If you’ve been researching starting your own business, you’ve probably seen the phrase “BOP insurance” pop up a few times. BOP, or business owners’ policy insurance, is actually a common package deal form of insurance that many small business owners invest in to protect their businesses from unforeseen accidents, damages, and lawsuits. If you want to start your own business, getting yourself a business owners policy is a great place to start to ensure that your company and its finances are protected from any negative circumstances that come its way.
You’ve likely got some questions about BOP insurance: What does it cover? Who does it benefit? Do I really need it? We’ve got answers to all your burning business owners’ policy questions and more. Read on to find out how to make sure that your small business has the coverage it needs to succeed.
What is a Business Owners Policy?
A business owners policy is a form of insurance coverage that includes various types of insurance essential for any business. The three most common forms of insurance included in a typical business owners policy include the following:
Commercial Property Insurance
When starting a business, you’ll need some form of property to run your business out of. Whether you buy or rent space to operate your business, you’ll want to keep your company’s home safe. On top of that, you’ll want to protect all the important business documents, equipment, and inventory that you’ve got inside your company’s building. In order to make sure that you have an adequate amount of protection for your business’ property, you’ll want commercial property insurance.
Commercial property insurance provides coverage for damage done to your business property and anything inside that’s a part of your business. This kind of damage can be the result of natural disasters, theft, or vandalism. In any of these cases, commercial property insurance will help you afford the cost of building repairs as well as the replacement of equipment, furniture, product inventory, and the restoration of important documents.
It’s important to note that when you choose a business owner’s policy, you’ll want to determine whether your plan will cover replacement cost (the full value of the damaged property and goods) or actual cash cost (the depreciated value of the damaged property and goods). You’ll also want to choose between a policy that covers all risks, or just specific perils as listed in the policy guidelines. These two factors can affect the cost of your overall business owners policy, so it’s best to choose the option that best suits your business’ risk factors and your financial ability.
General Liability Insurance
Obviously, you want every facet of your business to run smoothly, but sometimes accidents happen. When accidents involving a third-party (someone who is not involved in your company) occur, it can lead to long and expensive third-party lawsuits. The most common forms of third-party lawsuits raised against small business typically involve a person getting injured on a business’ premises; for instance, if a customer slipped on a patch of wet ground at a store that wasn’t properly marked, they could sue the store for funds to cover their injury and medical care. Additionally, some third-party lawsuits occur when a product offered by a business malfunctions and causes mental or bodily harm to a user. Given the unpredictability of third-party lawsuits, you’ll want to have general liability insurance to help cover your legal fees and settlement amounts. Without general liability insurance, you’d be left to foot the bill for any lawsuits brought against you, which could affect the financial integrity of your company.
Business Interruption Insurance
The final common form of insurance included within a business owners policy is business interruption insurance, which provides coverage to your business in the case that you have to temporarily close due to damage caused by theft, vandalism, or natural disaster. This type of coverage will typically cover a year of assistance, so you can use your insurance funds to cover repairs and employee salaries while you work to rebuild your business. This kind of insurance is of paramount importance for small business owners, as they might not have enough money to cover the cost of keeping the business afloat while repairs take place.
If you’re a small business owner, you’re going to want to take the time to research and purchase a great business owners policy to make sure that your company has the protection it needs. Together, commercial property insurance, general liability insurance, and business interruption insurance provide small business owners with a broad spectrum of coverages that they’ll need to keep them afloat in the case of unexpected damage or third-party lawsuits. It’s better to be safe than sorry when it comes to ensuring that your small business is properly covered for any emergency, which is why you should get a business owners policy today.