Finding the Best Business Owners Policy (BOP)

 

If you’ve been scouring the internet for business insurance then you know there are a lot of options. But you’re here because you need to find the best insurance option for you and somewhere along the lines you’ve heard of a Business Owners Policy or BOP and are wondering what the deal is with this insurance option.

What Is Business Owners Policy Insurance?

A Business Owners Policy is insurance that allows a business (that meet certain criteria) to combine coverage from multiple policies into one convenient package. BOPs are created for businesses that face similar risks and often appeal to small and medium-sized businesses. However, larger companies can purchase a commercial BOP package and customize it to fit their needs. These days, there’s a BOP for most mainstream businesses, from hair salons to hardware stores, which makes the process easier.

Why Do I Need a Business Owners Policy?

Every business needs insurance but policies can get pricey. Sometimes a BOP is less costly than individual policies which is why it’s appealing. Furthermore, if there is damage to your property or the property of others, employee theft, mechanical difficulties, or an everyday accident at your business that causes a loss of income, a BOP can keep you from having to close your doors as a result of the expenses related to the events. 

Terrible things can happen if you don’t have a BOP:

• Financial ruin: Why risk paying out of pocket and possibly going bankrupt, when you could just pay for a BOP that is fairly inexpensive?
• Lawsuits: Legal issues can not only be costly, but they can also be very time-consuming, so one accident has the potential to bring down your business.
• Losing your stuff (or other people’s stuff): Recovering the costs of theft, damage to buildings or broken equipment could send your company into a downward spiral.

What Does a Business Owners Policy Cover?

Your standard business needs a variety of liability and property insurance. Depending on your risks, you may have to purchase these policies individually or you may qualify for a BOP. BOPs provide most of this insurance coverage but under one package which makes it more affordable for businesses. 

Your coverage under a BOP can include:

• Property: The building and its contents. 
• Property of others: In case your business provides a service on property like a repair shop.
• Business interruption: Lost income and employee salaries while you rebuild after a disaster.
• General liability: For any time that you might be sued.
• Employee dishonesty coverage: In case an employee steals from you.

Other needs:

• Mechanical/machinery difficulties.
• Front store window replacement.
• Hired and non-owned autos (i.e., you don’t own a company car but employees are still driving for the job).
• Loss of valuable papers. 

What Is Not Covered In a Business Owners Policy?

While the above coverage might be enough for your business, you may need additional coverages that are not covered by a BOP. 

The following is NOT covered under a BOP: 

• Professional liability
• Auto insurance
• Workers’ compensation
• Health and disability insurance
• Flood and sewer back-up
• Cyberrisk insurance
• Terrorism insurance

For each of the above, you’ll need separate insurance policies. 

What Types of Businesses Are Good for a BOP? 

While a BOP is good for nearly any business, there are some businesses that have general lower risks and are well suited for a BOP. Insurance companies determine a business’s level of risk based on any claim history and conditions such as safety and health concerns, the likelihood of theft, burglary, or damage from a natural disaster, and business that are in high-risk industries. The lower the risk of your company the less complicated insurance coverage you need. This makes it convenient to go with a BOP. 

The following businesses are good candidates for a BOP:

• Restaurants
• Retail stores
• Salons
• Professional services
• Pet groomers
• Veterinarians
• Caterers
• Coffeeshops
• Deli
• Auto repair shops
• Florists

Who Should Not Purchase a BOP?

For companies in high-risk industries like agriculture, mining, construction, health care, gun shops and even computer stores, a BOP policy might not be the best fit. Companies that run high risks or are in unique industries require a specific insurance package and a certain amount of coverage. For these businesses, a BOP might not offer the coverage type or amount that your business needs. 

A BOP is also not a good fit for a business that needs something that’s not offered within the policy, such as professional liability insurance. Businesses that usually need professional liability insurance include fitness trainers, photographers, beauty technicians and anyone who runs the risk of being sued by a client for not producing an adequate enough product. Since professional liability is not offered with a BOP and cannot be added to a BOP it wouldn’t be the best choice. 

How Much Does a Business Owners Policy Cost?

The cost of a BOP depends on the coverage limits and a number of other factors like size, location, and materials used. So a hair salon in Milwaukee might only pay $200 a month, whereas a logging company on the north coast of California could pay $2,000 a month. 

Basically, the safer and smaller the company, the cheaper the premium.