Business Owners Policy

Business owners policies typically include:

• Property insurance for buildings and contents owned by the company. There are two forms, standard and special. Special provides more comprehensive coverage.
• Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business. It can also include the extra expense of operating out of a temporary location.
• Liability protection, which covers your company’s legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations, or errors in services provided.

Not all types of insurance are a part of a business insurance policy. The following types of insurance are not part of a standard business owners policy, but you might be able to add them to your BOP:

• Workers’ compensation: Workers’ compensation insurance, legally required for most employers, covers injuries or illnesses that employees experience in the scope of their work.
• Professional liability: Professional liability insurance protects service businesses and professionals against claims of negligence.
• Commercial auto insurance: Covers injuries or damage from the use or operation of a company vehicle.
• Flood and earthquake insurance: Small businesses typically must buy separate, specialized policies to cover flood and earthquake damage. This is important if you do business in zones prone to floods or earthquakes.
• Employment practices liability: Employment practices liability insurance (EPLI) guards your business against claims of discrimination, such as gender or race-based discrimination.

Business owner policies can be customized to a business’s specific needs. You can also add umbrella or excess liability coverage to a business owner policy. These coverages fill in any gaps left by your primary insurance policies. If a claim maxes out the coverage limits on your general liability policy, for instance, you can tap into an excess liability policy.

A BOP is specifically designed for low-risk small businesses. Most small businesses need general liability insurance and commercial property insurance when they rent or own an office or other commercial space. On top of that, client contracts often require general liability coverage.

Even when coverage isn’t required, a BOP is a wise choice for small businesses that work directly with the public and own property. This policy protects against financial losses from customer accidents and incidents like fires and burglaries.

Here’s an example of how a business insurance policy works:  Suppose you own a retail shop and a heavy storm hits the business district, causing damage to your facade. As a result, you have to close down the shop for several hours while you do some emergency repairs. You finally reopen but fail to notice a leak in the ceiling where water is dripping. The water pools onto the floor and causes a customer to slip, who then sues your business.

A BOP would replace or repair the assets that are damaged during the storm, pay for the facade repair, replace the income that you lose when you have to close down the shop, and cover the expenses of defending the customer’s lawsuit. But instead of paying three separate premiums for three separate types of insurance, you would pay just one premium for the business owners policy.

Interested in learning more about a business insurance policy for your business?  At Knight-Dik Insurance, we’ll work with you to design coverage that protects your business from a variety of risks, unique to you. For a free insurance premium analysis, simply contact us here or call 800-286-6353.