Business owners are subject to multiple risks when running a business. Business owner’s policy (BOP) protects you against losses related to property damages, injury, and theft. Keep reading to learn the basics about BOP. We’ve evaluated the best business insurance providers based on coverage, financial stability, customer satisfaction, and overall quality.
Coverwallet began its journey in New York City in 2015 operating under the
Aon Insurance banner. At Coverwallet, you can access everything you need to
keep your company well-protected at an unbeatable price.
With a 100-year history of insuring businesses, Hiscox is well-known across
America and globally. With more than 500,000 small business customers,
Hiscox is fully aware and trained in the unique risks a business can face.
Thimble provides business insurance that can be tailored to your business by
the year, month, day, or even the job. At Thimble, the process to getting
the right business insurance is simple, scalable, and flexible.
BOP insurance can package several types of coverage into one insurance policy. It commonly includes liability insurance and property insurance in one policy that protects a small to medium business owner. It covers claims that could arise due to your business operations or due to incidents within the business. BOP insurance is versatile and can be customized to many different businesses and industries.
Who needs business owner’s policy?
A BOP insurance policy can simplify a business’s coverage needs while providing enough protection for all its potential risks. Types of businesses that could be eligible for a BOP include restaurants, grocery stores, retail stores, wholesalers, contractors, and architectural firms.
If your company has any of these factors, BOP insurance can be a good idea:
Employees: Workers associated with your business can be subject to injuring themselves or others and causing property damage. BOP insurance helps protect your company and employees in the event of an employee-related accident.
Location: If you run your business from your home, an office (rented or owned), a storefront, or any other physical location, your BOP can help cover losses related to this location.
Private data: BOP insurance can cover expenses related to a breach in data security that compromises your company’s data or your customers’ data.
Assets: If you have equipment, property, inventory, or money that could be stolen, BOP can help you cover costs to replace or repair these assets.
Certain insurance providers layout requirements that dictate if a company is eligible for BOP insurance. Requirements can include maximum amounts of employees, office space, revenue, and more. Check these requirements to make sure your business is eligible.
What does business owner’s policy cover and exclude?
A business owner’s policy can protect your business from legal liability and pay for damages to the building or equipment you use to do business. Coverage includes a combination of general liability insurance and commercial property insurance, with business interruption insurance added to most policies.
General liability insurance
General liability insurance is one of the first insurance policies that many business owners take out as it covers basic risk factors that small business owners face. For example, a customer could slip and fall while on your business premises and ask you to pay for medical bills. Or they could take legal action against your business, which can hit your bottom line and harm your business’s reputation.
Coverage for general liability insurance can provide protection against third-party bodily injury, third-party property damage, medical claims, copyright infringement, and legal costs of a lawsuit.
Commercial property insurance
If you own or rent physical space for your business, including a commercial building, warehouse, storage unit, or office space, you should consider taking out a business owner’s policy. Unexpected events can happen where a fire destroys your building or vandalism damages the equipment you use for business. Commercial property insurance can help pay for repairs to your building, replacement of damaged equipment, and spoiled inventory.
In some cases, landlords may require businesses to have a commercial property insurance plan in place, before signing a lease.
Coverage for commercial property insurance can include damage that results from covered events such as fire, vandalism, explosions, and falling objects.
Business interruption insurance
Business interruption insurance covers the loss of income due to an unexpected event that causes you to shut down or temporarily close business operations. Occasionally included in certain business insurance policies, it can also be sold as a stand-alone policy.
Coverage for business interruption insurance can include loss of business income, payroll, benefits to employees, and rent or mortgage payments.
Exclusions are incidents and events that are not covered by your insurance policy. Common exclusions for a business owner’s policy include:
Workers’ compensation: Employee accidents and medical expenses
Professional liability: Professional negligence and mistakes
Damage to vehicles used for business: Delivery vehicles, food trucks
Cyber security: Customer data breaches
Natural disasters: Earthquakes, hurricanes, and flood damage
If you require additional coverage, you can tailor a BOP to your specific needs. Additional coverage can include cyber liability insurance, workers’ compensation insurance, professional liability insurance, and commercial auto insurance.
What are the limits of business owner’s policy?
When you take out a business owner’s policy limits will determine the maximum amount you can claim in a given policy period. Limits typically range from $1 million to $2 million. However, lower limits are also available for smaller businesses.
It is important to distinguish between per occurrence limits and aggregate limits. Policies with a per-occurrence limit provide coverage for a maximum amount for each claim submitted. An aggregate limit covers you for a maximum payout per policy period, no matter how many claims are submitted.
How much does business owner’s policy cost?
Several factors go into the calculation of a business owner’s policy, and policy premiums can vary from one insurer to the next. Many insurers will offer a 10% discount or more on bundled policies, which can help provide cost savings.
Here are some factors that insurers will consider when providing a quote:
Value of business property and assets: The value of physical assets can have a significant impact on the commercial property insurance part of the policy. The more your business property and assets are worth, the higher your insurance premium.
Type of policy: Additional coverage such as business interruption insurance can increase the cost of your insurance plan.
Industry: Different industries pose varying levels of risk with higher risk industries paying a higher premium.
Deductibles: The higher your deductibles, the lower the premium. This can result in larger out-of-pocket expenses when you go to file a claim.
Size of business: Larger businesses are likely to require more extensive coverage which can increase the cost of your business owner’s policy.
Location: Your location can affect the value of your business property which can impact the cost of insurance.
Replacement cost versus cash value: Actual cash value calculates the payout according to the present-day value of the property. This is often cheaper than buying replacement cost coverage which will pay out the full value of the item.
Coverage limits: Higher limits can increase your insurance premium.
Revenue: If your BOP includes business interruption insurance, higher revenue can increase the cost of your policy.
Age of building: Newer buildings may have lower maintenance costs and can be less susceptible to damage, lowering the cost of insurance.
How to choose the best business owner’s policy
When looking for the best business owner’s policy, here are some key factors to consider before you make a purchase:
Flexible bundles: All business owner’s policies include commercial property insurance and general liability insurance. Many insurers allow you to add on additional coverage including cyber security insurance, workers’ compensation insurance, and business interruption insurance to better fit your business needs.
Compare multiple providers: When looking for an insurer, it’s a good idea to compare multiple policies to find the best BOP for your business needs. If you know that your business will require general liability insurance and commercial property insurance, it’s best to ask if the insurer offers a BOP, as combining policies can provide additional discounts.
Read the terms and conditions: Taking out adequate coverage can help pay for costly legal proceedings and damage to your property. Read the terms and conditions to be aware of any exclusions that can apply. This can help to avoid rejections when filing an insurance claim, and finding out that your liability costs are not covered.
Consider legal requirements: If your business hires employees, most states require you to have workers’ compensation insurance to cover employee benefits and accidents. These requirements should be factored in when considering a business owner’s policy.
