What Is A Business Owner's Policy?
A business owner’s policy isn't a specific type of insurance. It is a packaged group of policies that protect small businesses against the most common liabilities they may face.
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What Does A Business Owner's Policy Cover?
A business owner’s policy (BOP) is designed to help recoup the financial fallout from a wide range of risks faced by a small business. The policy covers a broad spectrum of exposures by offering three different types of insurance policies:
General Liability Insurance
This is the most essential coverage your company will carry. General liability insurance protects businesses from bodily injury of a person on your premises, damage caused by you or your employees, fees for some legal suits brought against you, and much more. Learn more about general liability insurance.
Commercial Property Insurance
Most businesses have physical items that are used to complete their job and usually, an office or shop to keep them in. Commercial property insurance is put in place to fund the replacement or repair of your company’s building, tools, furniture, inventory, computers, and any other physical object in the event of a covered catastrophe. Learn more about commercial property insurance.
Business Interruption Insurance
In the case of a major disaster like a hurricane or fire, your business may suffer more than just the loss of a building or supplies. Chances are that it will be very difficult to operate a business at an average level while recovering from a loss, even if your other insurance policies are helping to pay for the damages. Business interruption insurance will replace some of your lost revenue for a period of time after a covered loss. This policy is not always required inside of a BOP policy. Be sure to ask the agent when you get a quote whether or not this coverage makes sense for your business.
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How Much Does A Business Owner's Policy Cost?
The average cost of a business owner’s policy is between $700 and $3,800 per year. Since there is more than one type of insurance policy within this package, there are many factors that affect cost, and they may include:
- Number of employees
- Location
- Industry
- Size, age, and type of building
- Total yearly payroll
- Claim history
TIP: It is almost always less expensive to purchase a business owner's policy than to acquire each of these coverages separately.
Since these policies are so customizable and wide-ranging, it’s easy to work with your insurance company to fit this policy into your company’s budget and keep your business protected from many types of risks.
Coverage Not Included In A Business Owner's Policy
While a business owner’s policy will cover many of the risks that your small business will face, there are some liabilities that it doesn’t account for. Other insurance policies that you should consider are:
- Professional Liability Insurance - This coverage will protect businesses and professionals who provide expert services or advice. Mistakes in your work could cost your clients’ profits, which they can try to hold you liable for. Learn more about professional liability insurance.
- Commercial Auto Insurance - If your company owns a vehicle, or if you drive your personal vehicle for business purposes, you will need commercial auto insurance. All states have minimum coverage requirements for vehicles to drive on public roadways. Learn more about commercial auto insurance.
- Workers’ Compensation Insurance - If you have any employees, your state may require you to carry workers’ compensation insurance. This coverage will help pay the medical bills of employees who are injured on the job, and in turn, help your company avoid costly lawsuits. Learn more about workers’ compensation insurance.
- Commercial Umbrella Insurance - At times, legal fees and court costs can add to exceedingly large amounts. Commercial umbrella insurance will extend over and above the limits of your primary insurance coverage to assist in paying those bills and fees.