What Your BOP Will and Will Not Insure

When running a business, you want to make convenient use of your insurance policies. Juggling multiple policies might seem like a hassle. To avoid this, you might decide to invest in a Business Owners Policy, more often called a BOP. Still, while very beneficial to most business owners, BOPs don’t cover everything. You sometimes need to look very carefully at your policy to decide if you need more coverage. Let’s consider this idea a little bit closer.

BOPs in Brief

Business insurance isn’t only one policy. Usually, comprehensive coverage includes multiple different types of coverage and policies. Each policy will work alone and together to effectively insure the business. But, sometimes, multiple policies might seem hard to manage. You have enough to worry about without juggling multiple policies and premiums. BOPs can step in to help in much of this regard.

A BOP will contain several different coverage options tailored to your business. Often, coverage within BOPs is among the most important that businesses should carry. They will have the appropriate financial limits to cover your needs and risks. The coverage elements will work together to coordinate your protection.

A benefit of the BOP is that you won’t have separate policies floating around. Instead, they will exist in one place. You will also pay one insurance premium for the policy. For the business owners with convenience and affordability in mind, BOPs might seem a perfect fit.

Coverage in Most BOPS

Depending on which insurer carries your BOP, you might be able to include coverage. Often, policies offer three or four of the most-necessary business insurance elements. These include:

• Property insurance: You might own the building in which you operate. If something happens to it, you need to pay for repairs or replacements. This coverage might help you do so.
• Possessions insurance: Contents and assets within the business might sustain damage during mishaps. This coverage can help replace those items. In many BOPs, possessions insurance is part of the property insurance coverage element.
• Commercial general liability (CGL) insurance: You have a duty to your clients. If something happens to them when doing business with you, then you might have to pay for their losses. Coverage will often pay for bodily injuries or property damage you cause to third parties in the course of business. It can also assist you in case of legal action against you.
• Business interruption coverage: If a serious incident occurs in the business, then you might have to close temporarily. Yet, though you might close, operating costs like salaries and utility bills might still beckon. This coverage might help you still pay those costs until you can reopen and start making money again. Coverage might also pay for temporary relocating the operation.

Your policy always must include coverage limits to appropriately cover your financial risks. You can often base the coverage you need on the money you might lose should you face a problem. Your agent can help you analyze these monetary factors.

Furthermore, you need to ask yourself if your BOP alone truly offers you the right coverage.

It Doesn’t Cover Everything

Often, your BOP won’t provide enough coverage in and of itself for your whole business.

Most of the time, you will want to add extra coverage alongside the BOP to reinforce it. This can help better protect you in case of particularly severe or unique risks.

Supplementary policies you might need include:

• Equipment breakdown insurance: Coverage will often pay for breakdowns to important machinery. The breakdown might hamper operations, after all. Coverage might also pay for sudden HVAC system failures, phone outages and similar occurrences that impact operations.
• Cyber liability coverage: Computer systems might face risks of data theft or loss. If this happens, clients could suffer financial losses. Other threats, like identity theft, might also beckon. Coverage can help you pay for their data recovery and even lawsuits related to these incidents.

• Data loss coverage: A policy might pay to help you cover repairs to data systems after losses.
• Errors & omissions insurance: Your professional mistakes might cause financial losses to clients. This coverage might help you repay them for such losses.
• Inland marine coverage: If you need to ship or move items, this coverage will protect them during transport.
• Umbrella insurance: This is extra liability insurance that kicks in if your standard coverage surpasses its existing limits. Coverage might also pay for risks not covered by your CGL coverage.

In some cases, you can add these items to your BOP as riders or extensions. In others, you will have to buy separate policies. Keep in mind, you might still need coverage like workers’ compensation, commercial auto or group health insurance. You generally cannot add these items to BOPs.

BOPs are not for everyone. Generally, they are best for small business owners as opposed to large companies. Yet, all businesses can use the basic ideas of a BOP to establish their own levels of commercial coverage. Don’t hesitate to talk to your agent about one today.