A business owners policy (BOP) can be an incredibly useful insurance resource for business owners, but many business owners don’t know how to tailor their policy to maximize coverage. BOPs combine coverages for small businesses to save money on important insurances. It typically comes with:
- General Liability: General liability coverage provides the business with compensation for bodily injury and property damage incidents that occur on the business’ property.
- Commercial Property: Commercial property insurance provides the business with compensation if its property is damaged or lost due to fire, lightning, hail, smoke, wind, theft, vandalism and more.
There are other policies that may be added to a business owners policy, however. Every business is different and thus has different insurance needs. Carefully consider the unique risks your company faces when it comes to property and liability.
Liability Options for BOPs
General liability only covers third party injuries and property damage related to non-professional negligence. Other optional liability coverages that may be added to a BOP include:
Professional Liability
Where general liability covers non-professional negligence, professional liability covers incidents of professional negligence that may directly affect a client. If your employees offer a professional or specialized service, they are at risk for claims regarding mistakes while offering those services. For example, if an accountant makes a mistake that causes a client to lose thousands of dollars, that client can then sue the company. A professional liability insurance policy can help pay for the legal fees that follow. This insurance has different names depending on the industry, but it is commonly known as professional liability, errors and omissions (E&O) insurance, and occasionally medical malpractice insurance.
Cyber Liability
In the modern age, a lot of information is kept online or electronically. This convenience unfortunately leads to a lot of risk. Information can easily be lost, damaged or stolen when stored electronically, and any of these incidences can fall back on the business. Cyber liability insurance can cover the business in case of hackers, cyber attacks and other issues and claims that can arise related to electronic data.
Directors and Officers Liability
Directors and officers liability (D&O insurance) covers claims made against your company’s board of directors or any of your individual officers. These claims can come from shareholders, clients, or employees and generally concern the director or officer’s actions on the board. It often comes with employment practices liability (EPLI), which covers HR issues such as discrimination, sexual harassment and more.
Property Coverages
Different businesses have different types of property that needs to be covered, so it’s important that you not only know what type of coverage you need, but to know the total replacement cost of all insured items.
Commercial Auto Insurance
Commercial auto insurance covers vehicles owned or used by a business in case of fire, wind, hail, falling objects, theft, vandalism, collision and more. It can also offer liability coverage that is often found on personal auto insurance policies.
Inland Marine Insurance
This insurance covers items or equipment that are in transport. If a hospital is moving expensive equipment as they change buildings, for example, inland marine insurance offers extra coverage.
Flood and Earthquake Insurance
Basic commercial property insurances don’t cover items against damage or loss due to floods or earthquakes. You may be able to add these coverages to your business’ BOP, especially if the commercial property is located in a high-risk area.
Be sure to consider your industry’s unique needs, calculate the replacement cost value of the building’s assets, and connect with your insurance agent about building your BOP into the best policy for your business.