Business Owner’s Policy: A Good Starting Point

In the past, we have discussed that a Business Owner’s Policy or BOP’s may be a good option for your new or small business.  BOP’s can cover many of the risks associated with a business while keeping the premium you pay in balance with a small business or start up.

A business owner’s policy is generally quite inclusive.  It is important for you as a business owner to review the specific coverage in detail with your commercial broker.  More important however, is a review of the exclusions.  You need to know what is not covered as well as what is.  Exclusions are damages not covered by your policy. Here are some of the common exclusions to BOP’s you want to be aware of as you consider a BOP.

Boiler and Machinery insurance, also know as equipment breakdown or mechanical failure is often not included in a business owner’s policy.  Review with your commercial insurance broker if this is a coverage your business would need.

Commercial Fleet (vehicle) insurance is generally not covered in a business owner’s policy.  Since vehicles are an expensive asset, it is important to maintain coverage on them.  A loss of a truck, a delivery van, or other vehicle(s) critical to your business could have a serious impact on your business and its cash flow.  Commercial vehicle insurance should be discussed with your broker if your company owns vehicles or equipment, or if driving may be a component of your business.

Debris Removal insurance is also coverage generally excluded by a business owner’s policy.  Businesses located in areas where tornadoes, hurricanes, and flooding exist may want to consider this type of coverage.  Property insurance will generally cover rebuilding, but not the clean up and debris removal necessary to get the rebuilding process started.

Every business owner’s policy is specific to you.  Just make sure you understand both the protection offered, and risk still exposed.  Work with your broker to customize the best coverage for your premium dollar.

What Is a Business Owner’s Policy?

What’s a business owner’s policy and should I get one for my new business?

One certainty in a struggling economy is many people find themselves downsized, re-assigned, or facing a cutback in hours and benefits.  For some people, they begin to look at running their own business or becoming self-employed.  If this is a possibility for you, or you have already started a small business, it’s imperative to understand how important insurance is to your business.

As a new or start up business, it is possible a Business Owner’s Policy may be a good starting point to protect your business and its assets.  A Business Owner’s Policy may offer a way to protect what you have while not breaking the bank out of the blocks.  A Business Owner’s Policy will help reduce risk and insulate your family’s assets (Naturally, speak with an attorney) in the event a claim if ever brought against you, your employees or business.

Most people today who are starting a business do not have a large amount of assets such as vehicles and equipment, machinery and a large number of employees.  Without being a large business, your insurance needs should be fairly easy to determine.  This is where a Business Owner’s Policy can be a good decision.  A licensed insurance professional can review the coverage options available to your business.

As a rule of thumb, a Business Owner’s Policy normally covers all the basics for your new start up or existing small business.  This includes basic property and liability protection for your small business.  More often than not, your Business Owner’s Policy can be added to and coverage(s) extended as your business grows.

This is a great feature of a Business Owner’s Policy.  As you review your insurance options for your business with your agent, make sure to understand where losses can occur.  Another good resource is the state department of insurance.  Look for similar businesses and what type of claims they may have had and make sure those types are covered.

Small Business Professional Liability

Many small business owners have typically not worried about professional liability claims.  However, due to the past few years economy, those worries are now increasing.  We are seeing small business sued who in particular rely on web services.  As our technology increases, so do our exposures.  Most business owners are turning to automation to increase their productivity and expand their marketing for business development.  However in doing so, there are increased risks often overlooked.

 

The risks of which I speak include hackers, viruses and other cyber attacks.  Failing to prevent these attacks are costly and time consuming for the business, but also expose their customers to breach of private information.  Business owners are now turning to insurers to help recover some of the money lost due to these conditions only to find it not to be a covered cause of loss under the Business Owner Package policy.  Many professional liability insurance companies exclude certain items also so each policy must be examined closely.  If you have questions regarding your insurance policy, please talk with your agent or one of ours.

 

 Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.

 

Is a Business Owners Policy enough?

In general, a Business Owners Policy may do the trick for a lot of businesses. A cursory will review makes it look pretty inclusive. It is important however to read it carefully, and make note of any exclusions written into the BOP. Nothing is worse than experiencing some sort of incident or loss and then discovering that your business insurance won’t cover the loss.

Often, commercial fleet insurance is not covered in a Business Owners Policy and needs a separate policy. Vehicles are an expensive asset and the damage or loss of one could have a serious impact on some businesses. Also not included more often than not is liability insurance covering the business owned vehicles. Check with your licensed insurance professional regarding the necessary coverage needed for your business vehicles.

Another exclusion often seen in Business Owners Policies is equipment breakdown or mechanical equipment breakdown insurance, which also may be known as boiler and machinery insurance. This type of coverage will cover repair of replacement of equipment and some revenue loss in the event of a loss as it impacts your business and its day to day operations.

Check for disaster coverage such as flood, wind, or other natural disasters. Take a look at debris removal. For instance, you may have flood insurance, but not debris removal, or only a small coverage limit. Imagine the cost of removing a total loss before having to rebuild.

It pays to read the fine print of any commercial insurance policy. Business Owner Policies are the right choice for many, many small businesses. It’s just very important to understand the exclusions and risk exposure. Work with your licensed insurance professional to determine what will work best for your business.