Business Owner’s Policy

In this new economy, one thing for certain is many people find themselves downsized, re-assigned, or facing a cutback in hours and benefits. Most of us know several people in these situations or maybe it’s you.  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 great way to protect your business and its assets.  A Business Owner’s Policy can offer affordable coverage to protect what you have while not breaking the bank out of the blocks.

Most Americans 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.  Even though you don’t have much in terms of assets, operating a business without the proper insurance can put all your personal assets at risk.  Too many new entrepreneurs make the mistake of thinking their homeowner’s insurance will cover any issues.

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.

As always, it is important to review Business Owner’s Policies with a commercial insurance agent. Before sitting down, make sure you have taken the time to determine where your business could suffer a loss and determine with your agent if coverage is available.  In many cases, a Business Owner’s Policy is a great way to protect your new business.

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.

Choosing Appropriate Coverage Amounts

Trying to choose the proper insurance and coverage amounts can be overwhelming.  Let’s look at the typical business insurance needed by almost any business as well as some additional insight to other coverage available for store owners. Understanding the language in an insurance policy is important.  Work with a licensed insurance professional along the way to help you understand the specifics of your policies.

Risk management is generally a department of a big company, but even in a small store, the business owner has to assume that role.  Your licensed insurance professional becomes your number one resource in determining the risk you and your business have and help you determine the coverage necessary to reduce that risk.  In addition, the state department of insurance and different retail associations can provide additional information key to your store.

Most stores will find three primary areas of risk which need to be addressed.  The first is property insurance.  Property insurance protects your business property and inventory against loss or damage by accident, theft, or another cause or by another party.  Often, your property insurance may be purchased in conjunction with your liability coverage.

These combined policies are often sold as Business Owners Policies or B.O.P’s.  The second is general liability insurance.  Liability insurance protects the company against claims of injury either bodily or physically.  This would protect you in the event of an accident at your business or in another location where you or your employees are conducting business.

As noted above, general liability protection is offered through a B.O.P.  In some cases, a business may also need professional liability coverage.  Discuss professional liability with your insurance professional.  Medical Malpractice Insurance is an example of professional liability insurance.

Finally, if you have employees, workers compensation is required in most states.  This insurance covers medical and loss wages to an employee injured conducting company business.  It also protects the business from being sued by the employee.

In addition to the three primary insurance needs, there are specialized policies and coverage options.  Plate glass and signage is one example.  Loss of use and mechanical breakdown coverage are others.  Crime insurance and having a commercial umbrella policy are other types.

Work with you licensed insurance professional to assess the risk and develop a comprehensive insurance package that fits your specific needs.  Remember, your insurance agent and the companies represented are tremendous resources available for you.