A business owner policy is an extremely comprehensive coverage. It is usually written as an all-risk policy unless the insured requests the named peril policy.
All-risk coverage is an insurance policy which covers losses from any and all causes which are not specifically excluded in the policy.
Named peril coverage is a policy which covers only specific losses which are listed on the policy. It is the opposite of all risk-coverage.
Below is a list of perils which are usually excluded from business owner policies.
- Nuclear hazard;
- Operations executed by the government;
- Military actions;
- Weather conditions;
- Smog or pollution;
- Water, including flood, seepage, or sewer backup;
- Intentional illegal actions performed by the named insured;
- Criminal acts or fraud performed by the employees of the named insured;
- Errors in the computer system of the insured business owner;
- Errors and omissions in computer operations;
- Explosion of machinery such as engines or boilers;
- Power failure;
- Damage or loss caused by normal wear and tear;
- Loss of market;
- Losses caused by animals, birds, or insects;
- Decay, rust, or corrosion; and
- Property loss resulting from faulty design, planning, or development.
It is important that a business owner understands the exclusions and realizes that it is probable that different coverages need to be obtained to “fill in the holes” left in these exclusions.
This is best done by working with a licensed insurance professional who understands what you do and how and can recommend the other coverages you may need to avail yourself of.