Business insurance can get complicated. Businesses need to protect themselves against damage to their property, income they may lose if they have to shut down after their property is damaged, and the risk of lawsuits.
With the risks of crime and other types of losses that separate policies cover, there can be a lot to keep track of.
But it doesn't have to be so complicated. Small businesses can meet many insurance needs with a single product - a business owner's policy, or "BOP" as it is commonly known.
BOP packages essential coverages into a single insurance policy. At its most basic, a BOP provides three broad coverages:
BOPs offer some flexibility to the buyer, but not the overwhelming variety of choices that individual property and liability policies offer.
Firms can choose between three coverages for property damage losses:
Basic form - This covers 11 "perils" or causes of loss:
Broad form - This covers the same 11 perils in the basic form, plus:
Special form - This does not specifically list perils and offers the widest range of protection, covering "all risks," unless specifically excluded. This is the most expensive coverage.
The business must select the amounts of insurance to purchase on the buildings and personal property.
However, it is unnecessary to select an amount of insurance for business interruption coverage. The policy simply pays for the actual loss the business sustains during a necessary shutdown caused by covered damage to the property.
BOPs typically include small amounts of coverages that would otherwise have to be purchased separately, such as:
The policy covers the business's legal liability for bodily injuries, property damage, advertising injury and some types of non-bodily personal injuries to others.
Most insurers offer businesses a choice of only three or four amounts of liability insurance.
BOPs may be customized to include other types of insurance, such as for the business's liability resulting from the use of autos it hires or borrows.
However, a BOP is not a substitute for an automobile insurance policy, and it does not cover workers' compensation benefits owed to employees.
How to qualify
To qualify for a BOP, a business cannot exceed a certain size, such as 100 employees or $5 million in revenue.
For those businesses that qualify, a BOP is a sensible foundation for their insurance programs.
501 Bell St.
Dubuque, IA 52001
Phone: (563) 556-0272
An AssuredPartners Agency
In February 2020, The Friedman Group joined AssuredPartners, the 11th largest insurance brokerage in the U.S. This partnership provides us access to additional capital and a national footprint that enables us to continue to negotiate the most favorable coverage terms and conditions for our clients, and allows us to provide an even broader spectrum of risk management support services.