Risk Insights – Business Owners Policies

Business Owners Policies (BOPs)

Business owners face a variety of risks unique to their specific type of business. Choosing appropriate insurance coverage is key to ensuring that the business remains lucrative, especially when any of those risks become reality. A business owners policy (BOP) takes some of the guesswork out of choosing insurance and can make it easier to safeguard your business.

A BOP bundles several types of coverage in one package, similar to the way a homeowner's policy works, but is designed for small and midsized businesses. Not only does it help businesses cover all their risks, but it can also save money, since the bundle of services typically costs less than the cost of all the individual coverages combined.

Risks Covered by BOPs

BOPs are packaged for businesses that generally face the same type of risks. For example, a restaurant BOP can be designed and packaged differently than a manufacturing BOP.

Typically, a BOP covers a business's equipment and merchandise while also covering everything that a general liability policy covers. It also covers equipment, furniture and supplies in up to five separate locations, including rented and leased equipment.

Exclusions

Although a BOP is a convenient insurance option for small to midsized businesses, it does not cover professional liability, auto insurance and workers' compensation. Workers' life, health and disability coverage is also excluded.

For those exclusions, business owners can purchase separate coverage to add to the BOP. Other risks that a BOP does not cover include business interruption, crime, and legal obligations as a result of any harm caused to others as a result of faulty business operations.

Good Candidates for a BOP

A BOP may be a smart choice for businesses that have the following characteristics:

• A physical location, whether home-based or outside the home
• Assets that can be stolen, including products, cash, furniture and digital property
• A high risk for lawsuits
• Less than 100 employees and $5 million in sales

The following types of businesses frequently purchase BOPs: Manufacturers, Religious organizations, Apartments, Restaurants, Technology consultants, Wholesalers, and Retailers.

Eligibility

Small to midsized businesses need to meet specific criteria to be eligible for a BOP. When determining eligibility, insurers consider factors that include the type of business, size of its primary location, class of business and revenue.

Premiums for BOPs are based on eligibility factors, as well as financial stability, building construction, security features and fire hazards.

When purchasing business insurance it's important to obtain the right amount. Contact Insurance Plus LLC for guidance as to whether a BOP is a logical choice for your business.