Business Owner's Policy A standard business owner's policy (BOP) provides coverage for property (fire, wind, theft, etc.), liability (injury of someone in your business or by your product), business interruption, and, in some cases, workers' compensation. The components of each Business Owners Policy are different, so be sure that your policy contains all the components your business requires. Business Owners Policies were originally designed for small businesses, often retail, such as stationery or hardware stores. Today, Business Owners Policies are available for a broad range of businesses covering most major industries and professions. If your business has more than 50 employees, or very high sales volume, you may not be eligible for a Business Owners Policy and will have to purchase a package with the same elements at higher limits. General Liability Insurance Liability insurance (also known as casualty insurance) refers to coverage for injury to another person or damage to a person's property for which you are legally responsible. General liability is a standard element of most business owner's policies. General liability insurance will cover your business in case of bodily injury to someone or damage to someone's property that occurs on your premises. For example, this type of insurance would cover you should a client trip over a loose phone cord in your conference room and break an arm. Similarly, if you were to accidentally knock over and break an expensive antique at a client's premises, your general liability policy would reimburse the client for the damaged property. Property Insurance As the name suggests, property insurance provides coverage to your business for loss or damage (such as fire or vandalism) to your property. Most business owner's policies include property insurance. Business property coverage typically falls into two categories: building and personal property.
Building - This coverage is sometimes referred to as "real" property. It protects you should something happen to your building. Be sure to analyze your policy to see exactly what it includes - these policies typically cover damage caused by fire, lightning, wind, vandalism, or the weight of snow on your roof. Some things such as earthquakes, hurricanes and even general wear and tear are often excluded.
Personal property - This covers a business for loss of, or damage to, the property inside its building, such as files, office furniture, inventory, materials, etc. Check to see if your policy includes your computers and your phone system; your insurer may consider these to be "special" property and require additional coverage. Commercial Automobile Insurance If you use your personal car in the course of your business and you infrequently have customers in your car, most insurance companies will let you pay a little more for business use under your personal auto policy. However, if you have cars, vans, or trucks used primarily for business, you will likely have to buy a separate business auto policy. Auto policies cover physical damage to the car, but do not cover the contents of a car, so if you travel outside the office with valuables (such as demo units, computers, samples, etc.), make sure your property policy covers loss outside your business. If other people will be driving your car for the business, put their names on your policy to ensure coverage in the case of an accident. If your employees use their own cars in the course of working for you, you may need to get a non-owned auto insurance policy that provides coverage in case something happens when they are working for you. Professional Liability (Errors and Omissions) Insurance Professional liability insurance, also commonly referred to as errors & omissions coverage, is the service equivalent to product liability insurance. It protects you financially in the case of a claim against you for negligence, errors, omissions, or wrongful acts in the performance of your duties. It includes coverage for malpractice, errors, and omissions. A good place to start your search for professional liability coverage is your trade association, since it will be familiar with the requirements for your profession. Often, these industry groups offer specialized liability coverage, or if they don't, can point you in the direction of a carrier that does. When you are shopping for professional liability insurance, be sure to ask if the coverage includes the cost of legal fees. Some policies are now being written with exclusions and limits on coverage for legal fees and court costs. Umbrella Insurance These types of policies offer extra liability coverage that kicks in for losses when the limits of your primary liability policy are reached. Umbrella coverage often applies to either business liability or automobile liability insurance. Using an umbrella policy, you can often purchase several hundred thousand to more than a million dollars worth of extra coverage for as little as a few hundred dollars. Business Income / Extra Expense Insurance This is an extremely important add-on to property coverage, and is part of most BOPs. Business income coverage reimburses your business for revenues you lost during downtime caused by damage to or loss of your property. Extra expense insurance reimburses you for expenses incurred to avoid or minimize the suspension of business. Say, for example, your building roof collapses after a heavy thunderstorm. The business income policy pays for the income you lost while you could not occupy the building, while the extra expense policy covers rent for a temporary office space while your building is being repaired. Product Liability Insurance Product liability insurance protects you in case a product you produce or provide causes harm to a user or a user's property. A "product" is anything that is tangibly used, touched, or consumed. This type of insurance is recommended for every business that manufactures a product, but is especially important for companies that produce food, clothing, toys or anything else that could conceivably cause harm to someone. Most business owner's policies include limited product liability coverage. If, for some reason, you do not have this coverage through a business owner's policy and your product runs the risk of inflicting harm on other people, you may need to buy product liability separately. Similarly, if your product presents a higher risk of injury (for example, it contains a hazardous material), you may need to purchase additional coverage. |
