Insurance is one of the best ways for business owners to manage risk. Financial losses stemming from property damage can be difficult to recoup without some type of monetary assistance. When shopping for business insurance, a standard business owner’s policy (BOP) is one product to consider. The BOP can cover a range of property and liability exposures with a single policy.
Before purchasing any insurance policy, it's important to understand exactly what is and is not covered. A standard business owner’s policy typically offers the following baseline coverage:
- Property insurance – This includes protection against losses from theft or damage to buildings and equipment.
- Liability protection – A business owner’s policy reimburses costs related to property damage or injury to persons arising as a result of errors made in the course of doing business.
Additional Coverage to Consider
Although a business owner’s policy is a good foundation for a small company, it provides only generalized protection. As a company grows, additional items may need to be added to properly manage risk.
- Professional liability – Sometimes called Errors & Omissions Insurance, this covers those working in service businesses.
- Worker’s Compensation – Required in every state except Texas, and helps employees pay for qualified expenses related to workplace injury or illness.
- Employee Health Care – A benefit many businesses extend to employees.
- Coverage for company automobiles – insurance for commercial vehicles.
Commercial package policies are an alternative to a business owner’s policy and offer additional customization. Also, home-based businesses should ensure that their insurance coverage is adequate when combined with homeowner’s insurance, which does not typically cover a business loss.
Finding the Right Business Insurance
A business owner's policy combines coverage for standard property and liability insurance risks into one convenient package — making it particularly economical for your business insurance needs. To secure the right insurance for your business, consider the following:
- Shop around — Request multiple quotes and compare depth of coverage between policies before making a final decision.
- Ask for a multi-policy discount — If more than one policy is covered with the same carrier, ask about a multi-policy discount when adding business insurance.
- Understand the value of the business — Know the type of property that must be insured and the value of assets to select the right policy.
- Reevaluate on a periodic basis — As a business grows, there may be a need to reevaluate insurance coverage to avoid future loss.
Finally, understanding specialized risks will ensure that the correct insurance policy is purchased. Individual state insurance requirements for businesses may also be a factor when choosing coverage.
Business insurance is a useful tool that can help small companies manage losses arising from unplanned or unforeseen events. By evaluating and understanding the unique risks to a company, owners and managers will be able to determine which type of policy works best. Speaking with an experienced insurance professional who is familiar with business risks can help you find the best and most economical insurance coverage.