BOP Coverage

What kind of insurance is right for your business? Image via Grand Velas Riviera Maya on Flickr

Business owner’s policies, which are also called BOPs, can be a great fit to cover the insurance needs of many small businesses. This type of policy combines commercial general liability coverage and property coverage into a single packaged product that is generally more affordable than purchasing these coverage’s as separate policies.  Small businesses that are in the market for insurance coverage should look at whether there is a BOP available that meets their needs.

Here are 7 things business owners need to know about BOP coverage.

1.     Packaged Coverage Can Save You Money

By combining several standard coverage’s required by small businesses into a packaged product, insurers can offer that coverage at a lower price.  As long as the limits and coverage’s offered in a specific insurer’s BOP product meet your needs, this can make getting the insurance your company needs at a price that fits within your budget.

2.     Provides Business Interruption Protection

The one coverage that is frequently included in a BOP package is business continuity coverage.  This type of insurance is often overlooked but it is one of the most important kinds of insurance for small business owners.  Business interruption coverage pays you a specific amount if your business cannot be operated which can make the difference between being able to rebuild after a disaster and having to file bankruptcy.

3.     Often Excludes Professional Liability Coverage

Although BOP coverage generally provides the kinds of insurance small businesses need, one area that is not usually included isprofessional liability coverage.  This means that any business that has professional liability exposure will need to purchase that coverage in addition to BOP.

4.     Tailored to Small Businesses

BOP policies are generally only available to companies that have less than 100 employees and bring in less than $1M in annual revenue.  If your company is larger than that it may not qualify for BOP coverage and buying the specific individual policies your company needs will be more cost effective.

5.     BOP Property Coverage Will Pay to Replace Property

Most BOPs provide protection against the loss or damage of property and will cover the cost of replacing the business property.  This is an important detail to confirm with your insurance agent as the difference between replacement value and actual value can be significant.  Replacement value ensures you will have the resources to replace any lost or damaged property.

6.     Offers Protection Against Libel, Slander, and False Advertising

BOP coverage will protect your business against claims of libel, slander, and false advertising in addition to shielding the business from liability for bodily injury and property damage.  This can not only save the company money in the event there is a groundless claim filed, but can also save the company in the event there is a successful claim.

7.     Lower Premium Usually Means Less Flexibility

One thing many business owners do not like about BOP insurance is the lack of flexibility these kinds of policies provide.  Business owner’s need to realize that there is a trade-off when they select BOP coverage.  Because the product is standardized and therefore easier for the company to sell and service, it is offered at a lower cost.  However, in order to maintain that standardization, BOPs don’t usually allow for any customizations or deviations from the base product.  If the BOP you are looking at doesn’t provide exactly what you need, you may need to purchase additional coverage which must be factored into your overall cost/benefit analysis.

A business owner’s policy (BOP) might be the perfect fit for your small business insurance needs.  Make sure you understand exactly what is and what is not covered and if needed, secure additional coverage to fill in any gaps.  By leveraging the cost savings provided by BOP coverage, businesses can ensure they have the protection they need at a price they can afford.

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