Business Owner’s Policy: What Business Owners Need To Know
Does your business not have insurance? Don’t worry, you’re not alone—40% of small business owners have no insurance.
There are many types of business insurance out there, so your options can seem overwhelming. Many companies gravitate toward a business owner’s policy (BOP). The average business owner’s policy insurance includes everything a business needs and is affordable enough for small-to-medium-sized businesses.
Continue reading to learn everything you need about a business owner’s policy.
What Is a Business Owner’s Policy?
BOP insurance bundles multiple coverages and includes them in one package. There are different coverages you can choose from, so a business owner’s policy can work with your budget. Because of this, a business owner’s policy is usually more affordable than other insurance types.
Keep in mind that not every business can qualify for this type of insurance. Business owners’ policies are typically only available to small-to-medium-sized businesses. Insurance companies only offer this insurance to businesses in lower-risk industries. Examples include retail, food, and manufacturing.
What a Business Owner’s Policy Covers
A business owner’s policy features everything your business needs, from property damage to legal liability. Most insurance companies also offer add-on policies, which we will discuss next. But the three integral policies you’ll want to have are general liability, property damage, and business interruption.
General Liability
General liability insurance protects your business legally. This is useful insurance to have if your business is sued. Suppose a customer sustained an injury at your workplace and sued your business. If you’re at fault, your insurance company will still pay for your customers’ injuries.
Property Damage
Commercial property insurance is a common coverage type that protects your storefront or office from damage. Natural disasters are the most common type of damage, but commercial property insurance can also cover other types of damage. This includes accidents like fires and vandalism. Some property damage coverages extend to inventory and equipment.
Business Interruption
Business interruption policies cover any event that results in a loss of business income. This policy will repay you for any lost income you sustained. Your insurance company can also cover essential expenses, such as:
- Rent and lease payments
- Relocation
- Taxes
- Employee wages
- Loan payments
Keep in mind that only certain events qualify. For example, companies relied on their business interruption policy during the COVID-19 pandemic.
Add-On Policies
Most insurance companies will also allow you to invest in different add-on policies. Don’t feel tempted to choose all these policies—only choose the ones that fit your needs, but make sure you consider your options to create the perfect business owner’s policy.
Cyber Liability Insurance
You may not think your small business will be the target of a cyber attack. In reality, small businesses account for 43% of data breaches. Cyber liability insurance will provide compensation in case you’re the victim of ransomware or a similar attack. If hackers compromise customer data and there’s a claim against your business, your cyber liability insurance will pay the settlement.
Employment Practices Liability Insurance
There are times when your employees may file a lawsuit against your business. Someone at your business may have sexually harassed another employee or a former employee may have accused you of unlawful termination. In this case, employment practices liability insurance will compensate your business for any legal costs that result from an employee lawsuit.
Worker’s Compensation Insurance
Worker’s comp insurance is a useful coverage to have since this insurance covers employee injuries and work-related illnesses. This insurance will cover employees’ medical bills, lost wages, and disability. This insurance will also cover employee death. Plus, worker’s comp insurance will protect employers from related lawsuits.
Remember that most states, including New Jersey, require worker’s comp insurance. A business owner’s policy may not require worker’s comp insurance but may include it as an add-on at a reduced rate.
Flood Insurance
Flood insurance is an add-on plan usually not included in a standard property damage policy. Adding flood insurance to your business owner’s policy is useful if your business is in a flood zone, which is common if your business is located on or near the Jersey shore.
Commercial Auto Insurance
Do you drive for your business? If so, you’ll want to add on a commercial auto insurance policy. Commercial auto insurance covers your employees and vehicle damage. If you have a great policy and your employee is at-fault in an accident, your insurance will also cover the other driver and their vehicle.
Professional Liability Insurance
This type of insurance is called errors and omissions insurance since this policy covers business mistakes. A client can sue your business if you offered bad advice or made a mistake that caused financial or even physical harm to your client. Professional liability insurance can protect your company if a lawsuit arises.
Is a Business Owner’s Policy Right for Me?
A business owner’s policy can cover all commercial insurance necessities. Plus, your business can choose additional add-ons for more protection. But as we stated previously, not all businesses qualify for a business owner’s policy. You have to be a small-to-medium-sized business and work in an industry that doesn’t have significant liability.
There are other reasons why a business owner’s policy may be right for you, such as:
- You often deal with customers, clients, and other third parties
- You have vulnerable assets
- You can’t sustain yourself through an interruption
What if a business owner’s policy isn’t right for you? If you’re a solopreneur or startup, it’s best to buy separate policies to save money. If you’re a larger business, you can reach out to a local insurance agent and find the best commercial insurance for your needs.
Do You Need a Business Owner’s Policy?
Now that you know a business owner’s policy is right for you, it’s time to choose the best insurance company. Since 1922, our insurance company has protected South Jersey businesses and thousands of other clients. We have locations in Marmora, Ocean City, and Cape May. Contact us today for a quote.