In short, a Business Owner Policy (BOP) is a bundle that covers all the basic insurance needs to protect a business owner’s property, aid during business interruption, and cover liability. These are for small or mid-sized businesses.
Building and Business Property Insurance
Standard property protection covers defined risks, which is referred to as named-peril coverage. The business is covered in the event of fire, explosion, vandalism, smoke damage, and any other damage-causing events specifically stated in the policy. The coverage will repair or replace damaged or destroyed buildings, stock, equipment, furniture, or fixtures. Property is defined as business-owned items stored within a certain proximity of the business premises.
Business Interruption Insurance
When the building is damaged and needs to be repaired or rebuilt, the business often experiences a disruption in revenue due to reduced or halted operations. The standard period of coverage for business interruption is 30 days. The upper limit for business interruption is 360 days. Business interruption coverage would have the insurance company cover the loss of income during this time, and may also cover the expense of a temporary location to resume business operations. Business interruption also covers operating expenses, the commision costs for replacing and retraining workers for new machinery, employee wages, taxes, and loan payments.
Business Liability Insurance
Liability insurance covers any damage the business inflicts on others, whether that be to property or personal injury. These damages must happen as a result of normal business operations to be covered by insurance. With business liability insurance, your legal defense expenses are paid and all direct financial liabilities are covered. It covers medical expenses for people who are injured on your property as well as on-the-job injuries of employees.
Additional Coverage Options
Some business owner policies can add more coverage for business vehicles, crime, or flood insurance. You could also choose to buy an all-risk policy to cover every eventuality unless something is specifically excluded. Buying an all-risk policy minimizes the risk that you will have overlapping coverage because everything will come in that one bundle.
Eligibility for BOP
Businesses qualify based on location, the size of the location, revenue, and the class of business. Most plans require businesses to handle all operations on-site. The businesses usually covered by BOPs include retail stores, apartment buildings, small restaurants, and office-based businesses.
For all of your Business Owner Policy (BOP) questions, please do not hesitate to contact the Redwood Agency Group.
