UPDATED: Sep 23, 2013
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Business owners may find themselves needing a variety of insurance products, including commercial property and general liability coverage. Purchasing so many separate types of policies can become complicated and costly, which is why some business owners prefer to purchase a bundled “business owner’s policy” instead. Although these policies are not the right choice for everyone, they can be a perfect solution for many small businesses.
What Does a Business Owners Policy Cover?
Business owner policies, or BOPs, are generalized insurance policies offered to small business owners. In general, your company must employ fewer than 100 people to qualify, as larger companies will require more extensive coverage.
A BOP covers many of the things a specialized policy would cover:
- Structure damage for the company building
- General liability claims
- Equipment breakdown protection
- Professional liability, including protection for libel and slander
- Rented vehicle coverage
You may be able to pick and choose among these coverage types to craft a policy that will suit your company’s needs. For example, if you operate a storefront, you will need different coverage than if you operate out of your home. Understanding these coverages enables you to tailor the policy to fit the needs of your business, and an insurance representative can help you create the right bundle.
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Who Needs a BOP?
Small business owners who do not plan to purchase separate commercial insurance policies should consider buying a BOP. Although the protection offered by a BOP is not as thorough as that offered by more specialized policies, it does provide coverage against many common perils at a reasonable cost.
In order to qualify for a BOP, your business will need to fit within certain size parameters. In addition to having less than 100 employees, the organization must make less than $5 million in annual profits. Businesses larger than this will require more protection than a BOP will provide. If you run a very small business as a sole proprietor or partnership, the BOP may be overkill. You’ll need to speak with your insurance company to confirm how much coverage you really need.
How Much Do They Cost?
In general, a BPO will be more affordable than holding multiple separate types of insurance. For example, a business owner might need to buy a commercial property policy, a general liability policy and a professional liability policy. If you purchase a BPO, you can have all three in one. This can help keep costs down.
The exact price of your BPO will depend on your risk level, the amount of coverage you purchase, and other factors. To determine the actual cost of the policy, you’ll need to obtain a personalized quote that will take all of these factors into account. That way, you can be assured that you’re getting the coverage you need at a price that will fit within your organization’s budget.