According to the Small Business Association, 36-53% of small businesses face litigation which costs on average $50K-100K to resolve. For this reason, it is very important to be protected by a Business Owner Policy (BOP) Insurance, which protects businesses against client lawsuits and unforeseen expenses that could force them to close for good.
A Business Owner Policy (BOP) provides three types of coverage: property, general liability, and business interruption (or business income interruption). All are combined into one ‘master policy’, or package deal combining the most important types of coverages for small to mid-sized businesses.
What does a Business Owners Policy (BOP) Include?
A Business Owners Policy (BOP) includes three insurance policies in one package:
General Liability Insurance protects covers a company’s legal responsibility towards property damage or bodily injury caused to third parties that are not involved in the business. One classic example is a restaurant waiter accidentally spilling a scorching cup of coffee on a customer. General liability coverage would cover any legal fees incurred by the business, along with an award payout.
Annual premiums for general liability could fall anywhere between $300 and $1,000 for the most popular policy, a $1 million occurrence/$2 million aggregate. The next most popular choice is a $2 million occurrence/$4 million aggregate policy. Higher general liability costs depend on risk. Contracting, landscaping, and food & beverage services typically see higher premiums than photography and real estate services due to the amount of work performed on private property.
Property Liability: Property liability covers all of your buildings and assets, including inventories and supplies lost to fire, theft, windstorms, and other ‘acts of God.” For example, a traditional retailer could insure its building (owned or leased), electronic equipment, and products to prevent against catastrophe.
Business Interruption Insurance helps pay for the loss of income and sales in the event of a natural disaster, such as a hurricane or fire. It protects against product loss, an inability to fulfill orders, customers lost to competitors, broken vendor contracts, and additional unforeseen expenses.
In addition to the “Big Three”, additional coverages can be bundled to meet a business’s unique needs. A Business Owner Policy (BOP) may include data breach coverage for tech companies, worker’s compensation, commercial auto, and inland marine which insures assets that moves from location to location, such as contractor’s equipment and motor truck cargo.
What is an Indemnity Period?
Business Owners Policy (BOP) includes business interruption insurance policy. Indemnity Period is a critical feature in business interruption insurance.
Expenses under business interruption insurance are typically paid within the indemnity period of 6 to 24-month. Indemnity Period starts from the date when damage and loss incur and end on the date no later than the last date of the indemnity period. During this time, temporary or permanent buildings, equipment, and other assets needed to run the business are paid for by the insurer.
How Much does Business Owners Policy (BOP) Cost?
Annual premiums of a BOP package vary between $500 to $2,500 a year depending on the coverage, business size, deductible, type of industry, and claims to date.
We also compare BOP quotes from 2 digital brokers, Coverwallet and CoverHound using a fictional windows company in Florida with revenue of $<1MM.
- Coverwallet – Our quote request revealed 2 quotes from Starr Companies, with a ‘Silver’ $1M/$2M package, $500 property deductible, and contents coverage of $100K for $252 a month and a “Gold” package with the same numbers plus ‘Terrorism Coverage” for $254 a month.
- CoverHound: Coverhound unveiled a plan from respected carrier Chubb for $76.17 a month or $914.00 a year, which covers bodily injury, property damage, business personal property, and business interruption. There is the option of monthly or annual payment plans.
A business owner policy is your first line of defense with the unexpected slip & fall, lawsuit, and excess legal fees by exorbitant lawyers in battling cases. It could mean the difference between continuing your business and closing up shop. Save money on your small business insurance with the above carriers, offering business owners policies that could mean the difference between uneasiness and peace of mind in all of your business affairs.