Insurance 101 Video:

What is a Business Owners Policy?

You’ve worked hard to start and grow your small business and know insurance can protect all your hard work. The problem is: comprehensive coverage requires a multitude of different policies — unless you purchase a Business Owners Policy.

Think of all the things that make up your small business. Your building, equipment, tools, inventory, employees, and reputation are all vital to the success of your business. As a responsible small business owner, you want to protect its assets.

However, adequately insuring and protecting your business can be a challenge — or downright daunting — and often requires a smattering of different insurance policies and products, such as:

• General Liability insurance: to protect against bodily injury claims and property damage
• Professional Liability insurance: to protect your business from errors and omissions and lawsuits from advice, reports, work, or opinions you provide.
• Property insurance: to protect against damage caused to your building and other tangible assets
• Business Income: makes your income statement whole again from lost net income suffered as a result of damage to property
• Equipment Breakdown: covers damage to your property resulting from an equipment failure

Worse, each of these individual policies cost a monthly or annual premium, which can quickly add up to a hefty bill.

Unless you opt for a Business Owners Policy instead.

What is a Business Owners Policy?

A business owners policy, or BOP, is a comprehensive insurance policy that combines general liability insurance with coverage for your building and contents — and then some.

In other words, business owners insurance provides you with all the coverage you need in a single easily-managed policy with one premium to pay.

Even better, because you’re bundling multiple types of coverage together, you’ll typically pay less for a business owners policy than if you purchased each bit of coverage separately. Win/win!

What’s covered by a Business Owners Policy?

Business owners policies are designed to be custom-tailored to meet the unique needs of your small business. In addition to choosing the type of coverage you want and need, you can add optional endorsements to extend your policy’s coverage to protect against a broader range of risks and perils.

Let’s break down the specific coverages that can make up a business owners policy.

General liability

General liability insurance is a requirement for small businesses and professionals who meet with clients in person or have customers visit their property.

By default, a business owners policy provides the same general liability coverage as a standalone policy, protecting your business from claims of bodily harm or property damage. As a result, a BOP also pays for medical expenses and legal fees you’d otherwise be responsible for.

Property coverage

Business owners policies protect your business’s property and contents from covered events or perils, as listed by your policy — such as fire, weather damage, and vandalism.

Property coverage includes:

• Building coverage, which protects your physical building (whether you rent or own), and
• Business personal property, or BPP, coverage, which protects the contents of your building
• Lost net income which was a result of a cease in your operations or even reduction in your capacity or ability to service customers. Plus, it pays for extra expenses you incur to keep your business running.
• Equipment Breakdown

To illustrate the property coverage component of business owners insurance, consider what would happen if you removed the roof from your building and flipped it upside down. The empty building itself would be covered by BP; everything that fell out of the building — its contents — would be covered by BPP.

You may opt to forego BP coverage if you’re renting or leasing a building, as your landlord should ultimately be responsible for damage done to the building. However, you should still purchase BPP coverage to protect your contents within that building.

Endorsements

In addition to liability and property coverage, business owners insurance can be enhanced through optional add-ons called endorsements or riders.

Endorsements allow you to purchase additional coverage beyond what’s typically included in a business owners policy. These endorsements allow you to customize your coverage to protect against the unique risks that threaten your business.

Common business owners policy endorsements include:

• Professional liability insurance: protects against claims from customers or clients alleging a mistake or a failure to adhere to your contract
• Water backup: protection from water backups and sump pump failures (though does not include cover damage from flooding)
• Cyber liability or data breach insurance: covers identity theft, data loss, malware, and other events related to your computers and network
• Employment practices liability insurance (EPLI): coverage that protects against employee claims asserting their legal rights have been violated, such as wrongful termination and sexual harassment. 
• Business interruption insurance: an endorsement that covers ordinary and extra expenses following an interruption to your regular business, such as relocating after a fire or natural disaster

By custom-tailoring your business owners policy through the addition of endorsements, you can increase your coverage without paying for protection you don’t need.

Who needs a business owners policy?

Business owners policies are ideal for small-to-medium businesses (including home businesses) that want comprehensive business insurance packaged into a single policy tailored to their specific needs.

Not only does business owners insurance cover general liability requirements, but it also helps to bridge the gap to protect against other risks that threaten your business.

For example, assume you own a computer repair shop. In the dead of night, thieves break in and steal equipment belonging to your customers. They also steal thousands of dollars of equipment belonging to your business, such as tools, replacement components, and testing devices.

The only losses covered by general liability insurance would be those related to your customers. You would be out the thousands of dollars in lost equipment, as well as any damages done to your business.

In contrast, a business owners policy would cover both your customers and your business. Sure, you’d have a minor hiccup to overcome, but you’d also be able to get back to work quicker, and with little out-of-pocket cost to you.

And, depending on your endorsements, you could also be protected from any subsequent identity theft or lost income as a result of the break-in.

How to buy a Business Owners Policy

A business owners policy can be purchased through Coterie’s online quote tool. Simply enter information about your business, including your industry, and select the coverage and endorsements you’d like. Then get back to doing what you do best — creating amazing products, services, and jobs — without the burden of unwanted risks to everything you’ve worked so hard to build.