Key Coverage Options in a Business Owner's Policy (BOP)

Property Insurance

  • What it covers: Buildings, equipment, inventory, and other physical assets.

General Liability Insurance

  • What it covers: Legal liabilities for bodily injury, property damage, and personal injury caused to others.

Business Interruption Insurance

  • What it covers: Loss of income and operating expenses if your business is temporarily unable to operate due to a covered event.

business professionals chatting at conference table

Optional Add-Ons and Endorsements

Professional Liability Insurance (Errors and Omissions)

  • What it covers: Claims related to professional mistakes or negligence.
  • Consider if: Your business provides professional services or advice.

Cyber Liability Insurance

  • What it covers: Data breaches, cyber-attacks, and related liabilities.
  • Consider if: Your business handles sensitive customer data or relies heavily on digital systems or uses the internet in any way.

Employment Practices Liability Insurance (EPLI)

  • What it covers: Claims related to employment practices, such as wrongful termination, discrimination, and harassment.
  • Consider if: You have employees and want to protect against employment-related claims.

Commercial Auto Insurance

  • What it covers: Vehicles used for business purposes.
  • Consider if: Your business owns or uses vehicles.

Equipment Breakdown Insurance

  • What it covers: Repair or replacement of machinery and equipment that breaks down due to mechanical or electrical failure.
  • Consider if: Your business relies heavily on specific equipment.

Crime Insurance

  • What it covers: Losses due to theft, fraud, or employee dishonesty.
  • Consider if: You handle significant amounts of cash or valuable inventory or worry about fraud

Inland Marine Insurance

  • What it covers: Property in transit or mobile equipment.
  • Consider if: You frequently transport goods or have mobile equipment or tools.

Determing What You Need

1. Assess Your Risks

  • Industry-Specific Risks: Different industries have unique risks. For example, a tech company may need more cyber liability coverage, while a restaurant might focus on general liability and property insurance.
  • Location-Based Risks: Consider geographical risks like natural disasters, crime rates, and local regulations.

2. Evaluate Your Assets and Operations

  • Physical Assets: Inventory, equipment, and property should be insured for their replacement cost.
  • Business Continuity: Determine how long you can afford to be out of operation and how much income you need to cover during that period. Also, how long will it take to get a replacement part or machine?
  • Professional Services: If you provide professional services, consider errors and omissions insurance.

3. Analyze Your Financial Situation

  • Budget: Balance the cost of premiums with the level of coverage you need. Higher deductibles can reduce premiums but increase out-of-pocket costs during a claim.
  • Revenue: Ensure business interruption coverage aligns with your revenue and operating expenses.

4. Legal and Lease Requirements

  • Lease Agreements: Some leases may require specific types of coverage or minimum limits.
  • Regulations: Certain industries may have mandated insurance requirements.

business owner in suit holding briefcase and fastening cuff link

Steps to Take

  1. Inventory Your Assets and Risks: Create a detailed list of your property, potential liabilities, and operational risks.
  2. Consult an Insurance Agent: An independent agent can help tailor a BOP to your specific needs and provide quotes from multiple carriers.
  3. Review and Update Regularly: As your business grows or changes, periodically review your coverage to ensure it remains adequate.