You carry a homeowner's insurance policy to protect your house, but what about your business?
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Is there an insurance vehicle out there to protect your business against unforeseen circumstances? Fortunately, there is. It's called a Business Owner's Policy (BOP) and it could be the only thing standing between you and a financial crisis in the event of a company disaster.
It would be nice if BOP insurance completely insulated your business from loss. Not surprisingly, it doesn't.
Like any other insurance policy, a BOP only covers scenarios dictated by the policy itself. However, the big advantage of a BOP is that it provides coverage in a variety of insurable areas for less than it would cost to purchase independent policies.
In other words, a BOP can save money for you by combining most of your insurance needs in a single policy. You should also know that BOPs are designed primarily for small- to medium-sized businesses. Large companies typically don't qualify for coverage under a BOP.
Although the actual areas covered by BOPs vary from policy to policy, the most common BOP coverages include the following:
As a small business owner, much of your investment is tied up in physical property, i.e. buildings, equipment, inventory, etc. A single event, like a fire, can have a devastating impact on your investment, so a BOP will cover losses over and above the policy's deductible amount.
Property value isn't the only loss your business can incur in a disaster. The loss of equipment and property may also force the business to decrease production or shut down entirely until repairs and new equipment are in place. Business interruption coverage provides funds to make up for lost profits and to cover expenses until the business is operational again.
Suppose your products or production processes harm someone. Who pays for that? If your BOP has a casualty and liability protection clause, you can sleep soundly knowing that you will be covered should the unimaginable occur as a result of your products.
Sadly, your business needs to be protected from the consequences of crime. A solid BOP will give you protection from all kinds of crimes including burglary, theft, and robbery, as well as more subtle crimes such as employee theft or embezzlement.
Lawsuits are simply part of doing business these days. Most BOPs provide liability protection against civil suits for accidents, product liability, slander, copyright infringement, and a variety of other legal liabilities.
BOPs wouldn't be complete if they didn't also provide coverage for the vehicles owned by your business. Rather than obtaining vehicle coverage through another insurer, you should consider looking for a BOP that includes this coverage to help keep insurance costs down.
You may also be able to find BOP coverage for other insurable contingencies including flood or earthquake insurance. Shop around until you find a BOP that is right for your needs and the needs of your company.