Many businesses consider bundling commercial insurance to save money on policies, but how do you know if your business qualifies for such insurance? The first step is considering what kind of insurance your business needs. Each business is unique, and certain industries require different types of coverage. For businesses looking to bundle the essentials, a business owners policy may be the best choice.
A business owners policy (BOP) combines property coverage and liability coverage into one policy. Generally, small businesses with less than 100 employees invest in BOP. BOPs work the best for industries that face low risk and cover:
· General Liability: General liability covers bodily injury and property damage that occurs to other people as a result of business operations. This does not include professional liability.
· Property Coverage: Property coverage provides compensation in case the physical assets of the business (such as the store, warehouse and their contents) are damaged or lost due to incidents such as fire, hail, windstorms, lightning, theft or vandalism.
· Business Interruption Insurance: Business interruption insurance helps if the business must stop operation for a period of time due to a covered incident. It provides compensation for the income lost while the business is unable to run.
Pros and Cons of a Business Owners Policy
A BOP makes it easy to pay one premium for multiple, essential coverages in one package. Unfortunately, a BOP isn’t a comprehensive package. There are many coverages it doesn’t include, and depending on the policy and your insurance company, you may not be able to add coverage to it. If you want extra insurance, you’ll likely have to purchase separate policies. The same goes the other way. If you don’t need a coverage that is included in a business owner’s policy, you’ll be paying for unnecessary coverage.
What Insurance Does a Small Business Need?
Small businesses with physical locations generally carry a BOP because it includes insurance coverage they need. Nearly every business needs some form of liability insurance. For businesses with physical locations, property insurance is essential. Besides these coverages, small businesses may also need:
· Workers Compensation: Any business with employees should have workers compensation. This insurance is required by every state in some capacity and provides compensation if an employee is injured at work. This can include drastic injuries such as breaking or loosing a limb to smaller injuries such as carpal tunnel from repetitive typing.
· Professional Liability: Unlike general liability, professional liability provides compensation for a specified incident in the business world. If an employee provides poor professional advice that results in a client losing money, the client could sue. Professional liability insurance assists with legal fees in such a case.
· Commercial Auto: A personal auto insurance policy won’t usually work for vehicles used or owned by the business, even if they’re personal vehicles used by the employee. Commercial auto insurance provides comprehensive, collision, uninsured/underinsured motorist coverage and more for work vehicles.
· Flood and Earthquake: A typical property insurance policy doesn’t cover floods or earthquakes. If your business is in an area with a high rate of either, you may want to purchase extra flood and earthquake coverage.
· Cyber Liability: These days, the majority of business is done online. Cyber liability protects the business in case an incident such as cyber attacks or theft occur to the company’s online information.
How Much Does a Business Owners Policy Cost?
Like any business insurance, the price of a BOP depends on the size of the business and the amount of coverage. On average, small businesses pay $1,200 a year for a BOP.