Business Owners Policy insurance: Learning the basics of BOP
This is a guest post written by Scott Streisand of S.K. Streisand Agency.
Accommodating a wide variety of business entity operations, an insurance policy package has been developed to assure continued prosperity and flow in the event of operational interruption. Commonly referred to as a Business Owners Policy, or “BOP” insurance, this package is designed to protect your business from a broad spectrum of first-party property losses, subsequent loss of income (business interruption coverage) from a covered loss, and many liability exposures (or allegations) associated with your business operations.
These policies—although uniform in their construction—may be easily modified to more specifically address your company’s orientation. Some detail regarding these packaged policies:
Personal property losses
Your personal property, which may also include the physical premises if common ownership exists, is the first item listed on the policy. Fire, smoke, pipe leakage and water damage, crime coverages, and many more perils are covered under BOP.
When assessing “how much protection,” or limit of coverage required, keep in mind this not only includes your inventory, furniture, and fixtures, but also the improvements and renovations you may have installed in your space. Lighting, electrical and computer work, HVAC, flooring, wall papering or painting, etc. are all your cost improvements that become part of the actual building. But remember it will become your financial loss and expenditure should a loss occur.
Business interruption / loss of income
Regarding business interruption/loss of income coverage, the business owners policy will reimburse your company for the continuing expenses required to maintain and rebuild your operational flow, as well as the monetary loss incurred. There are many automatic extensions of coverage (at no additional premium cost) afforded under the BOP policy, some of which include fine arts; laptops covered worldwide; employee dishonesty; and property in transit and trade shows. Additionally, there are many extensions and endorsements available to enhance your policy to more adequately address specific needs.
BOP provides liability coverage, which includes bodily injury, personal injury and property damage caused by the business operation, or injury that is caused on the business premises. The liability section will both defend, and if necessary, indemnify your business entity against allegations levied against the company. Product liability protection is included should claims arise regarding the use or handling of your merchandise. Please note that business owner policies are not always available for manufacturing operations.
Those working as consultants, engineers, designers, advertising firms, lawyers, accountants, or medical professionals may require a specific endorsement for inclusion in the BOP or a separate professional liability policy. Personal insurance, or umbrella liability for your home or cars, does not provide any protection for business-related activities.
Ask about your current coverage
Generally, the business owners policy or BOP is the most cost-effective and comprehensive product available for a wide variety of business classifications. Most prominent insurance carriers offer the product, and quoting and issuance is a quick (and pain-free) method of protecting your operational flow. Inquire with your insurance agent about what policies you currently have and whether they suffice for your business needs.
The information contained in this article is for informational purposes only and does not constitute legal or professional advice. For additional information on insurance options available, please contact S.K. Streisand Agency directly.