A business owners policy (BOP) is an important investment due to the constant risk of liability and property loss you face as a business operator. It is a practical way to protect your business’s physical and financial assets, in case a covered peril occurs.
What if a standard business owners policy doesn’t fully address your coverage needs? Here’s a look at how a BOP and additional coverages can help maximize protection for your business against liability and other losses.
Understanding Business Owners Policy
Instead of purchasing general liability insurance and property damage insurance separately, you can purchase these policies bundled together under a BOP. It’s a convenient and cheaper way for small and medium-sized businesses to get sufficient insurance protection.
What Is Covered under BOP?
A standard BOP covers the following risks:
- Property damage: If your business building is damaged in an event like fire or hail, a BOP will pay to rebuild or repair it. The policy also covers theft or damage of the contents in your commercial workspaces, including equipment and furniture.
- Bodily injury: The general liability component of your BOP will cover medical expenses incurred by third parties if injured on your business premises. It also covers your legal defense costs if sued for such injury.
- Business interruption: A BOP can cover up to 12-months worth of business revenue if you have to shut down due to a covered peril. The payment may include payroll and utilities.
Who Does BOP Insurance Cover?
Here are the main parties covered under BOP:
- Your business and employees: The policy covers certain liabilities your business faces, including lawsuits arising from employees’ actions. Your tangible business assets, such as your computers, inventory and other business owned property, are also covered for damage or loss.
- Parties to a business contract: You may extend coverage to a contractor or business partner by listing them as an additional insured on your BOP. If the added party is liable for third-party claims as a result of their work on your behalf, they’ll be protected under your BOP insurance.
- Vendors: A supplier may require indemnity against claims arising from the use of a product or damage of equipment you’re selling or renting. In that case, your BOP covers the vendor for liability associated with the product or equipment.
Limits to Coverage
A BOP may not cover certain risks or events, but that depends on policy specifics, such as the limits on your general liability and property insurance coverages. Most standard policies can pay to recover or replace properties after a covered loss like fire damage, theft, or vandalism. Other risks/liabilities will require additional insurance, such as data breaches, hired and non-owned (HNOA) vehicles, and Employment Practices Liability Insurance (EPLI).
To maximize insurance protection, you can add these policies to your BOP:
EPLI: It protects you from any legal costs and settlements arising from certain labor disputes or lawsuits that employees may bring against your company. You can use this protection even if you think you’re always acting fairly towards your former, current, and prospective employees. An EPLI policy covers claims such as:
- Age, gender, or disability-based discrimination
- Sexual harassment
- Wrongful termination
Hired and non-owned auto insurance: It provides coverage for vehicles you don’t own, but are using for business operations. Commercial auto insurance doesn’t cover such vehicles.
These are the key protections you can get for your business with a BOP policy. If you need additional insurance coverages, contact the experts at Modab Insurance Services today for guidance. We can help put together extra liability protections like EPLI and hired/non-owned auto insurance for your business.