Do I Need A Business Owners Policy (BOP) For My Small Business

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quick highlights

Pre-packaged bundle of coverage fits the needs of most businesses

Can be modified to fit a specific business risk profile

Available from virtually every insurance company in America

Business Owner's policies were created by the insurance industry to fit the needs of 90% of small businesses.

A Business Owners policy provides a package or bundle of coverage.

The basic coverage provided includes General Liability and Property Insurance, with many additional features that can be modified to fit the specific needs of any particular small business.

When you think of business insurance this is the first type that you will need to purchase. 

Virtually every major insurance company offers some kind of Business Owners Policy, so it is easy to shop around and find the best rates.

Types of Business Owners Coverage Typically Includes

General Liability: 

There are a few pieces to this coverage:

Slip and Fall” coverage for bodily injury sustained by a patron or visitor to your place of business.

Product Liability:  if the item you make or sell causes property damage or bodily injury to a 3rd party, coverage is triggered.

Property Damage:  If you cause damage to someone’s property in the course of your business activities,  this liability is covered.

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Dodo Tips

Want to protect yourself long-term?

Make sure to buy enough “loss of business income” insurance.  Typically, it takes over 12 months to rebuild after a major disaster like a tornado or a fire.

Personal Injury:  Liable or Slander accusations brought against your business

Advertising Injury:  if another business says your ads brought down their business 

Medical expenses:  if a patron or visitor claims the sustained a relatively minor injury on your premises, the insurance company is set up to pay with relative ease by using this coverage.

 

Property:

There are also a few different parts to this coverage:

Building:  if you own the building you use for business. 

Business Personal Property (BPP):  Covers everything inside the building that you use in the course of doing business.

Loss of Business Income:  replaces the income your business would have generated had it not been temporarily shut down by a covered claim.

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Don't Make this Dodo Mistake

Watch out for this mistake!

Slip and Fall Claims can be costly to settle.  Carry at least $2,000,000 in General Liability Coverage.  If not more!

Stock:  many insurance companies require a special designation of coverage for ‘stock’ which is on sale to the public.

Tenant Improvements or Betterments: if you do not own the building, your space was probably renovated to meet the specific needs of your business before it opened.  

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Here is a sad story...

Jane open her restaurant last weekend. Its been super busy all week too.

She was shocked this morning at 3 am to receive a call from her fire alarm service, letting her know an alarm had tripped at her business and they were dispatching the fire department.

Don't Make this Dodo Mistake

Jane open her restaurant last weekend. Its been super busy all week too.

She was shocked this morning at 3 am to receive a call from her fire alarm service, letting her know an alarm had tripped at her business and they were dispatching the fire department.

Jane arrived 30 minutes later to realize one of her servers had left a candle burning on a table top and it had ignited the table cloth, which spread to the rest of her dining room.

Janes new restaurant would be shut down for the next 15 months while the fire damage was repaired.

Dodo Definitions

insurance terms explained:

Co Insurance:  A clause within your policy which limits coverage for property claims if you are underinsured at the time of a claim.  Failure to have enough coverage will result in a pro-rated settlement offer by your insurance company.  

Luckily for Jane, she had purchased a Business Owners Policy, which included coverage against fire damage, as well as coverage for loss of business income.

Using these coverages, she was able to rebuild her restaurant, pay herself and her creditors, and even her most valuable employees while the rebuilding was completed.

Had it not been for her insurance coverage, Jane’s new venture would have literally been up in smoke.

Additional Coverage Options:

Business Owner Policies can also include some of the following coverage.  The limits offered are typically low, but the pricing is also typically lower than what a specific policy of the same type would cost.

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Cyber Liability:  a package of coverages meant to guard against hackers and loss of sensitive information online.

Tools and Equipment:  coverage for items that may leave your business location and travel to a client’s place of business

Errors and Omissions:  offered to beauty salons or tax prep offices.  Covers your forgetfulness or giving the wrong hair color treatment to a customer.  

Dependent Property Business Income:  does your business depend on the movie theatre next door to drive foot traffic?  If that business is shut down by a claim, you could have coverage for that loss of business income

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Civil Authority:  if the government prevents the general public from approaching your business location due to a catastrophe, you could have coverage for this loss of income.

Product Recall:  companies that make food or beverage may need to pull their product off shelves if it's found to be contaminated or if foreign objects may have fallen into the food during processing.  

Spoilage:  if you have food that requires refrigeration and the power goes out for longer than a few hours, you will need insurance to pay for the spoiled food.


Compare Policies

Action Item:  When comparing business insurance companies, don’t decide based on price alone.  Get two to three quotes, then call or chat online with the company and ask about their claims process.  Does it sound easy and reliable?  You can get started comparing quotes here. 


What To Know Before Shopping Around For A Business Policy

When shopping for a Business Owners Policy, you will probably be talking with a few different agents.  

Not all agents have access to the same insurance companies, so it pays to shop around with at least two or three.  

You will need to provide the following info before you can get an accurate quote:

  • Your Business Entity’s name (Sole Proprietorship, Corporation or LLC?)
  • Your estimated Annual Gross Revenue 
  • Square Footage you Occupy 
  • Fire prevention and protection measures in your building
  • Theft prevention and protection measures in the business
  • How much Property Insurance you would need to replace everything if it were lost in a fire.
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Compare Business Insurance Quotes

Choose from a variety of business insurance options. Professional Liability, Cyber Insurance, Business Owners Policy, Workers' Compensation.  

Comparison quotes are quick, easy, and free!

What I Hope You Take Away From This Business Owners Policy Guide

Business Owners Policies are really affordable, provide a lot of coverage in a pre-packaged bundle, and are sold by almost every insurance company in the country.  

Because a small cabinet shop and a beauty salon would have different risks, these policies also offer ways to modify them to fit a specific business.

Deductibles are a good way to lower the up front insurance cost, so consider a $2,500 or $5,000 deductible.  

Every business owner should have a Business Owner Policy!

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