Protect Your Business With BOP Insurance Rather than buy property and liability insurance, go for the whole package with a business owner's policy.

Introduction

Rather than purchasing separate property and liability coverage,many small businesses opt to lump them together in what's knownas a Business Owner's Package policy (or BOP). For eligiblesmall and medium-sized businesses, a BOP is a comprehensive packagethat can be a potential bargain source of insurance.

Since you can't predict when you might be hit with a naturaldisaster or a lawsuit, purchasing a BOP is a good way to get basiccoverage when you're starting your business. No matter howremote these risks may seem, just one hurricane or onepersonal-injury claim can make all the difference.

What is a BOP?

Like general property insurance coverage, the property portionof the BOP offers named perils or all risk coverage. Some policieswill even include other types of property-related insurance such asextra expense policies as part of the package.

The liability portion of a BOP is structured quite similarly toa stand-alone Commercial General Liability (CGL) policy. Theprimary difference: A BOP gives you much less flexibility indetermining your coverage limits for particular claims. It'simportant, however, to note that a BOP does not includeprofessional liability insurance, which protects you from losses orexpenses resulting from claims of errors or omissions or negligencein your business.

Business interruption insurance is generally included in a BOP.Business interruption insurance covers lost income and expensesincurred when a company suffers disaster-related damage. Operatingexpenses that continue to roll in even if business is suspended,such as payroll, are also covered.

BOPs typically provide reimbursement for up to a year of lostrevenue resulting from an insured property loss.

Who needs to purchase a BOP?

Almost every small business should look into a businessowner's policy for basic coverage. But to qualify for a BOP,you have to meet certain criteria: The company should have 100 orfewer employees, and revenues should not be more than $1 million.For companies that exceed these two limits, purchasing insurance ala carte is probably the way to go, and Commercial GeneralLiability insurance is a good place to start.

While it is one of the most common types of insurance for smallbusinesses, some companies may find the coverage limits of BOPs tobe too low, or may not like the lack of flexibility on options likecoinsurance.

Keep in mind, however, that what the policy lacks in flexibilityit usually makes up for in lower premiums.

What about add-ons?

And although comprehensive, companies with a BOP will still needto purchase other coverage such as automobile insurance (alsocalled fleet insurance) and workers compensation separately.

For companies with particular risks specific to that industry,an insurance broker should be able to suggest types of additionalcoverage you may need to fully protect the company. For instance, adry cleaner would want to purchase additional coverage in case of amechanical breakdown since his or her business is so dependent onthe performance of the machinery.

Small businesses should always look into getting more liabilityinsurance than what is included in a BOP since the amount and kindof liability facing each business is typically specific to theirindustry. So a basic BOP usually won't be enough.