Business Owner’s Policy: Coverage and Benefits

What is a Business Owner's policy

Among the various policies which are designed for business owners to benefit them in multiple ways, the Business Owner’s Policy stands out for its widespread advantages. This policy, abbreviated as BOP, acts as a comprehensive insurance policy for business owners which covers them against several types of liability. The business owner’s policy combines multiple insurance coverages including general liability, property damage insurance, third-party injury, and more. A business owner’s policy offers tremendous benefits in terms of saving expenses and offering a convenient solution for various types of problems to businesses covered under this policy.

 

Types of Coverage Offered

As mentioned, the business owner’s policy covers the business’ assets, property, general liability, and more.

Also read: What is Business Interruption Insurance?

The comprehensive policy covers business owners against several kinds of insurance liabilities which may vary based on the particular details of the business policy. However, in general, a standard business owner’s policy covers the following kinds of liabilities.

  • Interruption of Business Policy: In case the business is experiencing any kind of loss in income, the business owner’s policy covers them, provided that the cause of loss is any event which is stated in the specific terms of the policy. For instance, if a business policy mentions coverage for income loss occurring from a natural calamity, it would cover income loss and compensate the business for the same, in the event that said loss is the result of a natural calamity. As such, this kind of coverage is also known as business income insurance, and it may cover things like ongoing expenses, as well as profits lost during the restoration period.
  • General Liability Coverage: A general liability coverage is essential for businesses to protect themselves against claims for injury to the body, damage of property, as well as personal injury. This type of insurance typically extends itself to third-party claims, and includes coverage of expenses related to legal defense as well as settlements in case the business is found liable. However, the coverage would only extend to specific types of incidents which are covered under the policy. In other cases, the business would be liable to incur all costs.
  • Coverage for Equipment Breakdown: Almost all businesses have some kind of machinery which is necessary for the smooth functioning of the business’s daily operations. In the event of a breakdown of such machinery, the business owner’s policy might provide cover for the expenses which would incur for the repair or replacement of such machines. The policy could also provide cover for any losses which incurred because of the breakdown of this equipment.
  • Employee Fraud Coverage: When running a business, the owners of the business often run the risk of hiring fraudulent or dishonest employees. The actions of such employees can cost the business severely. In case this happens to a business covered by the business owner’s policy, they can be compensated for the losses which they have accrued because of the dishonest actions of such an employee. This type of cover is also known as a fidelity coverage and can save businesses hundreds of thousands of dollars.

 

Benefits of the Business Owner’s Policy

Mentioned above are only a few types of coverage that the business owner’s policy offers.

Also read: Do I need business insurance if I’m a sole proprietor?

There are many more types of covers that such a policy can provide, however the intricacies can vary based on where you are located and whose policy you opt for. Nevertheless, whichever policy you may opt for, they all provide several benefits including the following.

  • Custom Made for Small Businesses: The Business Owner’s Policy is typically designed to protect small and medium sized businesses. This means that the costs of premiums are not very high, and the coverage is quite comprehensive. Since this policy targets small and medium businesses, it is made keeping in mind that these businesses would have limited resources, making it difficult for the owners to invest in multiple policies for various types of coverage. For businesses that have very restricted budgets but need insurance coverage, this is ideal.
  • Personalization: A unique benefit of the business owner’s policy is that it can be customized to meet the needs of the business effectively. Through a method known as endorsements, the business can choose to take the flexible policy option rather than a standard package. This ensures that the business is covered for any kind of liability that is more likely to occur in the particular field of business.
  • Expense Saving: One of the most significant advantages of the business owner’s policy is that it presents tremendous scope for cost savings. Since it offers comprehensive liability coverage within a single policy, it ensures that the premiums to be paid by the policyholder would be lower than what they would have to pay if they would have to pay for individual policies for the various types of coverage they require for their business.
  • Efficient and Swift Handling of Claims: A business owner’s policy, by virtue of dealing with multiple types of claims ensures that all claims are handled rapidly. Since businesses have to run only to a single insurer, they do not have to worry about figuring out the right place to go to. Businesses which offer such comprehensive insurance coverage also have a more organized model which ensures that the customer is at ease and finds a solution in a methodical and quick manner.
  • Peace of Mind: By availing a business owner’s policy, businesses can have a peace of mind that they are covered against any type of liability. This gives them more confidence in conducting business as they are not worried about unforeseen expenditures. The coverage offered by the policy acts as a sort of shield, which enables the business owners to free their mind and focus solely on the business

A business owner’s policy can be a boon for businesses. Its applicability for any kind of business makes it a universally useful policy to invest in, particularly if the business customizes it to suit its particular need. By knowing that the business is covered against any potential losses, the business owners can focus all their attention to conducting and growing the business.