Bundled insurance policies address many risks that you or your business may encounter. A single insurer’s convenience to cover diverse types of losses makes business owner’s policies viable and appealing options for those with small or mid-sized enterprises.
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Can Any Business Get Business Owner’s Insurance?
As you will see below, the business owner’s insurance is not designed generally to cover risks that are often unique to particular enterprises. The packages in the business owner’s policies are intended for more regular risks.
The holders of the business owner’s policies come from the ranks of small and medium-sized businesses. Depending on the particular insurer, eligible companies are limited to 100 employees or $5 million in revenues.
With these policies, only those losses occurring on or near the business premises are covered. To that end, you might not qualify for the business owner’s coverage if you conduct activity significantly or primarily off-site. These may include delivery and home repairs. Special endorsements for business owners’ policies or separate insurance policies for particular risks may cover these losses.
What Comes With Business Owner’s Policies?
Business owners’ insurance bundles into one package coverage against many types of property losses, general liability claims, and lost income or ability to pay expenses from your business’s disruption.
Property
Business owners’ insurance reimburses you for computers, equipment, buildings, inventory, fixtures, and supplies damaged, lost, or destroyed by certain events. As with property insurance in general, perils covered include fire, damaging winds, theft, vandalism, and explosions.
With a business owner’s policy, your commercial property receives coverage whether you own or rent the premises out of which you conduct business. If you have a home-business, BOP is mainly helpful as your homeowner’s policy may not cover commercial activities damages.
These policies may limit covered property to that on the business premises or within a certain distance from the premises.
As with property coverage in general, many events are excluded from the business owner’s policies. In this group lie perils such as:
- Earthquakes
- Floods
- Water seepage or leaks that occur over weeks, months, or years
- Damage caused by government operations, including the exercise of eminent domain
Also, damage from your equipment’s ordinary wear and tear does not enjoy the benefit of coverage.
Liability
Through business owner’s insurance, you can pay claims of those injured at the hands of your business activities.
Hazardous conditions at your premises present a significant risk of harm for patrons, customers, and others with whom you conduct business. Premises liability law encompasses injuries from:
- Slip and falls due to liquids or objects on floors
- Insufficient lighting
- Malfunctioning electrical system
- Improper storage of combustible materials
- Inadequate security measures
- Defective smoke alarms or detectors
- Broken rails or steps
The liability portion of your business owner’s property covers injuries from other aspects of your business. You may face lawsuits for foreign objects in food, defectively designed or manufactured products, inadequate warnings on merchandise, and negligently-performed work beyond the book’s subject matter. Liability can also arise from claims that you negligently hired incompetent workers or poorly trained or supervised employees.
The damages that your policy may pay include the victim’s medical expenses, pain, and suffering, lost wages and lost earning capacity. Property damage claims arising from your enterprise’s alleged negligence may also be covered.
Business owner’s policies also pay the cost of defending liability claims. The insurer typically retains the lawyer and directs the defense or settlement of claims.
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Business Interruption
The events that damage your property or premises create more than they need for repairs or replacement. Your business cannot operate and cannot generate income. Business owners’ policies afford business interruption coverage for income that you lose because an event forces our establishment’s temporary closure. This insurance also helps you with payments for leases, mortgage, taxes, and payroll during the interruption of business activities.
Business interruption insurance typically does not cover long-term closures. Standard business owner’s policies insure against losses up to 30 days from the triggering event. You can purchase, usually at additional costs, coverage for up to 360 days.
What Typically Is Not Covered by Business Owner’s Policies?
The business owner’s insurance does not cover specialized risks or those that occur away from the business establishment in its standard form. To that end, don’t rely upon a business owner’s policy for injuries to your employees or property damage reliability arising from the operation of your vehicles.
To cover medical expenses and disability to workers injured on the job, you will need workers’ compensation insurance. Most states require employers with a certain number of employees to have workers’ compensation insurance. For losses involving your vehicles or arising from them, you will need separate automobile policies.
While general business activities come within the gambit of business owners’ policies, professional services typically do not. If you are an attorney, physician, accountant, architect, engineer, or in another learned profession, you will need professional malpractice insurance. Sometimes, this goes under the name errors and omissions (E&O) insurance. Malpractice presents specialized risks because these involve specific standards of care, not common to businesses in general.
Standard business owner’s policies do not avail those facing negligent advice or representation claims. In addition to those in learned professions, brokers or agents in the insurance, real estate, and financial services industries may need separate policies to cover claims of negligently giving guidance to those making decisions. Often, the damages from these errors are mostly monetary as opposed to physical or personal injuries.
What Does a Business Owner’s Policy Cost?
The premiums differ by particular insurers. What you can expect to pay for your policy typically involves factors such as:
- Number of employees
- Size of business and earnings
- Location of business
- History of losses and claims
- Nature of business activities
- How much business occurs away from the premises
- Safety and security measures, which might include alarms, sprinkler systems, security cameras, smoke detectors, fire extinguishers, and lights
Contact one of our agents today to evaluate your insurance needs. We can help you find a business owner’s policy or other insurance that can help you meet and mitigate the risks of doing business.