Bundled with Liability in a Business Owner's Policy

A property insurance Business Owner’s Policy (BOP) offers the small business owner or farmer the advantage of purchasing a number of different and separate policies (such as property, garage, liability, casualty, crime/theft, and business interruption) for the business all wrapped up together in one policy, thereby saving premiums while simplifying bookkeeping for both the business and the insurance carrier. Generally, a BOP combines commercial business liability with property insurance to cover all the physical items owned by the business.

The Business Owner’s Policy provides property insurance coverage on all buildings, equipment, and inventory, as well as coverage for rented or borrowed vehicles. It includes liability insurance to cover losses that occur due to injuries caused by employees or the business owner’s products, as well as liability coverage for lawsuits to the owner or business that may arise because of damage to or injury incurred by someone on the property or by a person who bought a product from the business. A BOP might also include liability coverage against loss to the business caused by slander, copyright infringement, or privacy invasion. A BOP is an excellent purchase for a new business owner since it insures almost all of the financial perils that need coverage without the owner having to research and purchase many separate policies.

Business Owner’s Policies do not normally cover workers’ compensation, nor will they generally offer coverage for vehicles owned by the business or business owner, both of which are normally purchased as separate policies. BOP plans offer limited flexibility; most policies are standard, with cookie-cutter benefits and details, and the purchaser cannot normally specify or request higher or lower coverages for any component.

Most BOP carriers impose size and financial restrictions on the business owner, who typically must have fewer than 100 employees and less than $1 million in annual revenue to qualify for a BOP. Larger businesses are usually required to purchase separate policies for both liability and property coverage that are more customized to the specifics of the larger business. Carriers also require more detailed risk assessments in order to quote and issue policies for larger companies; the simplified BOP can’t accurately assess risk for larger companies and their greater inherent risks.

Last Updated: 08/20/2013

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