Maintaining adequate business insurance can provide your organization with essential protection in times of emergency, but with so many options and paperwork involved in applying for commercial policies it may appear daunting.
Take steps now to secure coverage that best meets the needs of your business, and save both time and money by taking small steps toward finding coverage that fits them.
Business Owner’s Policy (BOP)
A business owner’s policy (BOP) combines general liability and commercial property insurance into one policy for small businesses. It typically costs less than purchasing them individually, and many insurers can customize a BOP to fit the individual business. Furthermore, its coverage can also be expanded or modified further with provisions like workers’ compensation, business interruption and commercial auto coverages.
BOPs are used by businesses that need proof of insurance for lenders, landlords or clients. A BOP can provide an easy way for small businesses to quickly obtain documentation they require and get back to work without spending valuable resources managing multiple policies individually.
To qualify for a BOP policy, a business must satisfy specific criteria including size, revenue and location. Other considerations, including its susceptibility to theft or fire may also be taken into account. It’s best to speak with an independent insurance agent in order to ascertain if your business meets all eligibility requirements for one of these policies.
Although a business owner’s policy provides the basic coverage necessary for most companies, it’s essential that all businesses consider additional options as part of their coverage strategy. Workers’ compensation coverage is required by most states and should be an essential element of any successful operation; additionally, business auto and umbrella policies offer extra protection in the event of large claims; typically these extra coverages are available as add-ons to BOP policies.
General Liability
General liability insurance provides financial protection should your company cause harm to another individual or their property due to something it did or failed to do, for example if someone slips and falls on your property, being injured and needing medical attention; similarly if delivered products do not work as advertised they could potentially file suit.
Commercial general liability policies generally cover damages of 1 million per occurrence and 2 million aggregate – this minimum coverage should suffice for most businesses; the actual amounts you select depend upon your risk profile and personal preferences.
Liability claims can be costly and disruptive to a business’s finances, necessitating additional investments or incurring debt to cover them. Furthermore, some clients require proof of general liability coverage before working with you.
As part of their BOPs, small business owners may obtain general liability coverage; however, you can purchase this policy separately as well. When making this choice, be sure to speak to an insurance agent first and consult their licensed advice for selecting an adequate policy.
Consider workers’ compensation insurance, which helps cover expenses should your employees become injured while working at your company, as well as crime/financial/professional indemnity cover for theft, hacking and libel and slander claims. Most states legally require employers to carry workers’ comp coverage as it’s often included as part of commercial general liability policies.
Business Auto
No matter the size or scope of your business, an auto policy is an integral component in protecting assets and drivers alike. A business auto policy protects liability for bodily injuries sustained from auto accidents that occur while one or more drivers from your company are driving on business-related duties, as well as physical damages to vehicles in your fleet. While not replacing personal auto policies entirely, business auto policies do offer certain additional coverage that individuals’ policies don’t include such as bodily injury coverage due to limitations imposed by other policies that exclude certain risks that personal policies cover such as repairs costs related to vehicle repair costs related to physical damage sustained from accidents involving company vehicles in service of business purposes.
A standard Business Auto policy typically offers both collision and comprehensive coverage options with limits ranging from $50,000 to $250,000 per accident, typically including both collision and comprehensive options as well as hired/non-owned coverage, which adds extra liability protection in cases when employees use their personal vehicles while conducting business on company grounds. It’s essential that this type of protection be available because, without it, employees’ own auto policies might not provide enough coverage in case of serious accidents.
Your agent will ask a series of questions regarding how your business uses vehicles, who will be driving them and who owns or leases them. Based on the responses to these queries, he or she may suggest adding non-owned auto coverage as an inexpensive add-on that provides extra protection in case your employees cause an accident with non-owned vehicles that they own or lease themselves. Blanket additional insured coverage could also prove useful as an additional safeguard, eliminating the need to list each person or company involved as additional insureds on your policy separately.
Worker’s Compensation
Workers’ compensation (often abbreviated “workers’ comp”) provides benefits to employees injured while performing their jobs, and is typically required by most states for businesses with employees. Policies typically cover third-party injuries as well as property damage. Workers’ comp policies can be purchased separately or as part of a Business Owners Policy (BOP).
Workers’ comp policies offer several different forms of coverage, including medical care, partial wage replacement and death benefits for employees. Some policies even cover occupational diseases contracted due to job duties. The cost of workers’ comp policies depends on a number of factors including accident frequency and severity; insurer experience rating; frequency breeds severity).
Though workers’ comp policies can sometimes be included as part of a business package policy, most states mandate separate sales. Furthermore, most state laws dictate who must purchase coverage through workers’ comp policies; for example in California all employers are required to purchase it for their employees except sole proprietors opting out; corporate officers and members; family farm labor employed by an employer with cash payroll less than $10,000 annually and domestic/casual employees working agricultural exchange labor sites or on private construction sites who fall outside this requirement.
Small business owners must clearly communicate their expectations regarding workers’ comp and other safety-related matters to employees, whether new hire orientation sessions or safety reviews. Employees who believe their employer cares about keeping them healthy and safe are more likely to return after suffering an injury and return to work quickly.
Business Interruption
Business interruption insurance is an integral component of any enterprise that relies on physical locations or assets for revenue generation, especially small businesses. Without adequate coverage, the costs associated with closing temporarily due to damage could be devastating – this policy helps cover operating expenses, wages for employees not working due to damage, relocation and start-up expenses for a temporary location, as well as extra expense coverage including equipment acquisition or retraining, commission or marketing fees as a result.
To qualify for this coverage, a few stipulations must be fulfilled. First, physical damage must have occurred directly to the property, such as fire or hurricane. Second, within an adequate amount of time after such damages have occurred, an insurance policy must have been purchased within that amount of time and include a “period of restoration,” which measures how long it would take the business to recover from any such damages and resume operations again; typically measured in days but it depends on your policy language and agent.
Last but not least, losses or damages must be covered by perils listed in a commercial property policy. For example, business interruption policies do not typically provide coverage against flood or earthquake-related losses since such events tend to be excluded from standard policies and require separate protection plans.
Most commercial policies already include business interruption coverage as part of their coverage; if not, it can be added for an additional premium. This rate depends on various factors including industry, location and risk. On average, this coverage costs anywhere from $40-$130 monthly on average.