Certain small businesses can benefit from purchasing BOP insurance because it helps them save money by bundling their insurance coverages together. The average cost of BOP insurance is very affordable and can really benefit startups and small businesses from not overpaying for insurance protection. BOP insurance policies are very convenient and can be purchased quickly to avoid stress and unnecessary headaches for those who simply don’t want to deal with insurance.
A BOP policy is a package put together consisting of several coverages that you can always buy separately, but it makes more sense for many qualifying businesses to buy them together as it often helps save on costs as well as the management of multiple policies at once.
General Liability - General Liability is often where many businesses start their insurance journey. It pays for claims associated with third party allegations of bodily injury and property damage. If a customer or client comes to your business and they are injured on the premises, it is possible that they may sue you for medical expenses and anything else that they deem appropriate, such as pain and suffering. BOP will also cover claims of property damage, like if you visit someone at their home for a professional matter and you happen to damage something in their home. This can happen, for example, with contractors having their ladders fall on a vehicle or bust out a window.
Commercial Property - Depending on your situation, Commercial Property coverage can offer many benefits. If you own the premises in which you do business, you will certainly want to have coverage if something such as fire, wind, or vandalism should occur that damages your premises. This way, with Commercial Property coverage from your BOP policy, you can get your building repaired or rebuilt if necessary. Additionally, there will be Business Personal Property coverage for the items inside including things like desks, computers, inventory and supplies.
Business Interruption – If an unfortunate event like a fire does occur and you have to shut down your business for some time, you could lose out on profits. Having a BOP policy ensures that you will have Business Interruption coverage. This pays your lost income in order to continue to cover costs like mortgages, vendors and key employees. Without Business Interruption coverage, you could end up having to close your business.
Employment Practices Liability – Employment Practices Liability (EPLI) is appearing more and more on BOP policies as they are being quoted due to today’s evolving marketplace and increase in claims. Even family-owned businesses are starting to see claims here. EPLI will provide coverage for claims of wrongful termination, discrimination, sexual harassment and even wage and hour disputes depending on the policy.
Endorsements – In addition to the above essential coverages, a BOP policy offers many other endorsements and additions at no extra cost. These can include Data Breach, or Cyber Liability, which is an extremely relevant issue right now and claims for this are increasing by the minute. Inland Marine insurance can also be an added coverage that includes things like equipment, rented or leased equipment, installation coverage, and even Builders’ Risk insurance with regards to transportation of goods and services on land. Spoilage is also sometimes an added benefit and really comes in handy with those businesses that deal with food on a daily basis, like restaurants or caterers. Some crime coverages are often included too like Employee Dishonesty, Accounts Receivable, Forgery and Alteration and Money and Securities. All of these extra coverages may be things that you don’t often think about but can place you and your business interests in a better position by having them in place.
As a business owner, we know you are wondering about the actual price of a BOP policy, since that affects your bottom line. After all, profits are one of the main concerns of an operating business, and knowing what your expenses will be can help in planning your budget.
While a BOP policy does often save money for many businesses and can range on average from saving $500 annually to over $2,000 annually, there are many factors that influence the price. Understanding the factors that will impact the premium of the BOP policy for your business can help you prepare when allocating costs for insurance.
Carriers – The insurance marketplace has an abundance of carriers and most of them offer their own BOP policy. Each carrier will likely have different rates and coverages available. While most of them will have the standard General Liability, Commercial Property and Business Interruption, they may also specialize in your industry. If they specialize in your type of business, they may have access to better rates than one who does not offer this specialization.
Type of Business/Industry – The type of business you operate will definitely influence the BOP insurance rates that you receive. For example, a company that has workers performing construction around tools and machinery will have a higher risk of injury than someone who has strictly office workers. Often, the higher risk a business faces, the higher their premium will be. It does help if you have a lot of experience in your industry and have not had any claims in the past.
Size – The size of your business can determine if your premiums will be higher or lower. If you have a lot of employees, this can impact certain coverage parts of the BOP policy. Also, the more employees you have, the higher risk of an untoward incident occurring.
Coverage Limits – Certainly, the limits of coverage you choose will have a direct effect on the price you pay. If you own a commercial building that costs $1,000,000 to replace, you will pay a higher premium than a business whose building costs $300,000 to replace. Also, the Liability limits you choose will impact the rates as well. The standard limit for most BOP policies is $1,000,000, but you can increase that to $2,000,000 if your industry requires this.
Replacement Cost vs ACV – Along with the coverage limits of the Commercial Property limits, you will have to choose whether you want Replacement Cost or Actual Cash Value. Replacement Cost is always recommended, but it does cost more money. Actual Cash Value is Replacement Cost minus the depreciation of items covered. Actual Cash Value can become a problem when it comes to things like televisions or clothing. Depending on what your Business Personal Property consists of, it is beneficial to weigh the pros and cons of Replacement Cost versus Actual Cash Value.
Deductible – The amount that you pay at the time of a loss is the deductible. Of course, the higher the deductible, the lower the BOP insurance quote. Since you are taking on a higher portion of the loss, the insurance carrier will cut you a break by reducing your premium. Keep in mind that you will have to pay this amount when there is a covered claim, so while you may save money on the monthly premium, claim time could be difficult if you have to pay a larger deductible.
Besides increasing your deductible and lowering your coverage amounts, which is not usually recommended, there are several ways that you can save money on your BOP policy. When shopping for a BOP insurance quote, keep these things in mind before you purchase your policy.
Pay Up Front – A lot of insurance carriers will charge installment fees if you choose to pay the premium on a monthly basis versus annually. For example, you can save $60 a year if the company charges a small $5 installment fee by paying the full annual payment up front. Since the average cost of a business owners policy can be as low as $500, this is an easy way to save money for your business.
Risk Management – Assess your operations often and determine what risks there are and how to avoid them. Many insurance companies offer risk management services as an added benefit, so be sure to take advantage of this if you are able to. Make sure to train employees on the importance of safety in the workplace and what to do if an incident occurs. Definitely have a social media policy and discuss cyber risks. Have policies and procedures in place for all financial aspects of your business as well. Security systems can never hurt and sometimes can even earn you a discount on the policy.
Don’t Over-Insure – Just like you want to make sure you have enough insurance protection for your business, you don’t want to pay too much for what you may not need. There may be times where you will see certain policies or coverages that just don’t make sense for your business. Do your due diligence and research these coverages connected to businesses like your own. Insurance is an investment in your business and your future, but paying for unnecessary coverage is not beneficial to your bottom line.
CoverWallet is a great resource when it comes to purchasing a BOP insurance policy for your business. We discuss the average cost of a business owners policy, ways to save money and you can complete the quote yourself on our online platform. Determine quotes and purchase all of your necessary insurance protection easily and quickly without leaving your business. If you have questions, we have dedicated insurance advisors that can assist you. Contact us today to learn more about what insurance coverage is right for you.
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