A business owner’s policy (BOP) provides two vital commercial coverages as a single package—property and liability insurance. The liability component addresses third-party claims such as customer injury or property damage. On the other hand, property coverage protects the business’s physical premises and any equipment owned or used by the policyholder for business operations. Many small businesses in sectors such as manufacturing, wholesale, retail, consumer services, and consultations need BOP insurance. Having this coverage in place enables you to avoid unanticipated financial losses from events not covered under general liability insurance.
Who Is Covered by BOP and in What Situations Do You Need It?
A BOP covers you (the business) and any party or individual who faces liabilities as a result of working for you. Covered parties include:
- Your company and staff-When a customer, bystander, or another party accuse your business or an employee of causing them physical injury or property damage, the business owner’s policy provides financial protection. The policy also covers your business against the loss or damage of property in an event like fire or theft.
- Contract partners-As a general contractor or larger company, you may add a subcontractor to your BOP as an additional insured. That way, your policy will be their first line of protection against any liability claims arising from their work for you.
- Vendors-BOP may include indemnity coverage, protecting your suppliers against claims related to the equipment or products they supplied.
You should consider getting a business owner’s policy if the following conditions apply to your company:
- You have a physical location– A business’s building can incur damage in an event like a fire or storm, be it a store, an office, or even a home-based workspace. A BOP can pay to replace or repair physical damage to your physical operating environment if the loss results from a covered peril.
- You own or rent tangible business properties-Owning or operating business equipment/assets usually comes at a risk of theft or damage. These can include office furniture, stock, or computers. Digital resources like electronic customer records are at risk too. If you own or utilize these assets, consider protecting yourself with BOP insurance.
- You face third-party liability risks-You may be liable for customer injuries that occur on your premises. BOP can pay for compensatory damages that a court awards against your business after a successful customer claim. It can also pay your defense attorney fees in such cases.
Business Owner’s Policy Coverage for Social Media Risks
If your social media use, such as posts or images, attracts a libel, slander, advertising injury, or breach of privacy lawsuit, your BOP can protect you from such claims.
Comparing Business Owner’s Policy vs. Professional Liability Insurance
The general liability component of a BOP covers claims/lawsuits a third party may bring over a physical injury, and advertising injury, or damage to their property. In contrast, professional liability coverage is limited to a client’s financial loss claims arising from a professional error or omission.
Comparing BOP Insurance vs. General Liability Insurance
A BOP includes general liability and commercial property insurance protections and is usually cheaper than getting each policy separately. General liability doesn’t cover property losses or damages that a business may incur, such as theft or fire damage.
Does State Law Mandate Business Owner’s Policy?
While a BOP isn’t required by law, having it protects your business’s financial interests. You may need it for general liability and property damage protection in the following circumstances:
- A client demands that you have general liability insurance to give you contract work
- Commercial property insurance is part of your landlord’s lease terms/conditions
Operating a business without BOP in Sarasota, FL, leaves you exposed to multiple financial loss risks. To get adequate commercial insurance protection, contact Atlas Insurance in Sarasota, Florida today. Our experienced team can help fulfill your unique business insurance coverage needs.