Business Owners: The Surprising Ways BOP and General Liability Differ

Name: Shield Insurance Agency
Address: 3214 Chicago Dr, Hudsonville, MI, 49426
Telephone: 616-896-4600

Posted on August 30, 2023August 21, 2023 by Shield Insurance Agency

Shield Insurance Blog | Business Owners | Business Insurance | Start A Quote Today!

How is a Business Owners Policy (BOP) Different from General Liability?

When it comes to protecting your business, insurance is a must. However, with so many different types of insurance policies available, it can be confusing to determine which one is right for you. Business owners often consider two common types of insurance: a Business Owners’ Policy (BOP) and General Liability insurance. While they may seem similar, there are some key differences between the two. In this blog post, we will explore how a BOP differs from general liability and help you understand which one may be the best fit for your business.

What is a Business Owners Policy (BOP)?

A Business Owners Policy, or BOP, is a comprehensive insurance package for small to medium-sized businesses. It combines several types of coverage into one policy, providing a convenient and cost-effective solution for business owners. A BOP typically includes property, liability, and business interruption insurance.

What Does a BOP Cover?

A BOP provides coverage for a wide range of risks that businesses commonly face. Here are some of the key coverages included in a typical BOP:

1. Property Insurance: This coverage protects your business property, including buildings, equipment, inventory, and furniture, against damage or loss caused by fire, theft, vandalism, or other covered perils.

2. Liability Insurance: Liability insurance protects your business from claims of bodily injury or property damage caused by your products, services, or operations. It also covers legal fees and settlements if you are sued.

3. Business Interruption Insurance: If your business is forced to temporarily close due to a covered event, such as a fire or natural disaster, business interruption insurance can help cover lost income and ongoing expenses, such as rent and payroll.

What Isn’t Covered by a Business Owners Policy?

While a BOP provides comprehensive coverage, there are some risks that are typically not covered. These may include:

Professional Liability: If your business provides professional services, such as consulting or advice, you may need a separate professional liability insurance policy to protect against claims of negligence or errors.
Workers’ Compensation: If you have employees, you are required by law to carry workers’ compensation insurance, which provides coverage for medical expenses and lost wages if an employee is injured on the job.
Auto Insurance: If your business owns vehicles or if employees use their personal vehicles for business purposes, you will need a separate commercial auto insurance policy to cover accidents and liability.

What Other Types of Coverages Are Needed?

In addition to a BOP, there are several other types of insurance coverage that may be necessary depending on the nature of your business. These may include:

Professional Liability Insurance: This coverage is essential for businesses that provide professional services, such as doctors, lawyers, or architects. It protects against claims of negligence, errors, or omissions.
Cyber Liability Insurance: In today’s digital age, businesses are increasingly vulnerable to cyber threats. Cyber liability insurance provides coverage for data breaches, cyberattacks, and other cyber-related risks.
Employment Practices Liability Insurance: This coverage protects your business against claims of wrongful termination, discrimination, harassment, or other employment-related issues.

Do You Need a Business Owners Policy?

Whether or not you need a BOP depends on the size and nature of your business. If you are a small to medium-sized business owner, a BOP can provide comprehensive coverage at an affordable price. It offers convenience by combining multiple coverages into one policy, saving you time and money. However, if your business has unique risks or requires specialized coverage, you may need additional policies to ensure adequate protection.

What Types of Businesses Are Eligible for a Business Owners Policy?

A BOP is typically designed for small to medium-sized businesses that operate in low-risk industries. Some examples of eligible businesses include retail stores, restaurants, offices, and small manufacturing operations. However, eligibility requirements may vary depending on the insurance company, so it’s best to consult with an insurance agent to determine if your business qualifies for a BOP.

What Does a Business Owners Policy Cost?

The cost of a BOP depends on several factors, including the size of your business, the industry you operate in, and the coverage limits you choose. On average, a BOP can cost anywhere from a few hundred dollars to several thousand dollars per year. To get an accurate quote for your business, it’s best to contact an insurance agent who can assess your specific needs and provide you with a customized quote.
In conclusion, a business owner’s policy (BOP) and general liability insurance are two different types of coverage that offer varying levels of protection for your business. While a BOP provides comprehensive coverage for property, liability, and income, general liability insurance specifically covers claims of bodily injury, property damage, and personal injury.

It’s important to assess your business’s specific needs and consult with an insurance agent to determine the appropriate coverages for your situation. Shield Insurance Agency represents over 40 insurance companies and can provide you with a free quote tailored to your business’s needs. Contact Shield Insurance Agency at (616) 896-4600 for a free quote today or start the quoting process by visiting this LINK and an agent will be in touch soon.

More great blogs by Shield Insurance Agency

How Should You Insure Your Home-Based Business?

Posted on December 30, 2020June 7, 2023 by Shield Insurance Agency

Shield Insurance Blog | Business | Business Insurance | Start a quote today!

Three Basic Coverage Options Home-Based Business Owners Should Know

Updated November 19, 2020

Many businesses begin in the home. As of 2018, there were 30.2 million small businesses operating in the United States, and 50% of them were home-based.

A home-based business offers many advantages, including low startup costs, flexibility, tax benefits, and freedom from commuting. Like any business, a home-based operation requires insurance. Several insurance options are available so business owners can choose the one that best meets their needs.

Why You Need Home-Based Business Insurance

While home-based businesses may operate on a small scale, they face many of the same risks as their larger counterparts. These include third-party claims, auto accidents, and damage to company-owned property. To protect themselves from losses, business owners must purchase adequate insurance.

Some home-based business owners might assume their homeowner’s insurance will cover claims arising from their business activities. This is a faulty assumption because most homeowner’s policies contain business-related exclusions and limitations. For example, many policies exclude structures not attached to the dwelling (like a detached garage or shop building) if they’re used for business purposes.

Types of Coverage

Small business owners have three basic options for insuring home-based operations. They can cover business exposures via endorsements to a homeowners policy, purchase an in-home business policy, or buy a business owner’s package policy. Which option is best depends on the size and nature of the business and the cost of insurance.

Homeowners Policy Endorsement

Many home-based businesses depend on equipment like computers and printers. Unfortunately, most homeowner’s policies provide a very low limit (typically $2,500) for equipment on the residence premises that are used for business purposes. Business owners may be able to double or triple that limit by purchasing an endorsement for a modest additional premium.

Business owners may also have the option to add a homeowners liability endorsement to their policy. The endorsement covers third-party claims by customers or delivery people for injuries sustained on their property. It’s typically available only if policyholders have few business-related visitors.

In-Home Business Policy

An in-home home business policy affords broader coverage than a homeowners endorsement and may cost less than $300 per year. It’s a middle ground between a homeowners policy and commercial insurance. Policies typically include business personal property and general liability coverages. Optional coverages like business income, valuable papers, and accounts receivable may also be available.

In-home business policies can vary widely from one insurer to the next. Before you buy a policy, be sure you understand what it does and doesn’t cover.

Business Owners Policy

A business that needs more coverage than an in-home policy provides can choose a business owner’s policy (BOP). A BOP is a commercial package policy designed for small businesses. It includes commercial property, business income, and general liability coverages.

The general liability section covers claims for bodily injury or property damage, including claims against the business that arise out of its products or completed work. It also covers Personal and Advertising Injury Liability and claims based on damage to rented premises. A wide variety of endorsements are available for broadening or restricting coverage. Small businesses pay an average annual premium of $1,191 for a BOP.

If your home-based business sells a product or does construction work, be sure your liability insurance includes coverage for products and completed work.

Other Coverages To Consider

Homeowner’s policies, in-home business policies, and BOPs provide general liability and property coverages only. Here are some other coverages home-based businesses should consider.

Commercial Auto Insurance

Many home-based businesses use vehicles in their day-to-day operations. Business owners should not rely on a personal auto policy to insure business-use autos unless they have verified with their insurer that those vehicles are covered. Personal auto insurers generally won’t insure vehicles registered to a business (other than a sole proprietorship). Moreover, personal policies don’t cover trucks larger than a pickup or vehicles used for delivery.

A business auto policy includes commercial auto liability and physical damage coverages. It’s a flexible policy that can be tailored to the needs of a business by the use of endorsements. It can cover vehicles the business owns or hires as well as autos it doesn’t own (like employees’ autos) that are used in its operations.

Errors and Omissions (Professional) Liability

Accountants, lawyers, engineers, consultants, and other businesses that provide a service or advice to clients may need errors and omissions (E&O) liability insurance. Also called professional liability coverage, E&O insurance covers third-party claims for financial losses that result from mistakes made by a business when serving clients. Most E&O policies are written on claims-made forms.

Small business owners typically pay between $500 and $1,000 per year for an E&O policy.

Workers’ Compensation Insurance

Like all businesses, home-based companies must comply with state workers’ compensation laws. The obligation to buy workers’ compensation insurance is typically determined by the number of workers a business employs. Many states require businesses to purchase coverage if they employ one or more workers.

Most states don’t require sole proprietors to purchase workers’ compensation insurance if they don’t employ any workers. Many states allow sole proprietors to purchase coverage for themselves