does a business owners policy cover?
Insurance companies selling business insurance offer
policies that combine protection from all major
property and liability risks in one package. (They
also sell coverages separately.)
package purchased by small and mid-sized businesses
is the business owners policy (BOP). Package
policies are created for businesses that generally
face the same kind and degree of risk. Larger
companies might purchase a commercial package policy
or customize their policies to meet the special
risks they face.
Property insurance for buildings and contents owned
by the company -- there are two different forms,
standard and special, which provides more
Business interruption insurance, which covers the
loss of income resulting from a fire or other
catastrophe that disrupts the operation of the
business. It can also include the extra expense of
operating out of a temporary location.
Liability protection, which covers your company's
legal responsibility for the harm it may cause to
others. This harm is a result of things that you and
your employees do or fail to do in your business
operations that may cause bodily injury or property
damage due to defective products, faulty
installations and errors in services provided.
BOPs do NOT cover professional
liability, auto insurance, worker’s compensation or
health and disability insurance. You'll need
separate insurance policies to cover professional
services, vehicles and your employees.
How can I insure my home-based business?
Let's face it. Launching and running a business
takes capital, motivation and yes, even physical
stamina to handle the stress and demands of a new or
growing venture. And it's risky. In fact, one out of
every five businesses fails within the first five
years of opening.
Handling inventory, scheduling time, purchasing
supplies, handling payroll -- there are a myriad of
procedures every home or small business entrepreneur
needs to know, but one of the most critical and
often neglected is buying proper insurance coverage.
TAKING A BUSINESS INVENTORY
What would happen if a fire or other disaster
destroyed your property, making it impossible for
you to get back to business right away? Would you
remember what property had been destroyed? One way
is by taking a complete inventory of all your
personal business property, determining its value,
and deciding what's worth insuring. Having an
up-to-date business inventory will help you get your
insurance claim settled faster, verify losses for
your business' income tax return and help you
purchase the correct amount of insurance. Start by
making a list of personal business property,
describing each item and noting where you bought it
and its make and model. Clip to your list any sales
receipts, purchase contracts, and appraisals you
WHAT'S THE RIGHT COVERAGE FOR YOU?
Then there's the question of what types of coverages
you'll need. Aside from personal business property,
there is liability insurance, business income,
insurance for the building, boiler and machinery,
human failure, employee protection and management
protection, among others. The type of coverage you
need depends on a number of factors including what
kind of business you operate.
HOW TO KEEP COSTS DOWN
Start your search for a policy with trade
associations or business groups. In many cases,
these organizations are able to provide reduced
insurance rates based on the volume of business they
can offer the insurance company. They've also
negotiated coverage specific to your type of
business, which can save you significant time in
determining what you should cover. Also make sure
that you are working with an agent that understands
your type of business.