Business insurance offers needed protections

Janet Arrowood

Do you own or control a small business? Do you have a business owner’s policy (BOP)? If not, you might want to look at getting a BOP. Why? Because too many things can happen that could affect your bottom line and financial stability.

Once while walking down Main Street, I spotted a sad sign. The gist of the message: We’re closed for an unknown period due to a water leak. How will the damage be repaired, the equipment replaced and employees paid? Hopefully, the owner had an appropriate BOP or similar insurance.

What is a BOP and why should you consider buying one? A BOP is a two-part policy since it covers both general liability and protection for your business property.

A BOP covers a number of unlikely, but possible, damaging events. Some of the most common coverage includes bodily injury or property damage to others, defense costs for such covered situations as libel and slander, replacement or repair of such damaged business property as furniture and computers. Other coverages are available using endorsements or riders.

Other coverages often included in the BOP but other times provided by endorsement or rider include coverage of your location with its merchandise, contents and equipment; expenses associated with business interruption and loss of income; injuries to others in your facility, office, restaurant or store; and replacement of part or all of employees’ lost wages. Replacement of owners’ compensation usually requires a separate endorsement, rider or other type of policy.

If you’re a service provider or work from a home office, many of your customers require business liability insurance under the terms and conditions of their contracts — one of the components of a BOP. Some clients might even want to be added as an additional insured on your BOP.

According to, some of the businesses that typically need a BOP include apartment buildings, barber shops, beauty salons, consulting firms, floral shops, restaurants and retail stores. A BOP for a small business isn’t expensive. Rates and liability limits vary considerably. Based on personal experience, you should be able to find a quality policy for under $1,000.

It’s important to discuss particular scenarios with an insurance professional familiar with your type of business, industry and clients since BOPs are not a one-size-fits-all proposition. It’s also important to re-evaluate your property and liability coverage limits at least yearly to ensure you’re adequately covered as your business grows and risks increase.

Another consideration is what a BOP doesn’t cover. If you operate an accounting, architectural, engineering, financial services, legal, medical or other professional practice, a BOP offers only part of what you need. You also need to consider some form of professional liability insurance, often referred to as errors and omissions or malpractice insurance. If you serve on a board of directors, consider purchasing directors and officers insurance.

Your personal auto insurance isn’t adequate if you use your personal vehicle for such business-related activities as driving to client sites, delivering products or traveling to the airport for a business trip. Your insurance professional can provide separate commercial auto insurance policies and riders. If you drive to a client site — especially if that client is a government organization — you could be required to produce proof of commercial auto insurance.

The preceding business list and BOP coverages are far from comprehensive. It’s essential you seek the services of a licensed insurance professional.