One of the easiest ways for small business owners to start their insurance portfolio is to get a business owners policy, better known as a BOP. These insurance packages offer several types of critical protection that most businesses need. However,simply telling your agent I want a BOP is not enough. You’ll have to make sure your BOP is also your best fit.
To tailor your BOP, you will need to trim and adjust the policy to ensure to fit your specific operations. Sometimes, these adjustments will mean adding a few extra pieces of protection. These adjustments will likely come from insurance endorsements, and there are a lot of them on the market. Consider how a few of these can make a difference for your business.
BOPs are insurance packages. They can come with limits and terms that will address the coverage needs of most small businesses. They usually offer the essential coverage that most businesses need, including:
- Property Insurance: Coverage will insure the business’s building, equipment, stock and other owned property. It might pay in case of damage from fire, theft, severe weather, vandalism or other hazards.
- Bodily Injury Liability (BIL) Coverage: There are times where your negligence might harm someone else. For example, a client might slip and fall in your store, get hurt and then expect restitution. BIL coverage can help you compensate this client.
- Property Damage Liability Coverage: If you mistakenly damage someone else’s property, such as while making repairs to their home, then this coverage can repay them for their losses.
- Products/Completed Operations Liability Coverage: When you manufacture a product or provide a service, there is a chance that the results might harm someone. This portion of your liability coverage will address the resulting damage costs.
- Business Interruption Coverage: Hazards in the business might force you to temporarily close. With business interruption coverage, you can receive compensation for income lost during the closure. It might help you cover employee salaries, utility costs or ongoing expenses.
The advantage of buying a BOP is that you will get critical protection in one place and for one price. This often helps you better streamline your overhead costs and risk management practices.
However, only certain small businesses qualify for this coverage to begin with. Additionally, there are circumstances where the limits of the standard BOP will not cover all your property and liabilities. You might need special endorsements added to the
BOP to offer the right protection. Your insurer can work with you to ensure that you get the appropriate extensions.
Why BOPs Need Endorsements
Within a BOP, there are various limits and exclusions. This means that the BOP won’t always cover everything and everyone within your business. However, by getting policy endorsements you can expand the terms of the BOP. You’ll still maintain your BOP, but once you buy endorsements, the BOP will be more comprehensive.
An insurance endorsement is simply a change to a policy. In some cases, insurers make endorsements for routine policy updates. They might occur when business owners move locations or increase their policy limits. However, endorsements can be beneficial in more important ways, too. Often, they allow the policyholder to expand their coverage. Many can be very complex, allowing you to tailor the endorsement specifically to your business.
Common BOP Endorsements
It’s important to consider asking about endorsements when you first enroll in your BOP. That way, you will get the necessary protection that your business will need from the start. Some of those you might need include:
- Employment Practices Liability Coverage: This coverage will apply when you hire, terminate or review employees. If they allege misconduct, such as discrimination, then EPLI coverage can help you respond.
- Cyber Liability/Data Breach Coverage: Following data breaches, hacks or losses, cyber liability insurance can help the business and customers recover their losses and protect themselves against identity theft.
- Equipment Breakdown Coverage: Should unexpected hazards cause vital equipment to stall, then this coverage can repair the machinery in question.
- Outdoor Signage Coverage: Some BOPs limit how much they will pay for outdoor signs or other items. This endorsement can expand protection to those items so you can afford to replace them.
- Errors & Omissions (E&O) Insurance: An E&O endorsement helps you pay others in case your professional services or advice cause them harm. In some industries, this is similar to malpractice insurance.
- Employee Dishonesty Coverage: Should an employee commit a dishonest act then this coverage can help. It might apply to losses that both businesses and customers face.
At times, many agents can include these endorsements on your policy as a matter of necessity. However, always ask your agent about what specialty endorsements they offer. They can then help you decide which options are in your best interests.
As your business grows and changes, you will likely need to revisit your policy and review endorsements from time to time. You might need to update or add new endorsements to the policy as you take on new risks and liabilities. That way, you’ll always have the appropriate coverage.