What does a businessowners 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.) One package purchased by small and mid-sized businesses is the businessowners 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.
BOPs include:- Property insurance for buildings and contents owned by the company -- there are two different forms, standard and special, which provides more comprehensive coverage.
- 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.
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.
Workers Compensation Workers Compensation protects your employees should an injury occur during the course of employment. Payments are made to the injured party and can consist of medical payments, loss of wages or therapy. All states require all employers to carry Workers' Compensation insurance and each state has individual laws that must be met.At the very minimum, Workers' Compensation insurance policies will cover an employee's medical expenses and reimburse him or her for some percentage of lost wages. Almost all states are "open market", which means the coverage is underwritten by private insurers; and some states are "closed" or "monopolistic" - the coverage is underwritten by a state-sponsored fund (ND, OH, WA, WV, WY). In states that are open, rates can vary between insurance carriers depending on the type of business the carrier is attempting to attract. In an open market, the rates for workers' compensation are competitive.Employers with one or more employees are subject to the provisions of their states Disability Benefits Law. This law provides benefits to employees who may be become disabled because of injuries/sickness off the job or that may arise from other conditions such as pregnancy. Payments for these types of benefits are only allocated for the payment of wages... unlike that of workers' compensation which provides payment for medical costs.Rates for these policies are dependent on the degree of hazard that each occupation carries. Each occupation is coded and defined by state laws. Premiums are determined by the amount of payroll in each occupation code and is subject to annual audit for verification.
Property & Liability Property insurance can cover the buildings that you own and/or business property and inventory against physical loss or damage.If you don't own your building, you'll still need contents coverage. In the most policies, property insurance for business contents covers furniture, fixtures, inventory, office equipment and other supplies stored at your facility or off-premises. You may insure those items for replacement cost or for actual cash value (ACV), which pays only for the depreciated value of the property. Replacement cost policies have higher premiums, however they can help your business recover from a loss faster, since you can replace all of the lost or damaged property with new items. If you lease some of the equipment at your business, the leasing company may require that you insure the property at replacement value.
Liability Insurance Liability insurance is designed to protect the business against losses even if they are negligent or liable for damage, injury or loss to another's property, reputation, or health. Typically, damages, legal defense fees and settlement charges are paid by the insuring company when a claim is filed against the business. Bodily Injury - Liability coverage may pay the affected person or firm for the cost of care, the loss of services and restitution for death that results from an injury.Property Damage - In the event your business causes damage to, or causes the loss of use of someone else's property, property damage coverage may pay for the value of the physical damage to the property; or the loss of use of that property.
Products and Completed Operations A policy may provide coverage for your company's completed products or services. If an injury occurs due to the use of your products or services provided, the policy would pay for the resulting damages and any legal expenses up to the policy limits.
Contractual Liability General Liability coverage extends to any liability you may assume by entering into a variety of different types of contracts such as a building lease.
Liquor Liability If you're not in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages, the policy may protect you in case someone claims you are legally liable for a liquor-related accident.
Hired Auto & Non-Owned Auto Hired Auto & Non-Owned Auto coverage if requested is typically added as an endorsement on a policy. If their are no vehicles owned by the company this coverage will meet the contract requirement for Commercial Auto coverage. Hired Auto coverage replaces or augments the liability coverage offered by auto rental agencies for exampleNon-Owned Auto coverage protects your company in the event that your company is sued as a result of an auto accident that you or one of your employees has in a personal vehicle while on company business.
Medical Payments If someone is injured by you or at your business site, the policy may pay for medical and funeral expenses incurred, up to policy limits, within one year of the accident . For example, if a customer tripped and fell on your premises and had to be hospitalized.
Personal InjuryMost General Liability policies provide coverage if you are accused of:
- Publishing inaccurate information that slanders or libels a person or organization;
- Publishing material that violates a person's right of privacy;
- Falsely arresting, detaining or imprisoning someone;
- Maliciously prosecuting someone;
- Wrongfully evicting someone.
- Advertising Injury
In the course of advertising your company's own goods, products or services, this policy will provide valuable liability protection against advertising injuries resulting from:- Publishing inaccurate information that slanders or libels a person or organization;
- Publishing material that violates a person's right of privacy;
- Copying some other company's advertising ideas or style of doing business;
- Infringing on another company's copyright, title or slogan.
Specialty Liability General Liability insurance does not protect your business against claims of professional negligence, or for failure to perform your professional duties. For this type of coverage, the business will need a separate Professional Liability policy.Professional Liability Insurance protects your business against loss from a claim of alleged negligent acts, errors or omissions in the performance of your professional services. The policy normally pays for any resulting judgments against you, including court costs, up to the coverage limits on your policy.
Employment Practices Liability - Employment practices liability coverage protects an employer against an employee's claims such as:
- Wrongful Termination
- Sexual or Workplace Harassment
- Wrongful Discipline
- Age Discrimination
- Violation of Employment Discrimination Laws
- Violation of Americans with Disabilities Act
- Wrongful Failure to Employ or Promote
- Wrongful Deprivation of a Career Opportunity
- Breach of Employment Contract
- Employment Related Misrepresentation
- Failure to Adopt Adequate Workplace Employment Policies & Procedures
- Illegal Retaliatory Treatment
- Invasion of Privacy
- Negligent Evaluation
- Employment Related Wrongful Infliction of Emotional Distress
The purpose of this insurance is to protect the corporation, directors, officers and employees from alleged employment-related wrongful acts. Some features to having this policy are Coverage for front/back pay, attorneys' fees and compensatory damages, for punitive damages where insurable by law, for actual or alleged retaliatory treatment, varying retention's for class action suits or other claims, for emotional distress or mental anguish, no purposeful or intentional acts exclusion or reductions in force or mass layoffs exclusion.**Coverage varies from company to company.
Directors & Officers Liability Directors and officers liability coverage protects directors and officers against claims alleging negligence, errors and omissions, misstatements, misleading statements and misrepresentations.Most organizations have a general liability policy that protects its directors and officers against negligent acts that result in bodily injury or property damage. However, general liability does not protect against alleged wrongful acts or omissions, including breach of duty, which do not result in bodily injury.Directors and officers coverage protects your executives from potential lawsuits resulting from key decisions or management practices-lawsuits that may target their personal assets.A comprehensive Directors & Officers liability policy can provide the following: Insured's include
- Directors
- Officers
- Committee Members
- Volunteers
- Trustees or Employees
- Comprehensive D&O Insurance can:
- Defend Prior Acts
- Defend Non-Monetary Damages
- Provide Duty to Defend Coverage
- Defend Libel, Slander & Defamation of Character
- Defend Discrimination, Sexual Harassment and Wrongful Discharge
Crime coverage can extend to those who may have access to your companies funds: - Employee Dishonesty
- Money & Securities
- Forgery & Depository
Pollution / Environmental Liability Environmental coverage generally falls into two categories. Errors and omissions coverage, also known as professional liability, protects a professional who mistakenly designs a facility that causes pollution in some way. Pollution incident coverage protects professionals on the job in case they cause a pollution incident by perhaps backing into a sewage pipe.Policies for environmental consultants can feature broad coverage specifically tailored to the specific needs of a professional in the environmental field. Coverage may include pollution incident and asbestos coverage as well as retroactive coverage for eligible firms.
Commercial Vehicles Commercial auto liability coverage provides protection for any business-owned or leased commercial vehicle. Policies usually include collision and damage coverage as well as coverage for property and personal damage to others.Just like you need auto insurance for your own car, you need business auto insurance to cover your business-owned or leased vehicles. If you, or any of your employees have an accident in your business's car, you may be liable for bodily injuries, lost wages or any damage caused. Typical coverage includes: Bodily Injury Liability - Coverage for damages that involve bodily injury to others for which you become responsible under law. Property Damage Liability - Coverage for damage to property of others for which you become responsible under law. Medical Payments - Coverage for reasonable and necessary medical expenses and funeral services for those who are accidentally injured while in your automobile or while getting into or out of your automobile. Personal Injury Protection - Coverage for medical, hospital, rehabilitation, loss of wages or loss of services costs resulting from injury to you or any resident family member. In case of death to the insured or a resident family member, death benefits and survivor benefits, if applicable, will be provided. Other coverage that may be obtained include: Comprehensive - Protection for the loss of or damage to your vehicle and its equipment from all causes except collision, subject to the deductible on the policy. Collision - Protection for the collision damage to your automobile and its equipment, subject to the deductible on the policy. Uninsured Motorist - Coverage allows you to recover bodily injury damages due to an accident where the other party does not have insurance, and is found legally liable. Underinsured Motorist - Coverage allows you to recover bodily injury damages due to an accident where the other party is found legally liable and does not have adequate liability limits. Additional Expense - Coverage for necessary additional expenses incurred as a result of a loss for which you are protected under comprehensive or collision coverage. These expenses include rental cars, food, lodging and other incidental expenses. Hired Auto Liability Coverage - Covers liability for automobiles hired under contract on behalf of or loaned to the named insured. Hired Auto Physical Damage - Coverage for an automobile of any type, hired, borrowed or leased on a short term basis for use in the insured's business. Employer's Non-Ownership Liability - Coverage for a private-passenger automobile used in the business of the named insured by any person, or the occasional and infrequent use of a commercial automobile in the business by any of your employees. Misc. Commercial Insurance Typical coverage includes:
- Ocean Marine / Hull & Cargo
- Boiler & Machinery / Equipment Breakdown
- Crime
- Credit
- Libel & Slander
- Special Event
