Business Owner's Policy (BOP) refers to the insurance package, which is a combination of both property insurance and liability insurance. The reasonable price tag makes this option more attractive for the small businesses instead of buying separate policies for property insurance and liability insurance. Business owner's policy is not suitable for the large businesses because they do not fulfill the eligibility criteria for this policy. Insurance companies feel that large business involve greater amount of risk so they do not consider them for BOP.
Eligibility Criteria:
On the contrary, small and medium businesses are suitable candidates for business owner's policy. Eligibility criteria for this policy are liability limits, premises size, nature of the business and activities performed offsite. These factors along with financial stability, location of business, security measures, and quality of construction and possibilities of fire determine the price of the BOP.
There are vast variety of businesses are eligible for business owner's policy. Some of the examples are bakeries, fast food restaurants, convenience stores and restaurants providing fast food, wholesale and retail traders and many other businesses related with service industries. Interestingly, restaurants providing full services may be denied the advantage of this policy. Other businesses that may find eligibility difficult are bars, auto repair mechanics and manufacturers.
Let us discuss the property insurance and liability insurance separately. If you have property insurance, you are entitled to get the reimbursement for the losses to you business property. You have two options to choose from for property insurance. First is the Standard Form. In this option you will get compensation only if the losses have occurred due to certain predefined perils. On the contrary, if you choose Special Form, then you policy will cover losses due to any reason. However, make sure that no peril is specifically excluded in the policy. Not only the risk of your business property is covered, but the risk of machines and plants permanently installed like air conditioners, business inventory, furniture, and also property stored at other sites.
If you have the liability insurance, then the company will reimburse the amount if any visitors get injured at you premises or any of your products cause an injury to the customer. You can get some additional advantages by paying extra premium coverage like losses due to dishonest employees, Robbery, Burglary and mechanical breakdown.
Protecting business assets against loss is as important as the insurance cover for home and the contents. However, you need to make sure that the amount covered is not inadequate. Estimate both replacement value and actual value of your property. BOP also covers the losses occurred due to the damage to property or an instance of injury because either your business did something or it didn't do something.
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