Commercial Insurance – Business Owners Policy, BOP
Commercial insurance may be available in an affordable, General Liability and property package policy known as a Business Owner’s Policy, or BOP, if yours is a small business to a medium-sized business operating in a low-risk business class.
A BOP combines General Liability insurance and Property insurance in a single commercial insurance policy. For many growing companies, BOPs offer great small business insurance coverage at very competitive premiums.
Business Insurance Package PolicyA General Liability and property package policy includes General Liability insurance to cover your commercial liability and property insurance for physical assets, such as contents, that are leased or owned. The package insurance policy may also cover loss of business income and extra expense resulting from an insured peril. A business insurance package policy generally insures lost or damaged property for replacement value, which means you’ll receive a settlement amount sufficient to replace the property without deducting for depreciation. The Property insurance portion of a General Liability and property package policy also covers other people’s personal property to the extent that the business owner is legally liable for the damage.
Commercial General Liability Insurance – CGLThe General Liability insurance coverage of a BOP is comparable to a typical Commercial General Liability (CGL) policy, providing protection against claims of bodily injury or property damage for which your business may be liable. Insurance to Protect You Against Lawsuits Unfortunately for every business owner, the chances of getting sued have dramatically increased in the last decade. Fortunately for small business owners, Here are just a few of the ways liability insurance can protect your business.
Who This Policy Would CoverThe General Liability policy extends liability protection to a number of people involved in your business.
- If your business is a partnership or joint venture, this policy would cover all partners or members and their spouses — but only if they’re sued because of something they did while acting in an official capacity for your business.
- If your business is a corporation or association, this policy would also cover all executive officers, directors, and stockholders — while acting in these official capacities.
- Your employees would also be protected — while they are acting in their capacity as employees.
- Your policy would also extend liability coverage to any subsidiary for which you own more than 50% of the voting stock.
- Any person or organization, such as a vendor, with whom you have a written agreement to indemnify, would also be protected against liability claims for any bodily injury or property damage that results from distributing or selling your products.
- Any newly acquired organization would also be protected under your policy for 90 days to newly acquired companies.
- Your legal representatives would also be afforded liability coverage under this policy — for any liability arising from the maintenance or use of your property in their care.
- While acting under your direction and within the scope of their responsibilities for you, any volunteers for your business would also be extended liability coverage.
What Expenses This Policy May Cover
A General Liability policy is designed to provide financial protection in case your business is ever sued or held legally responsible for some injury or damage. Typical expenses this policy may cover include:
- Amount the insurer spends to investigate or defend the claim or suit brought against you;
- Other costs incurred directly by the insurance company, such as attorney’s fees, witness fees, and police report costs;
- Any court costs or other costs assessed against you in a suit;
- Reasonable expenses you incur at the insurance company’s request to aid in your defense against a claim (such as your loss of income for a day spent in court);
- Any judgment or settlement arising from a covered suit;
- Any required interest on the judgment if the defense is unsuccessful;
- Medical expenses for injured parties;
- Premiums for any bonds required by a liability suit.
What General Liability Protection Can Provide
Bodily InjuryOf course, no small business owners like to think that something their company does or doesn’t do could injure, even kill someone else. But it’s comforting to know that if you are ever held legally responsible for such an injury, sickness or disease, General Liability coverage will pay the affected person or organization for:
- The cost of care;
- The loss of services; and
- Restitution for any death that results from the injury.
Property DamageRegardless of how careful you are, you may find yourself in a situation where something your business does or doesn’t do damages someone else’s property. Even if you don’t physically injure that property, you may do something that actually prevents its owner from continuing to use it. If so, you’ll rest easier knowing that General Liability coverage will compensate the property’s owner for either:
- The physical damage to the property; or
- The loss of use of that property.
General Liability typically includes liability protection for your company’s completed products or services. This means that, if an injury ever resulted from something your company made or some service your company provided, your policy would pay for the resulting damages and any legal expenses (up to your policy’s limit). And if you were sued because of these damages, your policy would cover related defense costs regardless of who was at fault — in addition to your policy’s limit.
Contractual LiabilityGeneral Liability coverage extends to any liability you may assume by entering into a variety of different types of contracts, including:
- A uilding lease;
- Any easement of license agreement;
- An agreement to indemnify a town or city if required by ordinance;
- An elevator maintenance agreement.
Liquor LiabilityAs long as you’re not in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages, the General Liability policy will protect you in case someone claims you are legally liable for a liquor-related accident. This means that, as long as you don’t charge for the alcohol, you would be covered if you occasionally distribute alcoholic beverages — such as at any annual company picnic or a holiday office party.
If one of your employees ever sues you for an injury you supposedly caused, your General Liability policy would not cover any damages. Rather, this type of protection would be provided by your Workers’ Compensation policy.
Fire, Lightning or Explosion DamageWhether you rent or own your business property, you’ll find it reassuring that the insurance plan for small businesses includes coverage for damage to property of others resulting from fire, lightning or explosion damage caused by you. Better yet, this coverage applies to other parts of the building you occupy that may be damaged due to your negligence. For example, if you rent the second floor of a building, and through your negligence cause fire damage to the first floor, your liability policy will also cover the damage you’ve caused to your neighbor’s office space.
Hired Auto & Non-Owned AutoHired Auto & Non-Owned Auto coverage is typically added as an endorsement on a General Liability policy. When there are no vehicles titled in the company name 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. However, the vehicle must be rented in your company’s name and this does not replace the physical damage coverage that applies to any damage you cause to the vehicle you are renting. You should still obtain physical damage coverage from the rental agency.
Non-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. This coverage will not protect you or your employee personally, only your personal auto policy will do that.
Legal Defense CostsEven if your company is not legally responsible for some claim someone makes against you, it can be quite expensive to defend yourself against such claims. Fortunately, your liability policy will typically pay for:
- Any defense costs incurred directly by the insurance company, including attorney’s fees, witness fees, and police reports;
- Any court costs or related costs you’re charged in connection with a legal suit;
- Reasonable expenses you incur at the insurance company’s request to assist in your defense (such as loss of earnings if you have to testify in court). Your liability policy will also pay the premium for any bond the court requires, making sure judgment will be paid if you are found legally liable for some injury or damage.
If someone is accidentally injured either by you or at your business site, General Liability coverage will pay for medical and funeral expenses incurred within one year of the accident (up to your policy’s liability insurance limit). For example, if a customer slipped and fell on your premises and had to undergo medical treatments.
Personal InjurySomething your business either does — or fails to do — may not physically harm a person, but it may personally injure them. If so, you’d want to know that your liability coverage would protect you from any lawsuits arising from such an injury. Most General Liability policies provide coverage if you are accused of: • publishing (either verbally or in writing) 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 InjuryIf you are ever sued because of something that happened during the course of advertising your company’s own goods, products or services, this policy will provide valuable liability protection. Such advertising injuries may result from: • publishing (either verbally or in writing) 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.
Commercial Insurance for Your Business – BOPWhy wouldn’t every company choose General Liability and property package policy for their business insurance, with all the advantages listed above? First, not every business is eligible for BOP coverage. If a company is involved in high-risk or highly-specialized operations, if it occupies large premises or conducts most of its services off-premises, or if requires higher limits of liabilities than BOP packages offer, the company will have to find other forms of commercial insurance.
Second, General Liability and property package policies carry a single limit for bodily injury and property damage claims. For the right kind of business, the single limit in the BOP is a simple, adequate feature. But if your business has higher than average product liability risk, the fixed limits of a BOP may not be sufficient.
General Liability Insurance QuotesWhile General Liability and property package policies are competitively priced as a category, there will be variances in the premiums charged for different small business insurance policies. Contacting several insurance agents and/or researching commercial insurance policies online will help you receive competitive insurance quotes for the coverages you need. Also keep in mind that General Liability and property package policies only satisfy a company’s needs for Property and General Liability insurance. General Liability insurance does not protect your business from professional errors or negligence that are normally covered by a Professional Liability insurance policy.