"Additional Insurance Coverages" In Your Insurance Policy Can Make You Feel Like Your Business Is Protected, But They Can Be Deceiving

On most insurance policies there will be a long list of “Additional Coverages” that the insurance company adds to your policy


These additional coverages are designed to plug gaps in the policy. There are both good and bad sides to this. 


The good side of this is that the business quite a few coverages that they may not have thought of. This is especially true on insurance policies called Business Owners Policies (BOP). These policies are a standardized box of coverages meant to cover a variety of low-risk businesses. 


These BOP’s include a wide variety of coverages and are usually less expensive than if you purchased all of the coverages a la carte. This type of standardization; however, can cause problems with the coverage and provide a false sense of security. 


This arises for several reasons. 


First is that very few businesses are the same. One business may need more coverage for their Accounts Receivable than what the BOP limits allow for. Another business may need more coverage for Business Income.


The other reason is again, that it provides a false sense of security. Businesses and unfortunately some insurance agents assume that since the coverage is listed that it will provide both the limit necessary and the coverage necessary. 


The problem is that many times the coverage is insufficient. The coverage itself is often restricted so that it only applies in a very narrow set of circumstances. The limits also are often a mere fraction of what is needed to protect the business.


This is very common with Cyber Liability. It is on many BOPs but it is so narrow in its scope and so low in its limits that it is almost better to not have it. But business and even agents will sometimes look at that and think that they are covered. 


BOPs often can be customized to some extent to provide the coverage necessary, but only if the business and the agent know what they need in terms of coverage and limits. 


Be aware of the limitations of BOP insurance policies. A knowledgeable agent can be a huge asset to your business.