Most small businesses have a Business Owners Policy or a BOP.
There are a lot of advantages to a business purchasing a BOP, but there are also a significant number of disadvantages.
First, let’s look at what a BOP is.
BOPs, as opposed to a Commercial Package Policy, are insurance policies designed by insurance companies as a package of insurance coverages meant to protect small businesses.
They are meant to be kind of a “one size fits all” for the businesses that they cover.
The main components of a BOP are based on two insurance coverages.
1. General Liability
2. Property Coverage
They also often include add-on coverages that most people don’t think about such as:
- Debris Removal
- Accounts Receivable
- Fire Department Service Charge
- Business Income
- Increased Cost of Construction
- Cyber Coverage
- Employee Theft Coverage
And the list could go on.
They usually have much better pricing than if you tried to go and purchase all of the coverages individually.
While this is easy and simple and cheap, it can create a number of problems and give a false sense of security to the business owner.
For example, a business owner may look at their coverages and see that they have Cyber Liability coverage with a limit of $50,000.
What most people do not do is look at what that is actually covering and then they have a Cyber claim and seek coverage on their policy only to find that the coverage was very narrow and have the claim denied.
It also often leaves off important coverages that can be added but that are not automatically included.
For example, every company that has employees should have Employment Practices Liability (EPLI). This protects an employer from lawsuits made against them by their employees.
This coverage is often not included in BOPs and is very often overlooked by the insurance agents selling the policy creating a gap in coverage.
BOPs are extremely useful and affordable but in order to properly cover businesses, the agent and business owners must make sure that all of the insurance coverages needed are included in the policy.
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