The rewards of running a business come
with a high risk. As the size and scope
of your company increases, your insurance coverage needs to keep pace with the
opportunities for loss. Everything from
damaged buildings to injured employees to
delayed materials can have a dramatic
impact on your operations.
Business owners insurance policies
(BOP) are package policies that include
both property and liability coverage in a
cost-effective manner. Most policies also
include a number of additional coverage
options. These extra features help to round
out the comprehensive policy to meet the
specific needs of particular businesses.
“Historically, the BOP has been reserved
for small businesses in the office, apartment, retail, wholesale and service industries,” says Carrie Busic, CIC, regional
underwriting manager for small business
accounts at Westfield Insurance. “In recent
years, many carriers have begun expanding both the type and size of businesses
that are eligible for this inclusive product.”
Smart Business spoke with Busic about
how BOPs can offer companies complete
business coverage that brings total peace
of mind.
Why is BOP so important?
BOP is a cost-effective way for qualifying
business owners to obtain both property
and liability insurance coverage. Property
coverage responds when covered property
such as buildings or contents are lost or
damaged by a covered peril, such as a
windstorm or fire. If business owners are
forced to suspend operations due to a covered loss, property insurance can also provide coverage for the insured’s loss of business income. This helps businesses to continue meeting their financial obligations
during their recovery from the loss.
Liability coverage protects the insured’s
assets when a third party sues the business
for bodily injury or property damage.
What are the different types of coverages
available on a BOP policy?
In addition to the property and liability coverage that comes with BOP policies,
business owners can choose from a number of coverage options to customize their
program. Some of the different types of
coverage available include: coverage for
employee theft, valuable papers, accounts
receivable, computer equipment, fine arts,
spoilage of perishable items, equipment
breakdown, the insured’s professional
errors and omissions, and hired or non-owned auto coverage.
There are many more ways to customize
an insurance program with an agent’s guidance. An independent agent will know
about the many types of business insurance available and assist business owners
through the process of choosing the correct coverage for their businesses.
Where do business owners tend to have gaps
in their coverage?
Gaps tend to occur when companies
have exposures that are not encountered
by all businesses. Business owners need to
discuss any unique areas of concern with
their agents. Any potential issue that could
put a business at a standstill could require
coverage. Working with independent
agents will help business owners identify
the exposures faced by their business as well as the most cost-effective coverage
alternatives available to manage the risk
from those exposures.
For example, businesses that actively use
their basement to store goods or to run
their business should consider adding
sewer backup coverage. Companies whose
employees regularly have access to incoming or outgoing payments should consider
employee dishonesty coverage as employee theft can be extensive and affects businesses of all types and sizes.
It is also important that an insured review
all coverage limits to ensure that they are
adequate. If a company does not have
enough coverage to match the extent of
the damages, the cost to the business can
be enormous. Premium increases for limit
increases are often relatively minimal.
How often should business owners review
their coverage with their insurance agent?
Peace of mind is more than knowing that
your insurance carrier will take care of you
when you have a claim. True peace of mind
is also knowing you have the right insurance coverage before you need to use it. An
independent agent is really an adviser who
will help you make the best decisions
about what coverage you need. Once you
collaborate with your insurance agent to
build an insurance program that meets
your needs, it is important to revisit your
coverage periodically. Your renewal date
each year is a good time to have this discussion with your agent.
In between these periodic reviews, any
significant change in the customers, operation or assets of your business should also
trigger a meeting with your agent. It’s better to ask about possible insurance
changes due to your business’ changing circumstances than find out about coverage
gaps after a disaster strikes.
CARRIE BUSIC, CIC, is a regional underwriting manager for
small business accounts at Westfield Insurance. Reach her at
(800) 243-0210 ext. 2257 or [email protected].
