What are the Three Components of a BOP?

What are the Three Components of a BOP?

Small business owners need convenience and affordability out of their commercial insurance solutions. After all, you don’t have the time or money to waste on your essential benefits. Therefore, one of the best coverage solutions for small business owners is a business owners policy (BOP). 

BOPs are insurance packages that are designed with the needs of small operations in mind. They usually provide three essential benefits that most business owners need: Property insurance, general liability insurance and business interruption coverage.  

Each of these components are critical to supporting your business’s overall financial security and sustainability. Let’s take a closer look at how they work. 

Property Insurance 

Your business includes physical property that it owns and relies on to function. It might be a company building, furnishings and equipment, & stock and inventory. All these items have value, and they are also susceptible to numerous risks, such as fires, theft, weather damage or other. Though these losses are usually unexpected, they can still be costly. Property insurance is designed to help you afford the costs of repairing or replacing these items of property. 

Liability Insurance 

There are times when your company’s negligence might harm someone else. For example, someone might fall and get hurt in your store, or you might leave a tap running at a client’s house and flood their upstairs. In either case, they might sue you for their losses.  

While you might not have intended to make the mistake that triggered this problem, it still might be your responsibility to pay for the ramifications. Commercial liability insurance can help you cover third-party losses related to property damage, bodily injuries, personal injuries like libel or slander, advertising injuries, product liabilities and more. The coverage can also cover your defense costs if you have to go to court to settle the claim. 

Business Interruption Insurance 

Suppose that a fire breaks out in your store, or a severe storm damages your restaurant’s roof and cause interior damage. You might have to close until you can assess the damage and make the proper repairs.  

However, this could lead to a loss of income and financial struggles could arise. To help you manage these costs, business interruption coverage can come in handy. It can help you recover lost income and continue to pay expenses, such as employee salaries, despite the closure. Some policies will even cover the costs of temporarily relocating your business. 

Keep in mind, even though your BOP can provide exceptional benefits, it is often just a starting point for your commercial insurance package. You might need other coverage alongside it, such as workers’ compensation, commercial auto, errors & omissions and other specialty insurance. Still, the BOP can remain the small business’s foundational level of protection against the common risks that might challenge it.