December 11, 2018

Business Owner's Policy (BOP)

Commercial - Small Business

The Business Owners Policy or BOP, is a package policies specifically designed for small business.  A package simply means it includes more than one type of coverage, typically Property and Liability coverages.  The great thing about the BOP policy is that it typically includes the majority of the coverages you will need, but can also be customized to your specific needs. 

Below are some of the coverages typically available (but not always included) on the BOP policy:

  • Building - If you own your building or if you are required to cover the building in your lease, we can include Building coverage on the BOP.  This coverage is usually on a Replacement Cost basis up to your chosen policy limit.

  • Business Personal Property - The policy can include coverage for pretty much all of you Business Personal Property (BPP), which can include property you own or lease (office furniture, equipment, and inventory), as well as tenant's improvements and betterments.  Some companies include Computers in the BPP limits, others provide a separate limit for Computers.  This coverage is usually on a Replacement Cost basis up to your chosen policy limit.

  • Business Income -  This coverage pays for your lost income in the event of a covered Property loss.  For example, if you own a restaurant and a fire destroys your building putting you out of business for 9 months while the repairs are made, this coverage will pay your lost income for the 9 months.  This coverage can include your employee's payroll, so you can keep your key employees.  For many small business owners, the income they get from their business is their main source of income, which is one of the reason's this coverage is so important.  Fortunately, most BOP policies include 12 months of coverage with no dollar limit.   If your business might not be able to be back up and running in 12 months, we can often change this coverage to a dollar amount with no time limit.   The standard coverage only applies to damage that occurs to your property.  The coverage can be endorsed to also cover loss of utility service due to off-premises damage (a storm that knocks down a tree a mile away that takes out your electrical power) and cover a loss due to a dependent property (the factory that makes the product you sell).
        
  • General Liability -  Protects you and your business in case you harm a person or damage the property of others.  The limit is typically $1,000,000 per occurrence with an Aggregate limit of $2,000,000.  This can usually be increased to $2,000,000 per occurrence with an Aggregate limit of $4,000,000.  For higher limits, you will need an Umbrella policy.  The best thing about General Liability (often called "GL") coverage is that it includes the defense of claims without any limit.  GL usually includes coverage for Products and Completed Operations (things you sell that hurt people away from your premises) and Personal Injury (liable, slander, false arrest, & copyright violation in your advertising).
     
  • Hired & Non-Owned Autos Liability - This covers Bodily Injury and Property Damage caused by a vehicle you, or one of your employees, hire for your business (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including your employee's vehicles).  It does not cover the physical damage to the vehicle itself; that is covered by the owner's insurance, or if you rented a car, you would need to purchase this coverage through the rental company.  If your business rents cars frequently, you can add physical damage coverage for rented vehicles to your policy.  If your business does own or lease any vehicles, than you should get a separate Commercial Auto policy.
     
  • Data Breach Coverage - If you collect any personally identifiable information on any of your clients, you may want to add this coverages.  It provides you with access to professionals who can help you comply with regulatory requirements, provide guidance on how to help prevent a data breach and handle a breach crisis if one occurs.  Response expense coverage can help to quickly restore confidence in your business or practice through notification to impacted individuals and can help pay for good faith advertising expenses, for example. In most states, coverage is also available for defense and liability expenses in the event you're sued because of a breach.

  • Employee Dishonesty - Most business owners assume their employees would never steal from them.  The unfortunate reality is that most thefts are committed by employees.  This coverage protects you from employee theft of money, securities, or property. 

  • Employment Practices Liability (EPLI) - The General Liability coverage included in the BOP policy provides coverage for claims from people other than your own employees.  If you have any employees, it is a good idea to have EPLI coverage.  This coverage typically protects you from employment related claims resulting from alleged or actual acts of; discrimination, harassment, retaliation, violation of the Family Medical Leave Act, wrongful discipline, wrongful failure to promote, and wrongful termination.  Unlike the GL coverage, the defense cost for these claims is not unlimited, it is usually paid as part of your limit.  Many business owners think they don't need this coverage because they don't do these things.  The problem is, you can be sued even if you did nothing wrong, and without this coverage, you will have to pay for your own defense.

  • Leasehold Interest - Most business owners never even think about this coverage, but if you currently have a favorable lease, this could be a very important coverage for you to add to your BOP policy.  This covers the loss suffered by a tenant due to termination of a favorable lease because of damage to the leased premises by a covered cause. The principal coverage is the net leasehold interest, which is the present value of the difference between the total rent payable over the unexpired portion of the lease and the total estimated rental value of the property during the same period.  Most leases allow the landlord to terminate the lease in the event of a fire or other damage to the building that will take longer than 90 days to repair.  If you are currently paying $25.00 per sq. ft. on your lease, but the going rate for a similar space is $35.00 per sq. ft., this could be very costly for you if your landlord terminates your lease.     

 

We have access to other carriers, but we primarly write BOP policies with the following carriers:

Berkley Mid-Atlantic Group Travelers
The Hartford



Contact us today for more information about our BOP policies or fill out our online quote form.

Click here for Frequently Asked Questions

3201 New Mexico Ave NW #300
Washington, DC  20016
202-966-0700
Info@howard-hoffman.com