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Insurance for the Business Owner

A business owner’s policy (BOP) has been compared to a homeowner's policy for business. BOPs were first developed in the 1970s and have become a very popular form of insurance for small to medium sized businesses. BOPs combine some of the basic coverages needed by a typical small business into a standard package at a premium that is generally less than would be required to purchase these coverages separately. Business owners also like the simplified nature of the package as opposed to buying a collection of small policies. The efficiency also appeals to insurance companies and allows them to offer a lower premium for the package.

Most of the coverages that are needed by small and medium sized businesses, with the exception of auto and worker’s compensation, are generally included. Business owner’s policies basically consist of property coverage, liability coverage and some additional types of coverage that most businesses require. Optional coverages can also be added to meet specific needs of the business.

Typically a BOP policy includes:

1. Property insurance (covering buildings, equipment and inventory).

2. Business interruption insurance (covering losses that cause you to shut
operations or reduce production for a time). Business interruption
insurance can provide money to offset lost profits or to pay continuing
expenses (typically for up to a year for insured losses).

3. Casualty or liability protection (covering harm done by the employees or
products to other people or their property).

4. Crime insurance (covering loss of money or securities resulting from
burglaries or robberies or destruction) as well as losses from employee
theft or embezzlement.

5. Liability insurance covering lawsuits arising from accidents (as when
someone trips and falls on your business’s property) or when you sell a
product that damages the customer’s property or you are accused of offenses
such as slander, copyright or invasion of privacy.

6.Vehicle coverage for rented or borrowed vehicles.

A number of other coverages such as flood insurance or earthquake insurance or owned vehicle coverage and specialized liabilities are generally not included in BOPs. Some of these may be available separately for extra premiums.

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