Are you starting a small business? Getting business insurance is one of the most important things you can do to protect your investment and your livelihood. But what is the right business insurance in your situation? For many entrepreneurs, the answer is what is known as a business owner policy (BOP). Is this the right choice for you? Here are a few pros and cons.
The Pros of Business Owner Policies
A business owner policy is a type of bundled insurance package designed to meet the basic needs of small business owners in common situations. It generally includes property insurance as well as liability. Many policies further offer standard packages with certain types of crime insurance and business income insurance.
The package arrangement generally offers a discount versus individual policies. And because it's a package, you don't have to guess what insurance you need and you don't have to locate individual policies.
A business owner policy can also be personalized by adding specific addenda to cover your particular needs. For instance, a business with a heavy online presence might add cyber insurance, while another might opt for accounts receivable insurance to guard against unpaid bills. Each additional feature adds some cost, but it may be sufficient when combined with the bundle discount.
The Cons of Business Owners Policies
While the BOP might sound like the perfect solution, it does have limitations. Only certain coverage additions can be made. Therefore, certain business types — such as those involved in manufacturing — may not find sufficient coverage. And the BOP doesn't cover many facets of employer responsibilities. That means you could end up having to buy other policies, which may negate the cost savings from the bundle.
The coverage limits are also intentionally low because the product is targeted to smaller business owners. So, eventually your company will likely outgrow the policy and need to move on to policies with higher dollar limits and wider coverage. The point at which this happens will depend on how the business grows and at what rate.
How to Learn More
A business owner policy may be the right starting point for entrepreneurs, or it may not be sufficient coverage. To find the right mix for your own endeavors, start by consulting with an experienced business insurance agent in your area. They can help you assess all your options and decide if the pros of a BOP outweigh the cons for your needs.Share