A business owners policy, also known as a BOP, is an insurance policy geared to cover small businesses in low risk industries. Most coverages under these policies are optional, but some may be required by state law or certain industries.
Coverage Under a Basic BOP
A basic business owners policy covers two main areas:
- General Liability Insurance: General liability insurance covers bodily injury, property damage and personal or advertising injury claims that may face your business. If someone is injured on your business’ property, for example, this insurance can cover the victim’s medical bills.
- Commercial Property Insurance: Commercial property insurance covers the physical property owned by the business.
While neither of these coverages are typically required by state or federal law, you may be required to carry them if your business has a physical location. If you take out a loan for a physical space, for example, you may be required to carry general liability and commercial property insurance.
Insurance Required by the State
Many insurance requirements are determined by state laws. Some of these policies you can add to your business owners policy, such as:
- Commercial Auto Insurance: Commercial auto insurance covers the vehicles owned or used by the business for work purposes. This insurance may not be technically required, but all vehicles must be insured with some form of auto insurance. If your business owns or uses vehicles, you may need commercial auto insurance. Personal auto insurance policies may not cover your business’ work vehicles.
- Workers Compensation: Workers compensation requirements are dictated by each state. In Florida, all employers with four or more employees must offer workers compensation. This insurance covers workplace injuries an employee may suffer on the job.
Insurance Required by Industry
In some cases, you may be required to carry insurance to operate within certain industries or obtain certain licenses. If you or your employees need to obtain a professional license, you may need insurance such as:
- Professional Liability: Professional liability insurance covers claims against your business concerning professional negligence. If one of your professionals makes a mistake that causes a client to lose money, this insurance can provide compensation.
- Liquor Liability: Liquor liability insurance covers claims that may occur in industries that make or sell alcohol. If someone purchases alcohol from your business and later causes property damage or bodily injury to someone else, for example, this insurance can protect your business from a lawsuit.
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