WEDNESDAY, SEPTEMBER 6, 2023
Small business owners frequently buy business owners policies (BOPs) as a way to jumpstart their insurance portfolios. Among the coverage within your BOP is likely liability coverage. However, BOPs vary in the liability coverage options they offer. What coverage do you need to buy to ensure you have appropriate protection? Here’s a bit more information.
Understanding BOPS 
BOPs are very convenient because of the ways they combine and condense insurance options in ways that help policyholders manage coverage.
Business insurance is a wide market of numerous policies. You need several to ensure your small business has appropriate protection in the face of its operating risks. BOPs are essentially packages of coverage that offer the most-common and essential types of business coverage in one package.
The way car insurance can offer you multiple types of coverage, so, too, can BOPs. This is a great incentive for small business owners. By having a BOP:
- Business owners won’t have to juggle and coordinate as many separate policies. Therefore, your ability to keep your coverage active will remain intact.
- Policyholders will only pay one premium for multiple types of coverage. While the cost will reflect each type of coverage, you won’t have to worry about making multiple payments. Coverage will often start and end at the same times.
- Policies will have a degree of cohesion among their different policy elements. Therefore, there will be fewer chances of holes in coverage.
And what exactly do BOPs cover? Usually, they include three or four of the most-common insurance among different businesses. These often are:
- Property/structure insurance
- Contents/possessions coverage
- Business expenses insurance
- Liability coverage
It is liability coverage that every business needs. Coverage doesn’t exactly apply to your own business. Rather, it covers the harm your business activities cause to other parties.
Liability Coverage in General
A liability is a responsibility that one person or party has for another. To insurers, your responsibility to others equals a risk. These are risks they might offer to pay for on your behalf. It is liability coverage that can help you pay for the harm you cause others.
Even if you didn’t intend for an accident to happen in your business, the fact is, it still did. It might harm clients, vendors and others. Therefore, liability coverage acts as a way for your business to pay for that harm. That can reduce the chances that you or your business will suffer significant losses because of these mistakes.
Frequent BOP Liability Options
The liability insurance within your BOP usually is commercial general liability (CGL) coverage. CGL policies apply to the common liability claims most business face. They often provide:
- Bodily Injury Coverage: If someone gets hurt in the business, such as from slipping and falling, this coverage can help you pay for their medical costs and other losses.
- Property Damage Coverage: Your services might accidentally damage someone else’s belongings. This coverage will help you repay the losses.
- Accidental Medical Payments Coverage: Like bodily injury coverage, this assistance can pay for a third party’s medical bills. However, whether you were negligent in the accident usually doesn’t matter in these cases. Usually, it covers smaller claims than bodily injury liability coverage.
- Legal Assistance: In many liability cases, the affected party might sue the business. This coverage can help you afford your legal fees in case a lawsuit arises.
Additional Policy Options
A standard CGL policy usually won’t cover every type of harm you might do to another party. Therefore, you might need to enhance your coverage with additional liability protection.
- Cyber Liability Insurance: This coverage pays for harm that losses or theft of your computer data causes clients. It can help protect them from threats like identity theft.
- Errors & Omissions (Professional Liability) Coverage: If you offer professional services, or give professional advice, you might make a mistake. The client might financially suffer as a result. This coverage will help them recoup their losses.
- Directors & Officers (D&O) Insurance: Principals like CEOs and board members frequently become the targets of liability suits. This coverage can help them protect their personal assets and those of their families.
- Employment Practices Liability Coverage: Your hiring or retention practices might lead to allegations of harassment or discrimination. This coverage can help you fight those claims and settle, if necessary.
- Products-Completed Liability Coverage: Items you manufacture could harm the buyers. If they do, then you might have to compensate the clients using this coverage.
In some cases, you can add these policy options directly to your BOP as endorsements. In others, however, you will have to buy separate coverage.
Still other liability coverage, like commercial auto liability coverage, are altogether separate from your general liability coverage. That’s why, even with a BOP, you likely need multiple insurance policies. Your agent, will ensure that any separate coverage still works in conjunction with the existing BOP.
As a result, you shouldn’t hesitate to buy the appropriate balance of coverage for your small business. Keep in mind, in some cases, your coverage is even a mandatory requirement.
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