If you are a business owner, you most likely have commercial liability and property and casualty insurance to protect your firm. You may not know, however, that many insurers offer bundled coverage known as a business owner’s policy that includes both types of coverage, usually at a lower cost. Typically available only to small and medium-sized businesses, these policies are designed to protect firms that, in general, face the same degree of risk.
What Does Business Owner’s Policy Coverage Include?
A business owner’s policy typically includes:
- Property insurance, which covers buildings and any contents, such as office equipment and furnishings. This coverage applies to property owned by the business, personal property of the business owner, and property that belongs to others that was left in the care of the business (for example, a computer left for repair).There are two forms of coverage: standard, which covers perils such as fire, wind and theft, and special, which covers all risks, except those that the policy specifically excludes, such as earthquakes or floods. Many standard policies also cover incidental damages, such as fire department service charges, debris removal, removal of pollutants and damage caused by water used to extinguish a fire.
- Liability insurance, which covers the business in the event that you or your employee causes harm to others or their property. This typically includes coverage for defective products and services as well as medical payments and other damages resulting from bodily injuries to others that occur on your property. Most policies also cover advertising injury and personal injury, such as slander, libel and intentional infliction of emotional distress, as well as litigation costs and court-awarded damages.
- Business interruption insurance, which covers your lost income in the event your business is forced to shut down due to a fire or other catastrophe. Some policies also cover the cost of doing business at a temporary location, including payroll and operating expenses.
For an additional premium, you may be able to add additional coverages, such as coverage for personal property kept off the premises, valuable papers and records, and property stored outdoors. Some insurers also offer additions that cover losses due to the mechanical breakdown of equipment and broken glass or sign repair.
What Does Business Owner’s Policy Coverage Exclude?
As a rule, business owner’s policies do not cover:
- Professional liability (also known as errors and omissions coverage) which is a separate form of coverage that protects business owners who provide a professional or personal service, such as accountants, real estate professionals, insurance agents, consultants, attorneys and physicians.
- Medical payments or lost wages for an employee who is injured on the job
- Injuries caused intentionally by you or an employee
- Business automobiles
- Liquor liability, which is a specific form of coverage for businesses that manufacture or sell alcohol.
What Types of Businesses Qualify for Business Owner’s Policy?
Although standards vary according to the insurer, a business generally must meet certain criteria to qualify for a business owner’s policy. For example, in most cases the business must:
- Have fewer than 100 employees
- Not operate in a large-scale office environment.
- Not be involved in a high risk industry
- Not require business interruption insurance for greater than six months
Additionally, the cost of a business insurance policy is higher for businesses that fall into certain categories, such as those that:
- Have a higher number of employees
- Have been turned down for insurance in the past
- Have filed a property of liability insurance claim in the past
- Perform physically challenging or risk-prone jobs
- Work off the business premises or travel for work
- Work with dangerous chemicals or power tools.
If you are the owner of a small business and would like to learn more about whether a business owner’s policy is right for you, contact one of our business insurance experts to discuss your needs. We are available at 516-292-3780 Monday through Friday from 9 a.m. to 6.pm. to take your call. Or, if you prefer, request a free consultation online and we will get back to you within one business day.