Whether you’re running a small business or you’re starting a new company, it’s a good idea to have insurance. It can help protect you against unexpected events that could make a significant impact on your business and your finances.
Some companies offer packages that combine several types of insurance into a single policy. These policies can be a cost-effective way to cover your business’s needs.
Business Owner’s Policy (BOP)
A Business Owner’s Policy (BOP) is a package of insurance coverages designed with small businesses in mind. It combines property and liability insurance into one convenient policy.
BOPs protect against a variety of financial losses, including liability lawsuits and physical damage to your business’s building, equipment and inventory. They also include extra expense insurance, which replaces lost net income if you can’t operate due to covered losses.
The commercial property component of a BOP covers your building, contents and other business property against damage or loss from covered events, such as fire, windstorm, explosion, vandalism, theft and severe weather. You can choose between named perils and open perils coverage for this portion of your policy.
The general liability portion of a BOP safeguards your business from claims that third-party bodily injury, property damage or advertising injury occurs as a result of your operations. It can also pay legal expenses and medical bills you incur in the event someone files a lawsuit against you.
Commercial Auto Insurance
Your business relies on a variety of vehicles to get the job done, so it’s important to protect them with commercial auto insurance. Your policy covers physical damage, bodily injury and property damage claims that arise from accidents involving your work vehicles.
It also includes liability coverage, which helps pay for damages you cause to others in an accident involving one of your company vehicles. Liability coverage includes bodily injury, property damage and medical payments.
The cost of your commercial auto policy depends on a number of factors, including the type of vehicle you own, its value and the amount of coverage you select. Employees’ driving records are also a factor, as drivers with fewer violations can often command lower premiums.
Your insurance agent can help you evaluate your business’s needs and vehicle use to ensure you have optimal coverage at a fair price. The agent will take time to understand your operations and vehicle use so that they can provide you with a commercial auto quote that meets all of your needs.
General Liability Insurance
General liability insurance (also called commercial general liability or CGL) helps cover the costs that come with a lawsuit. It protects your business against third-party bodily injury, property damage, copyright infringement and reputational harm.
A small business owner may be sued for something as simple as tripping on a rug at their store or causing an injury to a customer or employee. Without this coverage, you’d have to pay out of pocket for any damages and legal costs.
Generally, it’s not required by law, but some clients or contractors may demand proof of general liability before they work with you.
Workers’ Compensation
Workers’ Compensation is one of the most important forms of insurance for small business owners. It provides cash benefits and medical treatment to employees who are injured in the workplace.
It also protects you from lawsuits and other legal costs that can arise as a result of a work-related injury.
In most states, businesses with more than a certain number of full-time or part-time employees are required to carry workers’ compensation coverage. However, many states exempt sole proprietors and other employers with less than three or four full-time employees from the law.
When it comes to determining your workers’ comp rate, insurers look at several factors. These include the class codes of your employees, their annual payroll and a so-called “experience mod” that indicates your level of workplace safety. The higher your experience mod, the lower your rates will be.
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