Running a business entails a lot of paperwork and preparing for the unexpected is a major safeguard. One of the common ways business owners deal with unexpected situations is by getting insurance policies, hoping that if anything happens the policy will be there to deal with the problems both legally and financially.
Insurance companies, meanwhile, make money out of charging each of their policy owners a relatively small amount – certainly less than a liability that might arise – each year. Since most people who get an insurance policy don’t actually get to use it or don’t do so regularly, the numbers add up and insurance companies end up with a nice profit. It’s a symbiotic relationship, or close to one.
Back to running a business, it requires its owner to be ready for pretty much anything. The business owners insurance is sometimes required by law, some are optional, and some are only necessary for certain businesses. In order to give business owners an attractive offer, insurance companies provide packages that might bundle several of these insurance policies in one. These are called Business Owners Insurance Policies.
What do they contain?
Business Owners Insurance Policies aim to reduce the amount of paperwork a business owner has to deal with in order to fulfil all legal and personal requirements in a jurisdiction. They are generally aimed at small and mid-sized businesses, that consider dealing with many types of different policies a cumbersome take.
Commonly, the plans include Commercial Property Insurance, Business Interruption Insurance, and General Liability Insurance, which are some of the most requested policies for small business owners. On top of that, most BOIP plans also include coverage for extra losses a business might incur regularly, which is not covered by Commercial Property Insurance or covered only under extensions. However, these extra coverage cases usually only cover relatively small expenses.
To be specific, the three policies included cover these cases, among others:
- Property Damage Insurance covers damage to your property. This property can be a building or real estate property, or simply something you own. For example, if you operate with machinery, and it suffers damages, it will be covered. However, the Property Damage Insurance policies contained within BOIs are often named-peril coverage policies – so you’ll only be covered if damages are caused by one of the events listed in the policy.
- Business Interruption Insurance covers any loss of income because of a catastrophe that leads you to interrupt your operation. In some cases, these plans also pay for temporary relocation of your business so you can keep working while the catastrophe and its effects even-out.
- Liability Protection covers your company in case of damage caused to others during normal operation. Generally, it relates to accidents, and these policies don’t cover professional negligence, nor do they cover your employees, only your customers or people external to your business.
Can anyone get them?
No. To start with, Business Owners Insurance(BOI) policies are aimed only at small to medium businesses. In most cases, insurers will require a business to fulfill several requirements including a cap on the scale of operations to be eligible. However, if the business doesn’t meet the requirements, they can still be covered under separate policies.
Generally, insurers limit which businesses can apply to these policies based on the type of operation and physical size of the establishment. Those businesses where accidents are less likely, like barber shops or retail stores, are covered by these policies as long as they aren’t huge stores.
Other store types like restaurants might be accepted or disapproved depending on the type and operational size, while some businesses like auto repair shops or banks are flat out refused coverage.
In general, BOI policies are there to help cover small, low-risk establishments that might benefit from one-size-fits-all policies. Anything larger or riskier that might require policies specific to them will not be covered.
Do I need one?
No local law might impose a Business Owners Insurance Policy, as it is an insurance package. However, in some cases, it is unavoidable, and you might be required to get one or more of the policies covered by a BOI.
Even if your local laws don’t require you to get a BOI plan or any of its components, it is often smart to use one as a safeguard. After all, nobody ever plans for emergencies to happen, they just do. While you might pay for insurance without needing it, doing so is better than the alternative, which might come down to filing for bankruptcy when disaster strikes and you are caught napping.
Are there any disadvantages to getting a BOI? Would I be better off getting separate policies?
Yes, there are, although they aren’t necessarily disadvantaged for everyone. Since they are for smaller businesses, there are a handful of cases covered by other policies that Business Owners Insurance policies don’t cover. Some of these are:
- Professional Liability. This includes, most commonly, negligence claims, or any lawsuits resulting from a mistake made by you or a member of your business team while performing a service. Erroneous advice can also fall under this category.
- Auto or vehicle insurance. As a standard, BOIs only cover businesses for on-site circumstances, thus making auto insurance unnecessary.
- Worker’s compensation or health and disability. If any of your workers suffer a workplace accident or is injured performing tasks as part of their job, Business Owners Insurance policies won’t cover that. For those cases, you’ll need workers compensation insurance, which is always separate.
- Liquor Liability Insurance, which relates to accidents or damages caused or received while under the effects of alcohol sold by your business. These kinds of insurance are only required for establishments that sell or produce alcohol and must be bought separately.
That’s a lot. Is it still worth it?
While, as noted, several cases aren’t covered, Business Owners’ Insurance is still one of the better types of insurance you need to acquire given that your business fits the requirements. Not only will it save you time and paperwork, but usually the price of a BOI plan is cheaper than that of its three components bought separately.
As always, the choice on whether to buy packs like these or go for only one or two of its covered policies is yours. However, since accidents and disasters do happen, it’s always best to be safe than sorry. And when looking for insurance for your business, you’ll hardly find a better deal than a Business Owners’ Insurance package.