There’s no doubt that it takes courage to be an entrepreneur. You put your neck on the line to own a business, hire people, and create the life you’ve always dreamed of. There are many things that could cause you to fail. Of course, there is the chance that you won’t get enough customers or revenue and have to close down or declare bankruptcy. However, there are non-revenue-related incidents that can crash your business as well.
You can do everything right with developing, launching, and growing your business, but it will still be at risk. Fires, natural disasters, theft, vandalism, and lawsuits can all cause serious financial hardship. If you don’t take steps to protect your business, then it may not be able to recover from the costs associated with those risks. That’s why having business owners’ policy insurance (BOP) is so vital.
What is a BOP?
A BOP is a bundled set of coverages that protect against common business risks. Much like with your phone and cable services, bundling can provide cost savings for your premium when compared to purchasing those coverages separately. A typical BOP will have liability insurance, commercial property insurance, and business interruption insurance. These are the types of insurance that every small business should have. Of course, you will have to purchase additional coverage for other risks, depending on what kind of business you own.
Liability insurance protects you against lawsuits and claims when a third party suffers physical or financial losses before your actions. Customers can get injured on your property, or they could suffer from a data breach at your business, for example. Property insurance will cover against damage or destruction of property owned and used by your business, including equipment, signage, and other structures. Business interruption provides you with compensation if you have to lose out on revenue because a covered risk caused you to close your business.
Altogether, these coverages provide a strong security blanket for your small business. Here are some reasons why having a BOP is so important.
It Protects Your Business
This might be the most obvious, but it is really important to remember. A BOP will protect your business against many of its daily risks. Businesses get sued all the time, and even one lawsuit can be impossible to dig out from without the right protection. The fact is, anyone can use your business, even if you did nothing wrong. You don’t want your entire operation to be ruined just because of this.
Not only that, but your assets are extremely valuable. If you lose your property or the equipment within it, you might not be able to repair or replace them on time to get back on your feet. If you are stuck not operating for a lengthy period, it could sink your business. Even if you have the money to replace certain things, that money would be better invested into growing your business rather than trying to get it back up and running. A BOP will help you accomplish this.
It’s More Affordable
As a small business, you are probably looking for every way possible to lower your costs without sacrificing the things you need. You need insurance, but some business owners find it frustrating to pay for something they may never need. It is virtually impossible that you would never need insurance, but there’s no reason you can’t save money on it. With a BOP, you can get the coverage you need at less of a price. Even if you could find a comparable price for all of the coverages, you would have to spend time shopping around to find them. A BOP takes that work out of your hands.
It Gives You Peace of Mind
Many things can cause you stress as a small business owner. Mostly you are worried about bringing in enough revenue to keep the business running and to give yourself a salary. You should do whatever you can to reduce the number of things you should stress about. A BOP can help you do that. For example, if it’s raining hard, you don’t have to worry that your business will be shuttered because of water damage. If someone slips and falls going into your building, you can be confident that you will be able to weather that financial storm. You can’t put a price on your peace of mind, and a BOP policy will help you sleep at night.
Is It All the Coverage You Need?
While a BOP will provide you with very important coverage options, it may not be all you need for proper coverage. There are several types of risks that you are still exposed to and several types of insurance to protect against them. You can add some of these coverages to your BOP if you wish.
Commercial Auto Insurance
If your business owns vehicles or uses your personal vehicle for work-related tasks, you will need a commercial auto policy. You might be able to use your personal policy if all you are doing is transporting yourself to places of work, but for anything more, you’ll need additional coverage.
Professional Liability Insurance
If you own a service-based business, then you should have professional liability coverage. This will help protect you if a mistake on your part has caused losses for a client. For example, a lawyer might miss a deadline, causing a client’s claim to be dismissed. The client can then sue the lawyer for compensation.
Workers’ Compensation
Every state but one requires businesses with employees to provide workers’ compensation insurance. This will provide coverage to employees who are injured on the job and must miss work as a result. Their financial burden is lessened so that they can focus on recovering, and those costs do not have to come out of your pocket.
A BOP is a perfect way to easily have the basic coverages you need as a small business. While it won’t cover every possible risk, it will protect for the most likely perils that your business might face at an affordable cost.
