Insurance companies selling business insurance offer policies that combine protection from all major property and liability risks in one package. (They also sell coverage separately.) One package purchased by small and mid-sized businesses is the business owners policy (BOP).
Package policies are created for businesses that generally face the same kind and degree of risk. Larger companies might purchase a commercial package policy or customize their policies to meet the special risks they face.
Property insurance for buildings and contents owned by the company -- there are two different forms, standard and special, which provides more comprehensive coverage.
Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business. It can also include the extra expense of operating out of a temporary location.
Liability protection, which covers your company's legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided.
BOPs do NOT cover professional liability, auto insurance, worker's compensation or health and disability insurance. You'll need separate insurance policies to cover professional services, vehicles and your employees.
How can I insure my home-based business?
Let's face it. Launching and running a business takes capital, motivation and yes, even physical stamina to handle the stress and demands of a new or growing venture. And it's risky. In fact, one out of every five businesses fails within the first five years of opening. Handling inventory, scheduling time, purchasing supplies, handling payroll -- there are a myriad of procedures every home or small business entrepreneur needs to know, but one of the most critical and often neglected is buying proper insurance coverage.
TAKING A BUSINESS INVENTORY
What would happen if a fire or other disaster destroyed your property, making it impossible for you to get back to business right away? Would you remember what property had been destroyed? One way is by taking a complete inventory of all your personal business property, determining its value, and deciding what's worth insuring. Having an up-to-date business inventory will help you get your insurance claim settled faster, verify losses for your business' income tax return and help you purchase the correct amount of insurance. Start by making a list of personal business property, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have.
In almost all states, employers are required to carry Workers Compensation insurance – or “workers comp” as it is commonly called. This insurance protects you as an employer against lawsuits arising from workers injured on the job or developing work-related illness – whether it occurs on your workplace premises or elsewhere, including cases of business-related traffic accidents. Workers comp coverage applies regardless of who was at fault and is required even if you only have 1 employee.
Scope of Workers Comp Coverage
Typically, Workers Compensation will pay for the following:
Your state dictates the duration and amount of lost wage benefits as well as guidelines for coverage of medical and rehab services, benefit disputes, etc. Because of the nature of this type of insurance, your business insurance package will not include it. It is necessary to carry a separate policy for Workers Comp insurance.
Business Umbrella Insurance Coverage
Business catastrophe liability insurance is sometimes referred to as ‘business umbrella’ insurance. This insurance adds an additional layer of liability protection, typically one million dollars or more, beyond the coverage limits in your company’s present commercial auto and general liability policies. This is an additional policy that requires you to maintain certain coverage and protection limits on your company’s various primary insurance policies.