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Understanding Business Insurance - Part 2

Part 1 | Part 2 | Part 3 | Part 4 | Part 5

A Business Owners Package (“BOP”) is a policy that bundles property and liability insurance together through one premium. The coverage is meant to appeal to small businesses to provide broad, basic coverage at an affordable price. The key components of a BOP are: General Liability, Property & Umbrella.

General Liability is a form of insurance designed to protect owners and operators of businesses from a wide variety of liability exposures. These exposures include liability arising out of an on-premises accidents, store operations, or product sales. Examples include slip & falls by customers or damage to a third party’s property.

Property insurance protects an owner or tenant from a loss of property or the loss of its income producing abilities. These policies compensate business owners for a loss by providing cash to make repairs or replace the property lost. Examples include fire or water damage to office upfits or computers.

Umbrella policies ride above the underlying property and liability policies, meaning they cover losses once the loss exceeds the individual policy limit. Umbrella insurance is a very affordable way to protect against a catastrophic loss. If a claim is settled for $1.5 million but your general liability coverage is capped at $1.0 million, the Umbrella policy would cover the additional $500,000.

The next installment in this series will address Worker’s Compensation coverage. Please consult with your insurance advisor if you have any questions about changing existing or acquiring new coverage.