If you’re a small business owner, carrying the right insurance coverage is essential to protecting your business and personal assets. Fire, theft and vandalism can shut down your business or require replacement of expensive equipment. A business owner’s policy (BOP) can protect you against all of these risks and more. It is simply a policy that provides both property and business liability insurance in one packaged policy and is designed to cover the basic needs of small to mid-sized businesses at an affordable rate.
Here are three of the most common BOP insurance myths and why they are wrong:
Myth 1: Business owner’s insurance policies are only for bigger businesses, so you don’t need one.
The exact opposite is true. Business owner’s insurance policies are designed specifically for small businesses. A BOP insurance policy conveniently rolls property damage and business liability insurance into one policy, making full coverage very affordable.
A business owner’s policy also includes business interruption insurance, which compensates you for any business income you lose due to a covered peril. A major disaster can shut your business down for weeks or even months. Business interruption insurance will ensure that you survive the closure.
It’s not just disasters that can close a business. A kitchen fire can easily shutter a restaurant for weeks. The property damage portion of a BOP covers damages to the kitchen equipment, and business interruption coverage helps cover any lost income.
Myth 2: Your general liability insurance covers a business interruption and business property loss.
Absolutely not. General liability does not protect you from property damage or business interruption, both of which can be very costly.
General liability covers acts you commit, or things that happen at your business location. If a customer slips and falls in your grocery store, or a customer gets food poisoning from a pizza served at your shop, general liability covers their medical expenses as well as any resulting lawsuits.
A general liability policy does not cover damage to your business property. The property damage portion of a BOP covers loss or damage to your physical space, equipment, inventory, machinery, furniture and supplies, as well as losses due to theft.
Myth 3: Your personal umbrella policy covers a business equipment loss.
Personal umbrella policies are designed to cover personal, not business, liability. While coverage does extend to business equipment in certain circumstances, low coverage limits usually apply.
Personal umbrella policies cover bodily injury and property damage liability and pay legal fees for libel, slander and false arrest. Unfortunately, business coverage is extremely limited. In most cases, the maximum allowed for business equipment under a personal umbrella policy is $2,500. A personal umbrella policy is usually associated with a homeowners or personal auto policy and only extends coverage to business property if those underlying policies offer business coverage, which is rare.