A business owners policy (BOP) is one of the main ways small businesses get coverage. These policies can pay up to certain limits for several types of losses that might occur within the business. However, some of these will have deductibles attached, and as an insured owner, you must pay the deductible in the event a claim occurs.
Coverage Within BOPs
BOPs are packages of insurance that contain essential coverage that most small businesses need, including:
Each policy will apply in different situations. For example, if someone falls in your store and gets hurt, then liability insurance can pay for that person’s losses. However, if a fire or storm damages the business, then property coverage can pay for the related losses.
Property insurance is unlikely to pay you 100 percent of the costs of a loss. This is likely because this portion of your coverage will have a deductible attached. By having a deductible, you free the insurer from paying certain costs.
A deductible is the amount of money that you agree with the insurer to deduct from the total cost of a claim. By covering this expense, you free the insurer from having to pay you this cost as a result of a claim.
The standard BOP has a deductible of $500. However, if you increase the deductible (to $750, $1,000 or more), then you may qualify for a lower premium.
Not all portions of your BOP will include deductibles. Liability coverage often doesn’t have a deductible, for example. However, for the portions of your policy that do have this attachment, always make sure that you can afford to pay the deductible in case of a claim. If damage costs fall below your deductible costs, then your policy won’t pay, and you must do so yourself.