How Much Liability Insurance is in a Business Owners Policy?
Any small business in a low risk industry should consider a business owners policy (BOP) when it comes to insurance. This type of policy includes various types of insurance coverages built specifically for small businesses in low risk industries, including liability insurance.
Liability insurance protects you, your employees and your business as a whole from various incidents that could result in a lawsuit. If a claim is filed against your business, you should be able to file a claim on your liability policy. Your BOP may not automatically come with all of the liability coverage you need, however.
A basic BOP covers two main parts:
General liability insurance provides compensation for claims concerning bodily injury, property damage and personal and advertising injury. If someone is injured on your business’ property, for example, this insurance can help cover the victim’s medical bills as well as cover the business’ legal expenses in the face of a related lawsuit.
Personal and advertising injury coverage, on the other hand, covers less physical accusations such as those concerning libel, slander, copyright infringement, theft of an advertising idea and more.
Commercial Property Insurance
Commercial property insurance covers the physical property owned by your business, such as a store or restaurant, as well as its contents and some equipment. This insurance can cover loss or damage incurred by fire, wind, hail, lightning, explosions, smoke, theft, vandalism and more. It also may come with Business Interruption Insurance, which can help cover your business’ income if it is no longer able to operate due to a disaster or government mandate.
How Much General Liability Does My Business Owners Policy Cover?
Every business and every insurance policy is different. Your BOP should be geared to cover your specific needs. Most BOPs may include general liability limits of $1 million or $2 million per year, but you should speak with your insurance agent if you believe that your business needs higher amounts of coverage.
General liability insurance also isn’t the only type of liability your business may need. There are some accidents and lawsuits that are not covered by general liability insurance, leaving potential gaps in your business’ coverage.
What Liability Insurance Do I Need for My Business Owners Policy?
Since your business is unique, the type of coverage you should have is also unique. Does your company offer specialized services that, if gone wrong, could cost a client money? Does your business use vehicles that could cause accidents on the road?
Carefully consider your business’ needs when looking for coverage. Some common and useful liability insurance coverages you may add to a bop include:
Professional liability insurance covers incidents of professional negligence, meaning mistakes made during a professional service that may cause a client to lose money. If you run an accounting firm and an accountant miscalculates and causes a client to lose money, for example, professional liability insurance can step in to help pay for the damages and potential fallout. This insurance is known by different names depending on your industry, as well, such as Errors and Omissions insurance or medical malpractice insurance. Medical malpractice may occur when a healthcare provider makes a mistake that further injures a patient, such as conducting an unnecessary surgery or failing to follow up after a major procedure.
Cyber liability insurance covers claims against your business if you suffer a cyber attack or data breach on your electronically stored information. This is especially important for businesses that carry a lot of important client information, such as medical history, credit card information and addresses. This insurance can help pay for repairs as well as some recovery expenses.
Directors and Officers Liability
Directors and officers liability insurance covers the key employees of your business in case of claims regarding their work for the board or business, such as fraud and misrepresentation. This insurance may also come with Employment Practices Liability (EPLI), which covers claims regarding discrimination, sexual harassment, failure to promote, mismanagement of employee benefits and more.
Commercial Auto Liability
Commercial auto insurance covers vehicles owned or used by a business for work purposes. If your company uses company cars or trucks to transport equipment, for example, you may need commercial auto insurance. Part of these policies cover bodily injury and property damage liability, which covers property damage and injury your driver may cause someone else while operating a business vehicle.
Umbrella liability is a catch-all type of insurance policy that steps in to fill the gaps of any of your other liability insurance policies. If the liability on your commercial auto insurance policy reaches its limit for a claim, for example, umbrella liability insurance can step in to pay the remaining expenses.