3 Benefits of a Business Owner’s Policy.

What is a BOP?  If you work in insurance long enough, this becomes a question you receive quite frequently.  Many small businesses shop their policy around themselves to many different insurance companies. This can save those businesses some money, but it does come at the expense of the business owner’s precious time. Most insurance companies attempt to remedy this problem by offering a Business Owner’s Policy (BOP).

Find the answers to your questions about a Business Owner's Policy at My Insurance Question.com

A Business Owner’s Policy is an insurance package designed for businesses in a particular industry. These packages can be adjusted to fit the needs of each individual business, but they most commonly come in packages specific to each industry.  Over time, insurance companies have found certain coverages are needed by all businesses in a particular industry.  Because they have a unique insight in to the loss history of many businesses in that particular industry they tend to recommend a certain package of policies for that industry.  By offering a business owner’s policy, insurance companies can make sure there are no gaps in coverage.  At the same time they can make sure the business is not carrying too much or unnecessary coverage. Carrying a BOP benefits a business owner in three main ways.

Pricing

Pricing is one of the first aspects that attract business owner’s to choosing a BOP.  Insurance carriers are more likely to give businesses a discount if they know they are going to sell a business multiple policies. Business Owners can do the shopping for themselves, but they have to spend time searching for better coverage and price instead of working on their business. With the help of a good independent insurance agent, a business owner can allow the agent to shop the policy around to many insurance carriers. This allows the agent to negotiate the best price and the most complete coverage. For this reason, it is important to choose an insurance agent who has relationships with many insurance providers, not just a select few. Many agencies work exclusively with just a few carriers and this does not allow the agent to shop around your policy if you are in a tough classification code or have a negative claims history.

No gaps in coverage

Another great reason to consider a BOP is to ensure there are no gaps in coverage. Shopping for your policies individually might save a business a few bucks on the front end, but it be very detrimental to your business when a claim occurs.  This is a portion of the insurance industry where a few grey areas occur. When an incident occurs and a business has policy from many different carriers, at best they business will have to wait additional time while the carriers determine who is liable for the claim.  At worst, having several different carriers can cause the claim to not be covered at all.  On the contrary, if the policies are all with one carrier, the underwriter will just determine which policy needs to kick in and then processes the claim.  This is because, if you have a BOP with just one carrier typically there is General Liability, Professional Liability and an Umbrella policy. In this case the insurance company just determines which policy is in effect and processes your claim. When every policy is carried with one insurance carrier, that carrier can ensure there are no gaps in your policy.

Certificates

The final way businesses benefit from carrying a Business Owner’s Policy is when there is a need for a certificate. This occurs when businesses are involved in projects they are contracted on. Many artisan contractors do work for several general contractors. Take an electrician as an example. For each general contractor an electrician does a project for they need a certificate proving insurance coverage. If each coverage is with a different carrier that is an additional call the electrician has to make. If that electrician has a BOP they call one agent and can get a certificate for all of their policies.

These are three of the many benefits business owners get when they go with a Business Owner’s Policy. BOP’s are a win-win situation because the insurance company benefits from more business while the business owner benefits from having better service, more complete coverage and usually a better price. When in need of a business insurance quote it is also important to consult with an insurance agency who partners with many carriers. This will allow their agents to shop the policy to more carriers and ensure your business is getting the best coverage at the absolute lowest rates in the industry.

12 terms to familiarize yourself with before your next renewal.

Twelve tips for the next time you purchase Small Business Insurance.

Insured

The person, group, or organization whose life or property is covered by an insurance policy.

Insurer

Insurance company that issues a particular insurance policy to an insured. In case of a very large risk, several insurance companies may combine to issue one policy.

Named Insured

Any person, firm, or organization, or any of its members specifically designated by name as an insured(s) in an insurance policy.  .

Learn these terms to help your business at your next commercial insurance renewal.

Premium

The price or amount paid for insurance.

Claim

A formal request to an insurance company asking for a payment based on the terms of the insurance policy.

Carrier

A company that offers and underwrites insurance policies.

Insurance Carrier

Policy

A document detailing the terms and conditions of a contract of insurance.

Underwriter

The person who decides whether to provide insurance and under what terms.

Agent/Broker/Producer

A person licensed by a state and employed by an insurance company to sell insurance policies on the company’s behalf.

Find out if you really need Umbrella Insurance Coverage at www.myinsurancequestion.com

Umbrella Coverage

Umbrella coverage protects your business when your existing liability insurance policy limits can’t cover all the expenses of a claim.

Hired and Non-owned Auto

A coverage that is commonly added or endorsed onto a commercial auto insurance policy. This endorsement adds additional coverages for the insured in the event there becomes a liability issue for an automobile accident involving a vehicle they don’t directly insure (rentals or employee owned cars).

Experience Modification Rating

An employers’ Experience Modification Rating refers the factor calculated from actual loss experience. It is used to adjust the businesses premiums (higher or lower) based on the businesses loss experience relative to the average underlying manual premiums for workers compensation coverage. The Modifier (Mod) compares the insured experience to the average class experience.

 

General Liability Insurance

General liability insurance protects a company’s assets and pays for obligations. For example, it covers medical costs incurred if someone gets hurt on your property or when there are property damages or injuries caused by you or your employees. Liability insurance also covers the cost of your legal defense and any settlement or award should you be successfully sued. Generally, these include compensatory damages, non-monetary losses suffered by the injured party, and punitive damages. General liability insurance can also protect you against any liability as a tenant if you cause damage to a property that you rent, such as by fire or other covered loss. Finally, it can also cover claims of false or misleading advertising, including libel, slander, and copyright infringement.

General Liability Insurance

Getting liability insurance is a wise investment that doesn’t cost much – annual premiums could range from $425 and up on your line of business and coverage needs. That’s certainly a lot less than the thousands, if not millions, of dollars you may need to spend fighting your case in court. General liability insurance can be purchased on its own, but it can also be included as part of a Business Owner’s Policy (BOP) which bundles liability and property insurance into one policy. If you have a BOP, check it to see what your liability coverage limit is. You may find that it is quite low, in which case you may need additional coverage through a separate policy. There are specific liability products catered to contractors that you can add some tools and equipment coverage making it into a BOP that costs the same if not better than just getting liability coverage by itself. The coverage you need depends on the type of business you are in and the perceived risk associated with it.

How general liability insurance works is the same as many insurance plans, your general liability policy will outline the maximum amount the insurance company will pay against a liability claim. So, if your small business gets sued for $250,000 for medical costs associated with an injury caused by a worksite hazard, plus an additional $100,000 in legal fees, but your coverage maxes out at $300,000, then you are responsible for paying the difference of $50,000. If you are on the higher end of the risk scale and already have general liability insurance, you can also opt for umbrella insurance that increases your coverage limits. This will cover you in situations in which you’re worried that your existing coverage won’t cover all your costs should someone file and win a claim against you. The most commonly asked limit we have found is $1,000,000 per occurrence with a $2,000,000 aggregate.

Find out if your business needs a commercial umbrella policy at myinsurancequestion.com

 If an incident occurs that may lead to a claim, you should notify your insurance company or agent immediately. Be prepared to explain what has happened in detail including the time, date, the names of any witnesses, and any other pertinent information.

Remember General Liability Insurance just like all other kinds of insurance are designed to help you in a time of need. Make sure you review your policies with your insurance agent on a regular basis.  This can help you make sure you are up to date on coverages and that you have the limits that best suit your business. This is important because your business has probably changed a great deal from the first time you took a policy out when you open your doors.

20 terms you need to know when purchasing or renewing commercial insurance

For many business owners, purchasing insurance is a foreign concept. Like many industries there are terms only the insiders know and they frequently use when discussing the policies. Here is a list of 20 terms that will give you a leg up the next time you are purchasing or renewing your commercial insurance policy.

 20 commercial insurance terms to be aware of the next time you look to buy small business insurance.

Insurer –  a person or company that underwrites an insurance risk; the party in an insurance contract undertaking the risk to pay compensation.

Insured –  a person or organization covered by an insurance policy.

Peril –   the possibility that you will be hurt or killed or that something unpleasant or bad will happen.  exposure to the risk of being injured, destroyed, or lost.

Premium –   An amount to be paid for an insurance policy. It is an amount paid periodically to the insurer by the insured for covering their risk.

Deductible –  A deductible is the amount you have to pay out-of-pocket before the insurance company will cover your remaining costs. 

1st person liability –  First person liability is for damage that is done to you or your business. A good example of this would be a commercial property insurance policy. This policy covers the damages to you and your property. It does not cover the damage to another persons’ property or if they are hurt on your property.

3rd person liability –  Third person liability is liability that you or your business has to other third parties. Third parties can include customers, vendors, other businesses or anyone who may be harm by the actions of you or your business.

 Claims-made policy –  A policy written on a claims-made basis means that if the insurance is in place when the claim is made, but not when the occurrence took place than the insurer responsible for the claim is the insurer when the claim is made. This is common for professionals like a lawyer or an engineer. In these professions a claim is frequently filed months if not years after the occurrence takes place. At that time the insured may have coverage with a different company and there may be some discrepancy between who is responsible for the claim.

Occurrence based Policy –  A policy written on an occurrence basis means that the insurer responsible for the claim is the insurer who was in place when the occurrence took place. If an engineer works on a house and there is a problem with the house years later than the insurer responsible for the occurrence is the insurer that was in place when the occurrence took place.

 Endorsement –  an endorsement is a document attached to an insurance policy that amends the policy in some way. An endorsement may add, remove or alter the scope of coverage under the policy.

Negligence –  Negligence in relation to insurance means a person or business did not demonstrate appropriate amounts of care or responsibility for a particular situation. The failure to take appropriate precautions can cause you to be considered liable for the damage.  This can also be referred to as the failure to use a degree of care considered reasonable under a given set of circumstances. Liability policies are designed to cover claims of negligence.

Named Insured –  Any person, business or organization who is specifically named as an insured on an insurance policy. This is different from entities who although unnamed may fall within the policy definition of an insured.

Ordinance or Law Coverage –  Coverage for loss caused by the enforcement of an ordinance or law regulating construction and repair of a damaged property. Older structures that are damaged may need to be upgraded in regards to electrical, plumbing, venting, etc. A typical commercial property insurance policy does not pay for these additional cost. This policy is an endorsement on top of your commercial insurance policy and will cover the additional costs needed to bring the new building up to date.

A 'Hammer Clause' is a provision within an insurance policy that gives the insurer the right to settle for an undisclosed amount and if the insured does not agree to the settlement than they take on some or all of the risk. Hammer Clause –  A ‘Hammer Clause‘ is a provision within an insurance policy that gives the insurer the right to settle for an undisclosed amount and if the insured does not agree to the settlement than they take on some or all of the risk. In some cases, the insured takes on all of the risk, but in many cases it is 70/30 or 50/50.

The Assigned Risk Provider (Also known as the pool or the state fund) –  The assigned risk provider applies to workers’ compensation coverage. It is the provider of last resort within each state for businesses who cannot obtain coverage on the open market. The business may not be able to obtain coverage for a number of reasons. Typically, it is because of the small size of the company or because of their loss history. The Assigned Risk Provider offers coverage at a higher rate and typically once you are in the pool you must stay in the pool for 2-3 years.

Business Owners’ Package (BOP) –  A business owner’s policy, commonly referred to as a BOP, combines several lines of coverage built into one policy. They are often better suited for small business owners because they offer targeted coverage options designed for specific types of businesses within certain industries. They are usually less expensive then purchasing coverage separately because the business is purchasing multiple policies for liability, property, commercial auto, etc. 

Find out if you as an Artisan Contractors need workers compensation insurance coverage at myinsurancequestion.comArtisan Contractor –   This term refers to businesses in several different industries. It includes many occupations that involve skilled work with tools at the customer’s premises. Carpenters, plumbers, electricians, roofers and tree surgeons are some professions that would be included in this group of businesses. Also included are diverse other skilled service providers, such as interior decorators, piano tuners and exterminators.

Loss History –  Loss history is a documented history of damages or losses connected with a given asset. It is a way for the insurance carrier to determine the amount of claims your business has against an insurance policy.  They use it to determine how much premium to charge or if they are willing to take on the risk altogether. 

Inland Marine Insurance – Inland Marine Insurance is property insurance for property that is likely to be in transit over land.  Many inland marine coverage forms provide coverage without regard to the location of the covered property; these are sometimes called “floater” policies. As a group, inland marine coverage forms are generally broader than property coverage forms.

Find out if your business truly needs commercial umbrella coverage at myinsurancequestion.comUmbrella Coverage –  The umbrella policy serves three purposes: it provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims; it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims; and it provides protection against some claims not covered by the underlying policies, subject to the assumption by the named insured of a self-insured retention (SIR).

Insurance Help on Vacation

A while ago, I took a phone call from a client in need of help getting Errors & Omissions (E&O or professional liability) Coverage for a large contract he was working on.  However, my client was in Italy on vacation and the coverage needed to be in place before the job started in three days. To say he was in a panic would be an understatement.  I wrote his work comp insurance and our agency handled many endorsements on his policy for him.  However, it was a different agent here within our company who wrote his Liability Policy.  But he trusted me with his insurance needs, so I presented him with the following options:

  • I could write him a new Liability Policy with E&O Coverage included.
  • I could become his Agent with the current carrier, but it would take several days.
  • I could write a stand alone E&O Policy, but it would cost a little more since the liability would not be attached.

This actually was no problem at all. I just needed an Errors and Omissions application filled out, signed and returned to me. Thanks to technology the client had all of this information back to me by the next morning. All the way from Italy.

Liability Insurance help on a beach vacation.

When I presented the first quote, which was the stand-alone E&O policy, my client was shocked at the price of the coverage. In the past he had only had a liability policy. I explained the bulk of his company’s exposure was in the Errors and Omissions Liability and he should expect to pay more for this coverage.

The second quote was with a new carrier.  It was a Business Owners Package (BOP) with E&O as an added coverage. This was also the carrier I had his Workers’ Compensation Policy with. This was a great quote and made the most sense to me. However, the client did want to wait for the quote from the carrier he currently had for his liability coverage. This is the company I had taken over as the Agent of Record (AOR). In the end both carriers had great pricing and coverage. My client chose to go with the carrier that already had written his Work Comp and offered all of the endorsements he needed for the contract he was working on.

After discussing all of the projects his company had coming up in the next year I offered him a Commercial Umbrella Policy to extend his coverages. I explained that this would help protect his company if ever a claim went beyond the limits of his policy. The client thanked me for mentioning an umbrella policy and he agreed that his business needed this coverage.

We were able to get all the documents signed, the policy bound and all of the needed certificates of insurance out to the Holder by the deadline. It all got taken care of expediently. All while my client was on vacation.