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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.

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. .

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.

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.

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.

Additional Terms to consider familiarizing yourself with before your nest renewal

Waiver of Subrogation

A Waiver of Subrogation is a contractual provision whereby an insured waives the right of their insurance carrier to seek redress or seek compensation for losses from a negligent third party.

Certificate of Insurance

A certificate of insurance is a document that is used to provide info on specific insurance coverage and provide verification insurance is in place at the time of issuance. The certificate contains the types and limits of coverage, the carrier, policy number, named insured, and the policies’ effective dates.

Certificate Holder

The certificate holder is the person, business, or nonprofit organization who is provided with a certificate of insurance to prove coverage is in place at the time of issuance. The certificate holder will be notified if at any time the policy is cancelled before the listed policy effective date.

Additional Insured

The Additional Insured is the person or organization who is not automatically included as an insured on an insurance policy, but who is included under the policy at the request of the named insured.

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.

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.

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.

3^rd 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.

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.

Artisan 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.

Umbrella 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).

Umbrella Insurance

Umbrella Insurance is a type of liability coverage you may have seen before. It may have been a part of your contract requirements or as an additional coverage option on your policy. Umbrella Insurance is a source of protection that sits over the limits of any of your qualifying underlying policies. These could be policies like general liability, commercial auto liability, and employers liability. Umbrella insurance policies can also protect from exclusions and gaps that exist in your primary liability insurance. The covered causes of loss that are not normally included in primary policies are subject to a self-insured retention (SIR). This is the responsibility of the insured to pay. An SIR in the amount of $10,000 is the most common. The coverage of an umbrella policy is triggered when the limits of the underlying insurance have been exhausted. The umbrella liability policy has a critical requirement. You must maintain the policies listed in the schedule of underlying insurance. They must be kept in force, without alteration of terms and conditions, during the term of the umbrella liability policy.

Umbrella Insurance

Now that you have the basic understanding of what an umbrella policy is, lets look at why it can be important. The area I am going to focus on is in regards to lawsuits. Lawsuits seem to be more common place than they were 20 years ago. They could be from a slip and fall, or giving out a wrong phone number resulting in a large number of calls to another business. Lets look at an example:

A repairman arrives at your location to fix the phones, computers, system, HVAC, etc. It is a rainy day outside. He makes a few trips in and out of the building. On one of the trips he slips and falls in a hallway. The repairman claims that he had no warning about water in the hallway. From the fall he has a back injury along with a broken arm and neck stiffness. The injury requires a few surgeries to help the ailing back and it is determined he will always have an issue. This issue will affect his ability to work and his way of life. The repairman files a lawsuit against your company for not having the hallway marked notifying of the wet conditions. The case goes all the way to trial and a jury rewards the individual $1.5 million. The problem with that amount of money is your general liability policy has a $1 million per occurrence max on it. This leaves you exposed for the remaining $500,000.00. Thankfully your business had an umbrella policy that will then provide coverage over the excess amount. This will take care of the $500,000.00 difference. If your business had NOT had an umbrella policy then your business would have been on the hook for the $500,000.00.

The cost of adding an umbrella policy to your coverage is generally not that expensive. Hopefully you will never end up needing it, but over the course of time insurance claims happen. Whether you have been in business for 1 year or 75 years an incident will eventually occur. It is important to always consider how well your business is protected and make sure there are not any holes in your insurance coverage. If you have not thought about adding umbrella insurance, now may be the time to sit down with your agent to discuss the benefits it could provide your business. In order to make an informed decision you need to think about if your business might ever be in a situation where you may need additional coverage on top of your existing liability coverage. If you do need additional coverage then a Commercial Umbrella Policy might be right for you.