Reasons to Get Commercial Insurance for Your Small Business

As a business owner, you need commercial insurance to protect against financial loss resulting from a variety of risks that may leave your business unable to recover after a disaster. Your insurance agent or broker may suggest purchasing a Business Owner Policy (BOP) to get basic coverage. 

What Is a Business Owner Policy?

A BOP combines property insurance, business interruption insurance, and liability insurance, protecting your business against:

  • Property damage caused by events such as fire, hail, theft, among other covered disasters.
  • Loss of income resulting from a fire or other catastrophe that affects the productivity of your business.
  • Claims of bodily injury, personal injury, advertising injury, or property damage arising from your business operations.

Package-wise, a BOP covers only a few types of risk, making it a comprehensive package for small and mid-sized businesses as they face fewer and generally the same risks. Larger companies, however, face multiple perils hence may need to purchase a commercial package policy (CPP) as it can be better customized to meet the specialized risks they face. 

4 Top reasons to get a BOP

There are various reasons why you should consider purchasing a Business Owner Policy for your business, including:

Reason #1  BOP saves you money

A BOP allows you to save money while getting extensive coverage for scenarios such as loss of income, theft, catastrophes like fire and hurricanes, and lawsuits. And as it is usually sold at a premium that is less than the total cost of individual coverages, it is more affordable to purchase the policy than buying separate policies. 

Moreover, since with a BOP you bundle various types of commercial insurance into one, you may qualify for a multi-policy discount, further saving you money.

Reason #2 BOP protects your business

If your business has a physical location, you have assets that could get damaged or stolen, and there’s a possibility of getting sued, BOP coverage can help protect your business from any financial impact resulting from the aforenamed. Remember it doesn’t matter how careful you are, some things are just out of your control; a natural disaster could destroy your company property, or a competitor could sue you for copyright infringement, you name it.

Reason #3 BOP makes your business appear more credible

Are you looking to stand out from the competition? With the proper and adequate insurance coverage, you can. A BOP will show your clients that you’re a safer bet. It communicates that you know about managing risks, so should anything go wrong, you’ll ensure they’re well compensated. 

To avoid being underinsured, the policy can be tailored to fit industry-specific business needs by adding coverages such as professional liability and data breach.

Reason #4 BOP means peace of mind

A BOP gives you peace of mind in two ways:

  • It allows you to focus on growing your business instead of feeling anxious about the many things that could go wrong since you know you’re adequately covered.
  • You don’t have to manage multiple policies with multiple insurance companies as a BOP means various essential coverages under one policy offered by one insurance company. 

Is BOP right for your business?

A Business Owner Policy usually does not include professional liability, workers compensation, and commercial auto insurance. You would, therefore, need to purchase these policies separately. Moreover, your business may not qualify for a BOP depending on the eligibility requirements established by the provider.  Contact your insurance company to find out whether a BOP is the best commercial insurance for your business.


Annika Bansal

Annika "The Chick Geek" is the founder of Small Business Sense shares small business ideas, tips and resources for independent Entrepreneurs and Small Business owners.