Business Insurance

Most entrepreneurs have a keen sense of understanding as to why a business needs to be insured. After all, they are the people who know how difficult in can be to start, manage and maintain a business. The investment involved always comes into focus, so does the rigid process involved in setting up a company. Whether small or big time, any business deserves to be protected by business insurance. In case of unexpected setbacks, the company can remain solvent and can continue its operations.

There are three basic types of business insurance: property, liability and workers’ compensation, the latter being obligatory in all 50 states. While property pertains to the protection of company assets, liability refers to the costs of litigation when the business gets entangled in a lawsuit. It also covers for medical expenses when there is a proven incidence which caused personal injury or property damage during the course of business operations.

Business Owner’s Policy, better known as BOP, is an insurance package available in most insurance companies which combines both property and liability coverage in one affordable premium. This type of policy is usually made available to small and medium sized businesses, giving them an option of getting combined business insurance that significantly lowers premium as opposed to getting two separate policies totalling to a higher cost.

Eligibility for a BOP is based on general criteria of business area size, required liability limits, business type and degree of offsite activity. Large companies do not usually meet this criterion as they are automatically considered to be high-risk. BOP policies carry premium rates based on similar factors including business location, financial stability, building construction, and security and fire hazards. You can choose the rate of your business insurance according to the coverage that you need.


Essentially, a BOP encompasses coverage needed to protect your office building and everything inside it plus all other people’s properties brought inside the building. Fire and burglary protection are often integrated in the package but protection from flood, earthquake and other calamities are not always included but it is your right and incentive to look for business insurance that would answer to these requirements.



The liability coverage is computed on the ratio of the business assets and liquidity. As such, it is measured on the company’s financial capacity or its net worth. The liability policy pays for legal expenses when the business gets sued as well expenses for damaged property or body injury which occurred within the business operation.

Other than the above, a BOP also covers for business interruption and replacement costs should a crisis or tragedy befall on the business. Business interruption is a type of coverage pays for lost income and other expenditures related to transfer of business premise due to a disaster, along with the payroll and ongoing operational expenses. Replacement pertains to the actual replenishment of any stolen or damaged business property and equipment without computing for depreciation.

When choosing your business insurance it is vital to evaluate your business assets realistically so that your company is neither underinsured nor over insured. Seeking the needs of an insurance broker or insurance agent will help you identify your risks and calculate for the best coverage possible.