Small Business Insurance 101: The Business Owner's Package [2021]

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How many small businesses are there?


According to the most recent data from the Small Business Administration, as of January 2021 there were over 30 million small businesses operating in the United States. Out of all corporate filings in the U.S., small businesses (classified as under 499 employees) make up 99.9% of the businesses in the country. If you happen to be one of the 30 million + owners of one of these small businesses, this article was made just for you. If you're considering starting your own small business in the future, you'll also want to check out the rest of this article (especially before starting your business - many don't realize the costs and implications of commercial insurance)


What is a BOP?


A Business Owner's Policy (sometimes called a Business Owner's Package) is a package policy containing two different types of insurance; general liability and property coverage. Unlike a standalone policy which only offers one of these lines of coverage, the BOP combines many different types of coverage into one neat package. Many BOPs also include extra coverages, such as Outdoor Signage or Utility Damage coverage, where standalone policies may exclude such things.


Who needs a BOP?


To sum it up; nearly every business should have a BOP. In certain cases, BOPs may not be available due to the nature of your industry (ex: Industrial manufacturers). But for everyone else out there, from hair stylists to restaurant owners, the BOP likely offers you the flexibility in coverage and price that would need to make sure your business runs without a hitch.


What is covered by a BOP?


1. General Liability Insurance

The General Liability section of your BOP contains possibly the most important coverage of all, your general liability! Within your general liability exists a host of risks; slips and falls on your premises (General Liability), product failures or defects after you sell them (Products & Completed Operations), the cost of medical services if needed at your business (Medical Payments), or even your legal liability to your landlord in the event of a fire or other damage to your leased building (Fire Legal). Insurance is the only way to properly protect your business and your assets, should one of these things happen.



2. Property Insurance

The Property section of your BOP is where you will find coverages for you and your business's assets. Business Personal Property (BPP) covers all of your business owned equipment such as computers, tables, chairs and inventory. If you're a contractor, you may have some real big equipment that would need to be scheduled, like an excavator. Many policies contain coverage for this under Inland Marine (IM) coverage, especially if your equipment is used off-site of the insured location. Tenants Improvements & Betterments is also a critical coverage of the BOP; some tenants improve the property they are leasing with their own funds. If you own a bakery and install display cases, they are your property and not your landlord's. If there was a fire or other damage to those cases, the TI&B section of your policy would provide coverage to you for those permanently installed items.


Who provides BOP coverage?


Luckily, BOP policies are pretty standard, and nearly every major and regional insurance provider will write them. Here at Encompass Agency, we write our BOP policies primarily through several companies, depending on the needs of the customer or the eligibility of the company:

Berkshire Hathaway Guard - Wilkes-Barre, PA (Available in all states we write in) Liberty Mutual - Boston, MA (Available in all states we write in) The Hartford Companies - Hartford, CT (Available in all states we write in) The Travelers Companies - Hartford, CT (Available in all states we write in)

Madison Mutual Insurance Co. - Chittenango, NY (Upstate NY only)

Genesee Patrons Cooperative Insurance - Batavia, NY (Upstate NY only) Security Mutual Insurance Co. - Ithaca, NY (Upstate NY only)


How much does business owner's insurance cost?


Well, that's the golden ticket question now isn't it? It very heavily depends on what type of business you are engaging in. Typically, we see that the most affordable rates come from low-risk professions, such as professional offices (accountants, lawyers, realtors) or "main street" businesses like coffee shops and gift shops.

An average premium for these lines of business is between $500 and $1,000 per year.


The higher risk classes, such as trade occupations like plumbers, landscapers, electricians or light manufacturers will likely pay more due to a higher risk of products / completed operations claims. This includes restaurants who may have a higher chance of fire than other businesses.

An average premium for these lines of business is between $1,000 and $5,000 per year.

The highest cost class that we have seen in the last 12 months was a commercial snowplowing company that performed snow clearing operations on supermarkets.

The finalized quote for this company was over $50,000 per year. Yikes!

Do you want to try and look for a better rate?

Perhaps you're starting a new business and want guidance on getting insurance?

Give an independent agent a call. I'll be ready to talk! 1-800-424-9712

Available in NY, PA, TN, VA & FL

www.encompassupstate.com

Taylor M Haines is the Vice President of Encompass Agency, Inc., an independent insurance agent in Buffalo, NY. He holds a Master of Science in HR Development from Buffalo State College(2016). Taylor has been in the insurance business since 2012 and writes all lines of personal and commercial insurance across five states. He focuses on insurance law and compliance, and advises several non-profit and government municipalities as well as provides worker's compensation resolution services to non-compliant businesses in New York state.

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