Business owners’ policy (BOP)
Why do business owners need insurance policies?
When starting up your own business, make sure you have already purchased several types of insurance policies. Here are a few reasons:
- Purchasing an insurance policy is required by law
In many countries, it’s the law that requires business owners to have a number of insurances policies such as workers’ compensation, unemployment and disability. Different countries may require several policies depending on where the business is located.
- An insurance policy helps cover the costs associated to property damaged or liability
Doing business without any types of insurance policies can cause lots of problems, especially when it comes to paying for damages and legal claims against your business. In other words, an insurance policy will definitely save business owners from a financially devastating scenario.
- Insurance policies help protect your employees
One of the most important factors that keeps your business running and operating well is its human resources mostly including employees. Therefore, purchasing an insurance policy is a good way to protect your employees in many aspects such as medical care, missed wages and funeral benefits. For workers, it is vital to know what a workers’ compensation offers other than an unemployment insurance programs.
- Offering insurances policies attracts employees
When applying for a position, plenty of applicants would emphasize on what benefits and insurance policies that an organization or a company offers. In many cases, job applicants go in for the company offering better workers’ compensation policies and they even consider this factor as their top priority.
- Contracts may require insurance protection
Business makes contracts all the time, and in these days, a number of contracts include this term and you can find this in such situations as renting a building from your landlord, borrowing money and reaching clients agreements.
- Insurance policies cover the damage costs resulted from natural disasters
Remember to purchase an insurance policy as this will come in handy when natural disasters such as earthquakes, floods, tornados and hurricanes take place. All the damage will definitely cost a fortune to cover without a financial backup from insurance policies, hence, it’s not a bad idea to seek and purchase one.
There are other reasons contributing to why business owners need to purchase insurance policies, however, the three main points for this are: having an insurance policy saves your time and money, protects your business from damages, provides benefits to you and your employees.
- Types of insurance a business should have
- Compulsory types:
- Workers’ compensation: As fore-mentioned, this insurance policy is required by law and also considered as number 1 priority by many job applicants. This type would cover the medical care costs, missed wages and other perspectives.
- General liability: when running a business, you may get into such dilemmas as a visitor being accidentally injured in your building, general liability policy will cover the doctor bills as well as court costs. In some specific cases, a business owner can combine liability with property insurance in one single policy.
- Property insurance: Almost every citizen must have this insurance policy not just business owners. There are multiple types protecting your business assets against fire, theft or other perils and financial devastating scenarios. This will also come in use in the event of business closure. However, in case of floods, this type would not provide financial backup or reimbursement and you will have to seek for other means of support federal government flood insurance programs.
- Automobile coverage: This type is also known as Third Party. According to some terms, general liability would not support any costs relating to car accidents, but if you are running a home-based business, the automobile coverage is not necessary. Vice versa, you should take this into serious consideration as you or your employee may drive company-owned cars to meet clients. In such case, it is worth purchasing an automobile coverage.
- Additional types:
- Tax audit insurance: Covering costs incurred by your accountants or registered tax agents
- Theft and burglary policy: This insurance is usually not valuable in cash but covers significantly if your stock and content are lost or damaged by others who try to use deception and forces their ways to your premises.
- Employee fraud or dishonesty: Providing support or financial backup to any damage or loss caused by your employees’ dishonest behaviors. This insurance often comes in handy in case of money, instruments and goods.
- Computer and electronic equipment: This type will help covering if your computers, electric devices as well as your data cause any loss and damage.
- Professional indemnity: protecting you from any legal claims against your business after receiving your professional advice or services.
- Machinery breakdown: This insurance is also called as equipment breakdown and it helps your business cover costs relating to damaged or broken equipment.