Businesses require business insurance to protect themselves against various risks. Insurance policies cover various scenarios, from fire to theft, data breach to injury claims. Among these policies, a business owner’s policy stands out as an umbrella of three different insurance policies.
A business insurance policy contains the most commonly required insurance policies among business owners. But is it a legal mandate?
What Is A Business Owner’s Policy?
A business owner’s policy most commonly consists of three insurance policies. These are general liability insurance, business property insurance and business income insurance. With the financial coverage offered by these three, business owners can protect their businesses against a majority of common risk scenarios.
Here’s what they cover:
1. General Liability Insurance
This is a business insurance policy that every business owner is recommended to have. It provides coverage against injury claims, accidental injuries as well as property damage experienced by the client, or a third party.
If your client or a third party gets hurt either in your office or at your worksite. If they get hurt as a result of your work in any way, they can sue you. This can result in expensive legal battles as well as a potential final settlement claim. Businesses can lose thousands of dollars in legal battles. General liability insurance provides coverage against such scenarios, helping businesses protect their finances.
A general liability insurance also provides coverage against reputational damage. If your business gets sued over false or misleading advertising, then this insurance policy can cover that as well.
2. Business Property Insurance
Property insurance can help you save over the long run. If the building you run your operations out of gets damaged, you’ll be responsible for fixing it and paying for the damages. Even if you own the property, you’ll still have to get it repaired out of your own pocket.
Property insurance protects against scenarios such as fire damage, water damage, theft and vandalism, and other scenarios.
3. Business Income Insurance
This insurance policy provides coverage against loss of revenue as a result of business interruptions. If you find that you can’t operate your business for any reason, then you can recover a portion of your lost earnings with this insurance policy.
Aside from these insurance policies, you can also customize your business owner’s insurance to get other insurance policies that suit you. A common option people go for is a data breach insurance. This insurance provides protection against situations such as loss of customer data owing to theft, cyber attacks, and more.
Do Business Owners Need Business Owner’s Policy?
A business can encounter an accident at any time. Natural disasters, business interruptions and even theft can make it difficult for a business to proceed smoothly with their operations. A business owner’s policy acts as a safeguard for businesses should they face such adverse scenarios.
For business owners, having cash on hand is necessary. This money is used to deal with operations, run day to day affairs, and pay vendors. Business owners who don’t have business owner’s policy risk having to depart with money available on hand should they face a potential risk. If the business isn’t able to recover their finances, they may also face closure.
Having insurance policies that protect your business finances can make the difference between succeeding as a business, and having to close down. With a business owner’s policy, business owners ensure that their businesses are well prepared to mitigate business risks.
Are Business Owners Legally Required to Have Business Insurance?
Business owners are legally required to have some insurance policies. Workers compensation is an insurance policy that is required by law in most states. Certain other business insurance policies may also be required, depending on the state.
Some states require businesses offering professional services to have professional liability insurance. This helps them protect themselves, as well as their clients, should the client face financial loss as a result of their services. Businesses that sell liquor are required to have liquor Liability insurance in various states.
Businesses dealing with vehicles, such as car rental companies, may be required to have commercial auto insurance. But business owners aren’t strictly required to have business owner’s policy. While not legally required, you should still consider getting this insurance policy, as it can protect your business and your income.
You can also consider going through the legal requirements in your state, to understand whether you need business owner’s policy or not. This is, as different states have different requirements. If a policy that’s within the umbrella of the business owner’s policy is required, you can think about getting the complete package as well. For the most part, business owner’s policy is highly recommended but not legally required in the United States.
Business owner’s policy can help business owners enable their businesses to succeed past accidents, legal battles and risky scenarios. Although a business owner’s policy isn’t a legal requirement, you should still consider checking your state and local guidelines to ensure you have any and all required insurance policies.
Even if business owner’s policy isn’t required in your state, you should still consider getting it. This is as within the BOP package, you get business insurance policies that can help your business tide past common business risks.
If you want to learn more about business insurance, then you can click here.