The right insurance coverage is integral to your business's success. Business owner's policy, BOP, is a common policy for small businesses. Before you purchase BOP coverage, however, you need to know how insurance companies evaluate businesses for insurance purposes. Below are the top factors insurance companies consider.
Property insurance protects you from the loss or damage of the physical properties that your businesses use. It includes the properties you own or lease. Examples of covered properties include:
- The real estate property that houses your business
- The tools and equipment that you use in your business
- The files and papers that facilitate your business operations
The insurance company will evaluate the level of risks that your properties face and determine your rates. Some of the things that matter here are the value of the properties, how fragile or delicate the properties are, and the age of the properties, among other things.
Your business's liabilities are the claims that other parties might raise against your business. General liability claims come when other third parties accuse you of causing them injuries or damaging their properties. The liability portion of your BOP will pay for your legal defense and compensate the claimants who might succeed with their liability claims.
The potential liabilities that your business faces also determine your BOP rates. Some of the salient factors here include the nature of your business, how busy you are, how many clients you serve, and even your location, among other factors.
Lastly, your BOP will also consider the losses you would be forced to suffer if your business operations were unintentionally halted. For example, you would lose considerable money if your business premises burnt down and you had to halt operations for some time.
What is more, there are bills you have to pay whether or not your business is running. You still have to pay rent, your suppliers still expect their payments, and your workers still expect their salaries. BOP can help cover these expenses until your business starts operating again.
The size of the business, the number of employees, and the size of recurrent expenditures are some of the things that determine how much you would lose if your business ground to a halt. The insurance company will also evaluate whether you would be able to operate your business from an alternative location if you were unable to operate from your usual location. All of these things will affect your BOP premiums.