A business owners policy is a great way for business owners to save money by combining important coverages into a single policy. These policies generally come with general liability and commercial property coverage, and can be customized depending on the business’ specific needs.
While it’s a good way to save money, it’s important to keep track of the factors affecting the cost of your BOP. The point of a BOP is to save money, so understanding what affects the cost can help you understand when your premiums go up.
Location
The location of the business can have a heavy affect on the cost of your BOP. This is due to a variety of factors, including the history of weather in the location, medical care costs, and more. Businesses whose assets sit in an area with a high rate of storms and natural disasters may pay more for a BOP.
Coverage Limits
Although basic policies come with two coverages with certain limits, these limits can be adjusted and the policy can be enhanced with additional coverages. The higher limits and more coverage you add to a BOP, the more you will pay in insurance premiums. Having lower limits can leave you open to great financial loss when it comes to a lawsuit or disaster, however. Carefully calculate the replacement cost value of your business’ physical assets and the likelihood of a lawsuit when purchasing a BOP.
Size of the Business
The larger a business, the more risk it faces for property damage and liability claims. An insurance provider may consider the business’ total annual revenue when calculating a quote. Businesses that deal with a large number of clients heighten their risk of liability lawsuits, and thus pay more for coverage.
Industry
Certain industries may pay more for a business owners policy due to the nature of the business and history of insurance claims. Businesses that tend to have higher rates of claims, concern handling heavy machinery or sharp objects, or offer physical or risky services (such as wall climbing, ice skating, gymnastics training, etc.) may pay higher rates for their BOP.
Be sure to ask your insurance agent about your business owners policy. The average cost of a BOP is around $1,200 a year, but this can raise or lower depending on the above factors and other influences you should discuss with your agent.