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Protecting Assets with BOPs
Business Owner's Policies


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A business owner's policy, or BOP, is supplemental insurance that covers many aspects that aren't included in some standard insurance policies like a company's general liability policy. For instance, a landscaper's truck, unless it has comprehensive and collision insurance, is not protected against damage or theft to it, not to mention to equipment, inside or outside of the truck.


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BOPs not only cover equipment breakdowns and theft, they guard against the loss of income that can result from those instances. One other protection they can offer, which might often be overlooked as a potential liability to a business owner, is against lawsuits brought about by advice to customers that lead to adverse results.


A study done by management consulting firm McKinsey & Company concluded that 70 percent of small businesses are underinsured - this according to Rakesh Gupta, the COO at biBERK (https://www.biberk.com), a commercial insurance company that, in its experience, has seen this scenario confirmed in the landscaping/contractor industry.

"Most are buying only workers' compensation, which is required by law, and general liability," Gupta says. "It leaves them completely exposed to a whole slew of things that can happen to a landscaping company."

This includes damage to business property that is owned or leased, be it equipment or real estate. In addition, theft of equipment is also not covered. But these, and other misfortunes can be protected by a business owner's policy - supplemental insurance that picks up where general liability, which only shields a company from having to pay out-of-pocket when they are responsible for damage to someone else's person or property, leaves off.

Known as a BOP, the policy can be tailored to fit the needs of a company.

"You can buy different levels of coverage. You can ignore or add specific coverages that you want," explains Gupta, but adds that by definition, a business owner's policy is designed to simplify insurance-buying decisions: "Buy a BOP and have all this coverage."

For instance, compensation for damaged or stolen property is of couse very beneficial, but how about the loss of income that can be incurred while that property is being fixed, or until it is replaced? A BOP can help make up for that loss according to Gupta.



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Another type of supplemental insurance is an umbrella policy, which sits on top of any general liability insurance a business might have, and any BOP, adding extra protection against personal or property damage claims that exceed the primary insurance's limits. Rakesh Gupta, the COO of commercial insurance company biBERK (https://www.biberk.com), says that this coverage could amount to double, and even triple the coverage at one tenth the added cost.


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A potential liability that is becoming more prevalent is the theft of a company's customers' personal data, such as credit card information, which can lead to lawsuits by those customers. A typical general liability policy would not offer protection in these instances but a BOP can.


If advice to a customer leads to an unfavorable outcome, a professional can be sued. Receiving financial assistance if that should happen is another benefit that a business owner's policy can provide.

And that is not the only type of lawsuit that BOPs offer protection against.

"Coming into play more and more is data theft," informs Gupta. "It might be credit card info that someone has stolen. And a liability only policy will not cover (financial responsibilities) for loss of data."

He describes an additional purpose that BOPs serve: "Increasingly often, any kind of leasing you are doing, most of the owners of that property will make you buy insurance and they want to make sure that they are named as additionally insured. And a BOP would certainly facilitate that."

Another type of complementary insurance available, that his company sees a risky lack of in the landscape industry, is called an umbrella policy. It "sits on top" of a BOP and a general liability policy to provide coverage beyond the monetary limits of them.

"If your general liability policy covers you only up to $100,000 but the damage that you did to someone else's property is worth half a million, then you are paying out of your own pocket," Gupta says.

And according to him, double or even triple the coverage is provided at one tenth the cost of the original policies.

As Gupta relates, "It's really cheap to buy an umbrella policy, but most people don't do it because they don't know about it."

Protecting businesses against financial strains that might ultimately lead to ruin is surely near, or on, the top of the lists of concerns for business owners. BOPs and umbrella insurance policies are two more potential solutions to help address that concern.



As seen in LC/DBM magazine, October 2017.






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