A business owner policy, or BOP, is a common form of business insurance. Generally, it covers businesses for the most common claims that might strike them. It also often keeps costs a bit lower than purchasing individual policies. However, it must fit your specific goals to be worth your investment.
Some companies find that a BOP is exactly what they need for most needs. For those with inventory, it does offer financial protection for it. But, do you have enough?
What Does BOP Cover in Property?
BOPs provide financial protection for most assets a company owns. This includes the building itself. It covers your company’s equipment, furnishings, and inventory. Most of these items have a set value. Your equipment, for example, may be worth $10,000. While it may depreciate over time, it generally will not change frequently. On the other hand, inventory can change often. Your BOP coverage will still offer coverage. The plan will set an upper limit of protection to cover all of your property.
Is that upper limit enough? Take a closer look at your current policy. Notice the specific dollar value associated with your maximum coverage. That amount is the most the policy will pay out in the event of a significant loss. There is usually also a listed per item limit. That is the most it will pay out for a claim on a single item. Is that enough?
How to Improve Your BOP Coverage
If your business insurance limits are too low, speak to your agent about them. It is always important to have a policy that reflects the specific value of your property. This includes inventory. If your inventory changes from week to week or even month to month, discuss this as well.
- Determine what the highest value of inventory ever is. What is your largest inventory value? Look back over 12 months for clarity.
- Add in all of the other assets your company owns. This includes the building, equipment, furnishings, and computer systems.
- Your BOP coverage for property claims should be at least this amount. That provides ample protection for your company.
The good news is the fluctuations in inventory are not likely to impact your BOP coverage. However, it is important for you to have enough coverage to span all your assets. Work with your business insurance agent to better estimate your coverage. Discuss the need to add additional protection to your policy.
Also Read: How to Spring Clean Your Business and Businesses Need an Independent Insurance Agent