Business Owner's Policy - BOP

Business Owner's Policy (BOP) refers to the insurance package, which is a combination of both property insurance and liability insurance. The reasonable price tag makes this option more attractive for the small businesses instead of buying separate policies for property insurance and liability insurance. Business owner's policy is not suitable for the large businesses because they do not fulfill the eligibility criteria for this policy. Insurance companies feel that large business involve greater amount of risk so they do not consider them for BOP.

Eligibility Criteria:

On the contrary, small and medium businesses are suitable candidates for business owner's policy. Eligibility criteria for this policy are liability limits, premises size, nature of the business and activities performed offsite. These factors along with financial stability, location of business, security measures, and quality of construction and possibilities of fire determine the price of the BOP.

There are vast variety of businesses are eligible for business owner's policy. Some of the examples are bakeries, fast food restaurants, convenience stores and restaurants providing fast food, wholesale and retail traders and many other businesses related with service industries. Interestingly, restaurants providing full services may be denied the advantage of this policy. Other businesses that may find eligibility difficult are bars, auto repair mechanics and manufacturers.

Let us discuss the property insurance and liability insurance separately. If you have property insurance, you are entitled to get the reimbursement for the losses to you business property. You have two options to choose from for property insurance. First is the Standard Form. In this option you will get compensation only if the losses have occurred due to certain predefined perils. On the contrary, if you choose Special Form, then you policy will cover losses due to any reason. However, make sure that no peril is specifically excluded in the policy. Not only the risk of your business property is covered, but the risk of machines and plants permanently installed like air conditioners, business inventory, furniture, and also property stored at other sites.

If you have the liability insurance, then the company will reimburse the amount if any visitors get injured at you premises or any of your products cause an injury to the customer. You can get some additional advantages by paying extra premium coverage like losses due to dishonest employees, Robbery, Burglary and mechanical breakdown.

Protecting business assets against loss is as important as the insurance cover for home and the contents. However, you need to make sure that the amount covered is not inadequate. Estimate both replacement value and actual value of your property. BOP also covers the losses occurred due to the damage to property or an instance of injury because either your business did something or it didn't do something.

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Five Reasons Why You May Need A Liability Umbrella Policy?

Have you ever wondered if you might need an umbrella policy? What is an umbrella policy designed to protect? What factors should I consider before buying one? The answers to these questions and more are waiting for you inside this article.

As a financial adviser, I often review client insurances for adequacy, cost effectiveness and proper type. One of the most commonly overlooked protections is a personal liability policy or an umbrella. Many people are not quite sure what it is or if they need one.

An Umbrella or personal liability policy is usually an all risk, all peril policy with coverage limits that start at $1,000,000. There are some very specific reasons that you might want to consider purchasing an umbrella and there are also some adjustments that you will want to make to your homeowners and auto insurance if you do.

Reasons To Purchase An Umbrella:

1. Children Driving: One of the simplest reasons to purchase a liability umbrella is if you have young children that are learning to drive or are under age 25. This age drivers are the highest risk drivers for a reason. They are inexperienced, easily distracted (friends, cell phones, texting, etc.) and statistically are involved in more accidents than any other age group. An umbrella policy will cover them all and protect you from losing everything if one of your children happens to cause a serious accident.

2. Assets To Protect: Most homeowner and auto policies have a maximum liability coverage of $500,000. But if you have assets in excess of this amount, you are exposed to a potentially higher liability problem if someone decides to sue you. Maybe you were involved in a car accident or someone slipped on your property, etc. If they sue you for more than the $500,000 and win, it will come out of your pocket or you may have to sell some assets. If your net worth is over this limit, consider purchasing an umbrella policy for the appropriate amount.

3. High Profile Income or Career: Another reason to consider is if you are in a high-profile profession where incomes are typically high. Someone may think that you are wealthier than you are just because of your title or profession and may be more inclined to sue for a larger amount.

4. Litigious Society: Today we live in an extremely litigious society. Lawyers are suing for larger and larger amounts and if you bear any liability, they are winning. Even if you are not liable, the legal defense fees are expensive. Some say that having a million dollar umbrella causes attorney's to sue for more. This may be true, but if you need the protection, it is better to buy the policy and hope you never use it, than it is to need it and not have it.

5. Cost Savings Adjustments: If you decide to purchase an umbrella, you can reduce your overall cost by doing the following. First reduce your homeowners and auto liability limits to their minimum allowed. This may be $100,000 instead of $500,000 and this will save you some premium dollars to offset the cost of the new policy. Next consider increasing your deductible amounts from $100 to $500 or $1,000. This will also reduce your premiums, but remember that if you make a claim, your new higher deductible will cost more.

Summary: For many families today, young drivers, increasing net worth and higher incomes make personal liability protection a necessity rather than an option. The additional cost is not outrageous, usually $300 to $800 annually and if you make some adjustments to other policies, you can possibly cut your extra out-of-pocket cost in half. Make sure that when you look at your overall financial situation and your risk management strategies, you carefully consider this one.

To discover additional financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

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Understanding Personal Umbrella Policy

What is an umbrella policy? Do you need an umbrella policy? These are reasonable questions for everyone to ask. This article will go over the basics of an such a policy and what it can provide.

An umbrella policy covers above the limits of liability you have on all your personal policies. It gives extra coverage to others for liability, it does not give any extra coverage to you. It also provides this extra coverage to any and all of your personal policies. It is up to a limit you chose, usually starting around $1 million. This means your home, rental properties, cars, and toys are all able to draw extra coverage from your umbrella policy. One thing to consider is that your insurance company requires higher limits of liability on all your personal policies before they will offer you an umbrella. The limits required are usually around $250,000 of bodily injury protection per person and $500,000 per accident. Each insurance company is a little different, you'll need to check with them to see what is required.

We'll use an example to demonstrate how an umbrella can protect you. While driving your car you lose control and cause an accident with many people seriously injured. The total amount for all the medical bills comes to $750,000, but unfortunately you only have insurance to cover $500,000. At this point your umbrella policy will kick in to cover the additional $250,000.

So do you need an umbrella policy? That is a question you'll have to answer for yourself based on your situation in life. Typically, the average person does not carry such a policy. Those who do have umbrella's usually have "a lot to lose" or substantial assets.

This policy is extra protection for you so you don't lose all your assets and wealth to a lawsuit. Remember it provides extra coverage above the liability limits on your personal policies. If you decide to look into getting an umbrella policy, a local insurance agent is a great place to start.

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The Benefits of Having an Umbrella Insurance Policy

Many people often think that their homeowners and auto insurance is enough to cover expenses as well as protect assets should an accident occur. What no one expects to happen, but very likely could, is an incident where they are sued for an extremely large amount of money that goes above their liability insurance limits. Most people do not carry umbrella insurance though, because they think that nothing catastrophic will ever happen to them. Unfortunately, when these situations do occur, they will realize that everything they worked for in their life is now at risk of being lost because of one unfortunate situation.

Let's say that you are involved in a car accident where the other driver is severely injured, and their luxury vehicle is damaged. They could sue, and if the award is, for example, $1,000,000, but your coverage has a limit of $500,000, then they could go after you for the $500,000 difference. Most people don't have $500,000 lying around, so your home, savings accounts, other assets, and even future salary could be at risk.

Umbrella insurance, which is a form of extended liability insurance, pays for any amount that goes above the liability limit for your home or auto insurance. In the previous example, if umbrella insurance was a factor, then that extra $500,000 would be covered, and your assets would be protected. Umbrella insurance pays up to the amount you select, which usually ranges anywhere from $1,000,000 to $5,000,000. This means that your car insurance liability will be used first, and then anything above that amount will come from the umbrella policy.

Umbrella insurance is not just for rich people; everyone can benefit from it since it is affordable. When an insurance claim is filed, most of the money that pays for liability expenses comes from your regular insurance plan, which is why regular insurance is more expensive. Umbrella insurance coverage is only used when the expenses go above and beyond that amount, and therefore makes it less costly.

The more assets you have, the more important it is to have this type of additional insurance. It is important to know the value of your home and other property to help you assess how much additional coverage will be necessary. Finding yourself in a stressful situation after an accident is tough in itself, but if you are protected financially, it will help you focus on what is important, and not on what you could possibly lose.

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