A business owners policy, or BOP, is a great way for small businesses to save money by combining important coverages. But there are many influences on the cost of BOPs that business owners may not anticipate. The average cost of a BOP is around $1,200 a year, but this all depends on:
1. Size Of The Business
The size of the business accounts for a large influence in the cost of a BOP. If your business has multiple locations and hundreds of employees, you will need more coverage. A business owners policy is typically better for small businesses that have few locations. The ranking of a "small business" varies, however. The size consideration also depends on the industry. Typically, small businesses earning less than $5 million a year with 50 employees or less should invest in a BOP.
2. Replacement Cost Of Property
Since a BOP includes property insurance, the cost of replacing your business' physical property matters when calculating your insurance premiums. Businesses with expensive equipment and other property will cost more to insure. There are limits on the property that an insurance company will cover with a BOP, however. Warehouses and manufacturers may not be able to get coverage under a BOP.
3. Coverage Limits
The more coverage you have, the more your insurance premiums will be. A basic BOP covers general liability and property insurance, but there are often additional coverages you can purchase including employee dishonesty coverage, business income coverage, equipment breakdown and more. A basic BOP could cost as little as $500 a year while a larger policy may cost as much as $3,500.
4. Claims History
This may tie in with the industry of the business, as well. Businesses that have a long history of insurance claims or face more liability threats will cost more to insure. The more previous claims your business has, the more an insurance agency will charge for coverage as your business is seen as more likely to file a business insurance claim.
Other factors that may affect your BOP premiums are location and credit score. When considering a business owners policy, carefully decide how large your business is and how much coverage you need. High-risk businesses typically require more insurance than a BOP can offer. Small, low-risk businesses should consider purchasing a BOP to protect their company's assets.
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