Does a Business Owners Policy Include Business Interruption?

Most small businesses operate under a business owners policy (BOP) in regards to insurance since it bundles several coverages for a more affordable price. There is often confusion about what a BOP includes, however.

At its most basic, a business owners policy covers:

General Liability: General liability covers bodily injury or property damage that may occur to someone else on the business property. It can cover the victim’s medical bills and the business’ legal expenses if the victim decides to sue.

Commercial Property: Commercial property insurance covers the physical property owned by the business if it is damaged or lost due to fire, lightning, smoke, hail, wind, theft, vandalism and more.

BOPs are somewhat flexible when it comes to adding coverages.Common coverages added to a BOP include:

Professional Liability: Professional liability insurance covers claims of professional negligence that causes a client to lose money. It is used primarily by industries that offer specialized services and advice, such as medical health professionals.
Cyber Liability: Cyber liability covers incidences where electronically stored information is damaged, stolen or destroyed.
Commercial Auto Insurance: Commercial auto insurance provides coverage for work vehicles. Policies generally include comprehensive, collision, personal injury protection, liability, uninsured/underinsured motorist and guest passenger liability coverage.

Inland Marine: Inland marine insurance provides compensation for equipment that is lost or damaged while in transport.
Crime Insurance: Crime insurance covers unfortunate incidences where an employee steals money from the business.
Employment Practices Liability: Employment practices liability covers claims concerning certain employment practices of the business. This may include accusations concerning discrimination, sexual harassment, wrongful hiring or firing, failure to promote and more.

Each of these insurance policies are designed to protect the business financially from different risks. Business interruption insurance is often included with commercial property policies, although it can be purchased separately and added to a package such as a BOP or commercial package policy (CPP).

What Does Business Interruption Insurance Cover?

Business interruption insurance steps in if the business is unable to continue operating due to a disaster, government mandate and more. Due to recent events, this insurance has become crucial for businesses. It can replace or compensate for:

Lost business revenue
Rent, lease, mortgage or loan payments
Payroll
Taxes

Relocation
Training expenses for employees on new equipment

Business interruption insurance helps the business with the cost of moving to a temporary location if necessary. It also covers the cost of employee wages that the employer may not be able to afford due to a drastic drop in revenue.

This insurance unfortunately cannot cover everything. It does not cover utility bills, interruptions due to utility failure, undocumented income, market conditions or economic activity that may hurt the business, or anything excluded from your commercial property policy. Business interruption insurance is not the same as property insurance. It won’t pay to replace your business’ equipment or physical building after a disaster.

How Much is Business Interruption Insurance?

The average cost of a BOP with business interruption insurance can be anywhere between $500 and $3,000 a year. This cost depends on the size of your business, coverage limits, deductible, location and the industry of the business. Compare this with the thousands or millions your business could lose by being out of business for a month or more.

The worst thing for a business, especially in its starting years, is to be unable to operate because of forces outside of its control. Having a comprehensive insurance policy can be the difference between struggling to maintain employees and operations, and surviving to come out of the disaster prepared to start again.

Does a Business Owners Policy Include Business Interruption?

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