Business Owners (BOP)
A Business Owners’ policy is designed to protect your practice, (building and/or its contents) against losses resulting from physical damage and premises liability. It is imperative that a practice owner has a business owners’ policy to protect them from such losses. A covered cause of loss can bring on costs which can be hard to recover from financially.
Any practice owner who has a loan on the business could be required by the lender to carry business owner’s coverage in order to adequately protect the practice in the event of a total loss. Typically, along with this requirement is the lender’s request to be named as a loss payee and/or mortgagee.
Often times, one could also be required to provide proof of insurance when equipment is financed or leased. Coverage may be included for new equipment by increasing the property limit accordingly and listing the company you are purchasing/leasing from as an additional insured and/or loss payee.
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Additional Resources
Specific Policies
Renovation/Builder's Risk
Renovation
A practice owner who is renovating office space may need renovation insurance to cover losses during the renovation process. Standard business owner’s policies may not cover such risk. Policies may be written for 3, 6, 9 or 12 months.
Builder’s Risk
A practice owner who is constructing a new building (from the ground up) would need builder’s risk coverage to protect from losses during construction. Standard business owner’s policies may not cover builder’s risk. Policies are typically written for 6, 9 or 12 months. Most lenders may require that coverage be in place prior to your loan being disbursed. Without coverage for either situation, a total loss may be your financial responsibility. Do not assume your contractor will cover you for losses; their coverage likely protects them, not you.
Vacant Building
Vacant building coverage is important when a business owner sells their practice or retires but needs to maintain building insurance on the property due to the fact no tenants are occupying space in the building.
- The standard insurance market typically excludes coverage after 30 days of vacancy.
- Also, if you own a building but at least 70% of the building is NOT occupied (unless you have received special underwriting approval) you might need a vacant building policy to insure your building adequately.
Commercial Umbrella
Commercial umbrella coverage is designed to provide additional liability protection when extensive losses occur. It is typically written over business owners, workers compensation or commercial auto policies. Commercial umbrella provides excess limits, when an underlying liability policy limit has been exhausted.
Commercial Flood
Flood is defined as “flood, surface water, waves, tidal water or the overflow of a body of water, all whether driven by wind or not. This includes spray that results from any of these whether driven by wind or not.” (Basically, almost any water that comes from the outside in.)
Flood coverage is NOT provided on any business owners’ policy, and must be set up separately.
If you are in a flood zone and have a practice loan, it is very likely your bank will require you to carry flood insurance.
For more information regarding any coverages listed on this site, email or call 800-944-7550. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice to your situation. Request of a quote for coverage does not guarantee that coverage can be provided. Any misstatements or omissions of relevant information from a client can result in a price variation or even declination or rescission of coverage.
