According to the US Small Business Administration, there are currently about 400,000 small businesses operating in the state of Alabama. Many of these businesses may benefit from the coverage offered by a business owners policy. These policies are specifically designed to cover small- and mid-size businesses.
To learn more about how a business owners policy (or “BOP”) can protect your small business, you can talk to a local independent insurance agent. With more than 330 independent agents in the state of Alabama, it should be easy to find an insurance agent near you.
What Is a Business Owners Policy?
Business owner policies are policy packages that provide small- and mid-sized businesses with protection from the common property and liability risks they are likely to face.
BOP’s are specifically designed to cover businesses that face the same kinds of risks. These policies are ideal for low-risk businesses.
These policies are typically renewed annually.
Is a Business Owners Policy Required in Alabama?
A business owners policy is not required by law in Alabama. However, there are times when having a policy may be necessary, such as the following situations.
- If you are renting your business space, your landlord may require you to carry a BOP as one of the terms of your lease.
- If your business is currently paying on a commercial mortgage or a business loan, your lender may require you to maintain a BOP until your loan is paid in full.
Talk to a local independent insurance agent or a financial advisor to learn more.
What Are the Business Owners Policy Eligibility Requirements in Alabama?
Small business and mid-sized business with low liability risks are good candidates for a business owners policy. More hazardous businesses like construction firms and large companies will need to purchase a customized business insurance policy package instead.
For the most part, your business will qualify for a business owners policy if the following criteria are met.
- You employ fewer than 100 people
- Your company’s work is done in a small office or workspace
- Your company generates less than $1 million in revenues per year
- Your company operates in a low-risk industry
- Your company requires less than 12 months of business interruption insurance
If your business meets these requirements, you can talk to a local independent insurance agent to start reviewing business owners policy quotes. If not, you can discuss your other business insurance options.
What Is the Average Cost of a Business Owners Policy in Alabama?
The good news that that business owners policies tend to be more affordable than traditional business insurance policies. This is because they impose lower caps on their policy limits.
Most small business owners purchase business owner policies that cover $1 million per occurrence with a $2 million aggregate limit. This means that these policies will cover up to $1 million per claim and up to $2 million during the lifetime of a policy, which usually lasts about one year.
The average cost of a $1 million / $2 million policy is about $100 a month, but a very small business is likely to spend about half that much.
To find out how much a BOP will cost for your Alabama business, consult a local independent insurance agent and start comparing customized quotes.
What Does an Alabama Business Owners Policy Cover?
Your business insurance policy is designed to provide your small- to mid-sized business with most of the coverage it is likely to need.
Standard business owners policy coverages
- Commercial property insurance: This can cover your business property if it is lost or damaged due to a covered event such as theft, fire, or severe weather like a hurricane or tornado.
- Business interruption insurance: This can provide your business with a continuation of income if damages caused by a covered event force you to close down for an extended time to make repairs.
- Commercial general liability insurance: This can provide your business with coverage for some of the most common liability risks businesses face including premises liability coverage, product liability coverage, marketing liability coverage, and protection against charges of libel and slander.
Endorsements that can be added to your BOP coverage
Most insurance companies will enable business owners to add some additional coverage to their business owners policy by purchasing special endorsements. For instance, you may want to consider adding riders for the following.
- Inland marine insurance: This can cover your company’s valuable property whenever it is in transit or is being temporarily stored in another location.
- Liquor liability insurance: This can cover businesses that sell or serve alcoholic beverages, like restaurants and bars, in the event that they are sued for damage caused to a third party by an intoxicated patron.
- Cyber liability insurance: This is designed to cover against cybercrimes like data breaches. Since most businesses currently store customer data electronically, this coverage is increasing in importance.
Talk to a local independent agent to find out whether any additional coverage your business may need is offered as a policy endorsement by your BOP providers. If not, you may need to purchase a traditional business insurance policy package instead.
Your insurance agent can help you review your options.
What Does an Alabama Business Owners Policy Not Cover?
Business owners policies do have their limitations. If you need any of the coverage listed below, you will need to buy separate stand-alone policies. If you need a lot of the coverage that isn’t included, you may be better off buying a traditional business insurance policy package.
- Professional liability insurance: A BOP policy will not cover against professional errors. For this, you will need to buy an errors & omissions policy.
- Commercial auto insurance: If your business owns and operates vehicles, you will need to cover them with a commercial vehicle insurance policy.
- Workers’ compensation insurance: In Alabama, all employers with five or more employees are required by the state to carry workers’ compensation insurance, so you may need to purchase a separate policy.
- Health, life, and disability insurance: Insurance products for employee benefits packages must be purchased separately from a BOP policy.
- Flood insurance: Flood damage is excluded from nearly all types of insurance policies. If your business is at risk, you can purchase an affordable commercial flood insurance policy through the National Flood Insurance Program (NFIP).
Local independent insurance agents can help you review all of your business’s risks and coverage needs so they can recommend the best insurance products at the lowest available rates.
How to Find the Best BOP Insurance Rates in Alabama
If you are looking for an affordable business owners policy to cover your small business in Alabama, a local independent insurance agent can help. These agents work for you, not for a particular insurance company, so they can shop around to find a good policy at a low rate.
Find an insurance agent near you to get answers to your insurance-related questions and assistance with finding a competitively priced BOP policy.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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