A business owner's policy is your one-stop resource for effective insurance coverage. Because your BOP combines general liability and business property coverage, it’s both efficient and valuable. Still, how can you make it worth the price?
To get the most out of this coverage, focus on price efficiency. You’re in luck, too, because you can focus on your BOP’s bottom cost-line to do so. A BOP’s cost, year after year, can increase or decrease depending on your property value. Before you try to get the best BOP around, understand your property costs.
Commercial Property Insurance
Commercial property insurance is vital to your business. If you’re going to purchase a BOP, you’ll benefit from in-depth property coverage.
The value of a commercial property policy differs from business to business. Its overall cost will reflect the different areas it covers:
The business’s location
Because this policy protects your commercial property from vandalism, natural disasters, theft, construction accidents and more, its price reflects your location’s risk. It’s also determined by the value of your real estate—as well as your assets.
Your Property’s Assets
If your property has expensive or irreplaceable assets, it’ll need more coverage. Thus, a more expensive business owner's policy will likely result. Your BOP, in most cases, will cover any property on, or near, your premises. A few examples include:
- Raw material
The Insurance Institute suggests taking the assets of others into account, too. If you have another entity’s property in your control, care or custody, you’re responsible for it in most cases. This said, your BOP package can usually cover some of the value under liability coverage.
Your Property Itself
Your business’s location has value, too. Your BOP will cover your location’s structures—as well as its permanent fixtures. A few other property-related items it covers include:
- Outdoor fixtures
- Building appliances
- Construction additions
You can insure your building based upon its actual cash value if you buy a policy reflective of its true worth. Or, you can opt for a policy which handles your property’s value based upon its replacement cost. In this case, your policy insures the property based upon the costs of rebuilding. Keep in mind, replacement coverage is generally more expensive than cash value replacement. That's because with cash value coverage, you'll only get funding based on the depreciated cost of the property.
To get the most out of your policy, leverage your property’s value against the potential for property loss. Take your business operations into consideration, here. Costs associated with inactivity are hefty. You can avoid them if your business has sufficient policy coverage. Once you’ve determined your location’s value, you can secure the BOP needed to meet your financial needs.