If your business gets whacked by severe weather, take heart. A standard business owners policy, called a BOP, provides coverage for a wide range of weather-related disasters, such as burst pipes, wind and rain damage, and damage to buildings caused by heavy ice and snow, among others.
Business owners who suffer damage due to power outages may also look to their property insurance coverage or a type of business insurance called a “boiler and machinery” policy (which actually cover all kinds of items) to recover losses. These policies may even cover personal effects of you and your employees up to the policy limit (usually $2,500), but only if you’ve added “Personal Effects and Property of Others” coverage to your policy. This coverage does not include theft, however, even if theft is a covered cause of loss under the policy. Here are other critical things to know:
If there’s physical damage to your place of business and it affects your ability to be open, business income insurance (also known as business interruption insurance) will come into play – if you have that kind of coverage. “Small business owners should aim to have sufficient policy limits to cover the company for more than a few days,” says Loretta Worters, a vice president at the Insurance Information Institute. “When there’s a problem, it often takes more time than most people think to get a business back on track. And there is generally a 48-hour waiting period before business interruption coverage kicks in.”
If you have “extra income” coverage as part of a business interruption policy, your you’ll be reimbursed for any money you spend over and above normal operating expenses in order to avoid shutting down while your business recovers.
And some types of business interruption insurance don’t stop with your business alone. According to Worters, even if your business isn’t affected by a weather disaster, but your suppliers or customers are, you could be protected with “contingent business interruption” insurance. “Small companies today are more heavily dependent that ever on materials and services from key suppliers. If one of those vendors can’t deliver, contingent business interruption insurance will help,” says Worters.
Commercial vehicle insurance also plays a role. Automobile accidents resulting from slippery weather, for example, are covered under a commercial auto policy. And damage to vehicles from falling branches or other debris is covered under the optional comprehensive portion of the policy.
BOP Basics: BOP coverage is the basic (and most affordable) insurance that nearly every small business should have. BOPs are “off the shelf” type policies combining many of the basic coverage types needed by a typical small business at a premium that is generally less than would be required to purchase these coverages separately. Combining both property and liability insurance, a BOP will cover your business in the event of property damage, suspended operations, lawsuits resulting from bodily injury or property damage to others, and more.
However, BOPs do not include professional liability coverage, insurance for your vehicles, workers compensation or health and disability. You will need separate insurance policies to cover professional services, vehicles and your employees.
For more coverage of business insurance topics, visit the business insurance solutions section at Business.com.