Starting your own business isn't for the faint of heart. But thanks to the skills and abilities developed while serving in the military, entrepreneurship is a natural next step for many veterans. In fact, one in 10 small businesses in the U.S. are veteran owned Opens in a New Window. See note 1
Whether or not you've served, if you've made the decision to be your own boss, you know there are dozens of factors to consider and decisions to make as you build and grow a small business. One crucial piece of that puzzle is business insurance.
Of course, there are a variety of coverage options when it comes to insuring your small business. And with everything else on your plate, it can be a bit intimidating. To help make the decision easier, insurance providers often offer a special coverage bundle for small business owners, known as a business owners policy.
What is a BOP (Business owners policy)?
A business owners policy, or BOP, is an insurance package that combines three essential coverage types designed specifically for small businesses:
- General liability insurance
- Property insurance
- Business income insurance
These essential coverages address some of the major risks small businesses face. And when you purchase them together, you'll often get better rates. That's because many insurance companies offer a discount for bundling multiple types of insurance.
Who needs a BOP?
Owning a small business can be an exciting and rewarding opportunity for veterans, reservists and even active-duty service members. But it can also come with unexpected risks, especially if you're operating as a sole proprietor.
Believe it or not, over 70% of small businesses are sole proprietorships according to the Small Business Administration. In fact, you could be one and not realize it. If you perform business activities but haven't registered as another type of business, you're considered a sole proprietorship by default.
But here's the problem: As a sole proprietor, there's no separation between your business assets and your personal assets. You can be held personally liable for your business' debts or obligations, and that liability is unlimited.
While it's true that personal liability or homeowners insurance policies may offer some coverage for incidents that impact your business, they may not cover all the risks you face. Many of these policies restrict coverage for lawsuits stemming from business activities.
That means if you or your business face a lawsuit or large claim, you may be responsible for paying the expenses out of pocket. Plus, everything you own could be on the line — and not just your business, but also your house, car, retirement savings and more.
For that reason, many small business owners, and especially home-based businesses, opt for BOP coverage to provide the right type of protection and give them greater peace of mind.
Keep in mind that not all small businesses qualify for BOP coverage, and every insurer has their own requirements for eligibility.
What does a BOP cover?
Standard business owner policies include general liability and commercial property coverage. Some providers, like USAA, also offer business income insurance as part of their BOP. Together, these coverages provide more complete protection for small businesses while helping them save money (compared with purchasing multiple standalone policies).
General liability coverage
We've all heard stories of frivolous lawsuits, and most of the time, they're a good laugh. But if you're a small business owner, those stories probably make you cringe.
Your concern is justified. A property damage or bodily injury claim against your business, or even one related to personal or advertising injury, can quickly turn into an expensive lawsuit. Without liability insurance, you could get stuck covering all legal fees and other associated expenses on your own. It might even put you out of business.
On the other hand, if you have liability coverage for your business, you can rest easy knowing you'll have help if hit with a lawsuit — frivolous or otherwise. And while the primary goal is to protect both your business and your personal assets, it should be noted that general liability coverage is usually required for commercial leases.
Commercial property coverage
Whether you're operating out of a rented office or your garage, property insurance is an important coverage for your business. But commercial property insurance covers more than just the physical workspace you own or rent. It also includes the “personal property” of your business, such as:
- Raw materials.
- Product inventory.
- Furniture and other furnishings.
- Office supplies.
- Computers and electronics.
- Equipment or machinery.
Property insurance can help protect your business from loss, damage or destruction caused by fire, smoke, wind, theft, vandalism and other covered events.
Business income and business interruption coverage
Even with insurance, it can still take time to repair or replace damaged property after a covered event. If the damage is extensive, your business could be shut down for days, weeks or even months — and that could have a serious impact on your finances.
Business interruption insurance can help cover lost income and other key expenses while your business is being restored to working order. Be sure to check with your insurance provider to see if your policy has a time limit for this restoration period.
Enhance your BOP with additional coverage.
Every business is unique, and a standard BOP may not offer all the protection you need. Fortunately, insurers like USAA and the USAA Insurance Agency can help you tailor your policy to fit your business with a variety of additional coverage options, such as:
Cyber liability
Cybercrime hurts businesses and their customers. Get help covering financial losses related to cybercrime, including cyberattacks and data breaches, with cyber liability insurance.
Professional liability or errors and omissions (E&O)
Unhappy customers can bring serious lawsuits to the table. Whether it's a claim of negligence or financial harm resulting from your professional services or advice, you'll want professional liability insurance to help cover your legal fees.
Business or commercial auto
If you have a business vehicle, such as a truck or delivery van, or if you use your personal car for business purposes (even for advertising), you may need commercial auto insurance to be sure you have coverage for your unique situation.
Off-premises utility interruption
A standard BOP can help cover lost income when your normal operations are disrupted by a covered event on your property. But what if you're impacted by a power outage, gas-line break, or water shutoff that occurs offsite? This special type of insurance can help offset lost income.
Umbrella coverage
An umbrella policy adds an extra layer of coverage to your existing liability limits that can help protect you against a potentially catastrophic claim.
Workers' compensation
If your small business has employees, most states will require you to carry workers' compensation to cover medical fees and lost wages for employees who can't work due to work-related illness or injury.
Talk with your insurance provider to learn about the many types of coverages that are available to you. They'll help you find what you need to protect your business today and tomorrow.
Get a business insurance quote.
Starting your own business is hard work. Let USAA help protect it.