Editorial Director
John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.
Small business owners often look for ways to cost-effectively manage their risks. Many turn to business owner’s policies for their insurance needs. A BOP is aimed at small businesses and combines general liability, commercial property and business interruption insurance and is typically more affordable than buying the three policies separately.
To get a better appreciation for BOPs and the advantages this coverage offers small businesses, Insurance.com recently interviewed Jeff Duncan, executive vice president and head of commercial lines at AmTrust Financial, a multinational insurance holding company that offers BOPs and other specialty property and casualty insurance products.
Duncan manages the firm’s $1.2 billion property and liability portfolio focusing on small businesses and the trucking and real estate industry verticals as well as nonprofits. He is responsible for product management and pricing, underwriting, agent experience and portfolio profitability. He is currently launching a new countrywide BOP product as part of AmTrust’s investment in building a single platform to support all the insurance needs of small business owners.
A slightly edited version of Insurance.com’s interview with Duncan follows:
Insurance.com: What are business owner’s policies, or BOPs, and why do small businesses need them?
Duncan: BOPs protect business owners in three big ways.
First, if someone gets hurt at your location or while using your product, a BOP can pay for an attorney to defend you and even pay the cost of a settlement or jury verdict.
Second, if your building, equipment, or inventory are destroyed in an accident or stolen, a BOP can pay to replace them so you can get back to running your business.
And since getting back in business after an accident often takes time, a BOP can pay some of your ongoing expenses like leases or the cost to expedite replacement equipment. A BOP can even pay you for the net profits lost because your business was closed.
It’s hard enough getting a small business off the ground – and a lawsuit or an accident could derail your plans and destroy your investment. A BOP can help protect you and get your business back on track so you can focus on growing your company.
Insurance.com: What do BOPs cover and what don’t they cover?
Duncan: BOPs are designed to cover most of the risks a business owner faces: fire, theft, vandalism – even a car crashing into your building. They also protect against most lawsuits involving an accident that hurts someone or damages their property.
But they can’t cover everything. Floods and earthquakes are excluded by most insurance policies. BOPs also don’t protect against a downturn in business or a mistake like ordering the wrong equipment for a job.
BOP usually includes general liability, commercial property and, often, business interruption insurance. But can BOP insurance be customized? Can you add endorsements to BOP insurance?
Insurance.com: BOP usually includes general liability, commercial property and, often, business interruption insurance. But can BOP insurance be customized? Can you add endorsements to BOP insurance?
Duncan: Customizing a BOP isn’t just possible – it’s a great idea. If your business doesn’t have a lot of equipment or inventory, you might buy general liability only – it can be a great value on its own as protection against the enormous cost of a lawsuit. You can also add special additional coverage unique to your business, like professional liability coverage for contractors or special property coverage for high value medical equipment. An independent agent can help you make sure you consider all your options and get coverage that meets your needs.
Insurance.com: Are there certain businesses that are a better fit for BOPs? If so, what businesses and why?
Duncan: I think every small business should have a BOP. As a former small business owner, I remember how hard I worked to make payroll, stay stocked, and figure out what my customers wanted so I could deliver it … and I remember how proud I was as the business started to succeed. It was a sweat equity and emotional investment as much as a financial one. My BOP was a way of ensuring that I wouldn’t lose that investment because of something outside of my control. If something went really wrong, I’d have help getting things back on track. I think every business should have that peace of mind.
Insurance.com: How often should small business owners review their business owner’s policy – especially if their business is growing quickly?
Duncan: You should review your BOP annually to make sure the limit for your building, equipment, and inventory is adequate. If your growth is coming from new operations or product lines, be sure to tell your agent to make sure your coverage is appropriate.
Insurance.com: Are there any common mistakes small business owners make when they consider a BOP? If so, how can they avoid making those mistakes?
Duncan: Some business owners underestimate the value of their inventory or equipment because they think it will save them money on premium. It might do that, but it could also mean paying out of pocket in the event of an accident. Talk to your agent about other ways to save money by increasing deductibles or fine-tuning other coverage.
Another common mistake when purchasing a BOP is not buying enough liability limits – especially for successful businesses or owners with personal assets. If someone is seriously injured by your company and you get sued, you want to have enough liability limits to ensure that the injured party doesn’t come after the assets of the company or the owner as an individual. Again, work with your agent to consider your options and get the right coverage for your business.
Q: Are there certain businesses that are a better fit for BOPs? If so, what businesses and why?
Jeff Duncan
Jeff Duncan is EVP and Head of Commercial Lines at AmTrust Financial.
“I think every small business should have a BOP. As a former small business owner, I remember how hard I worked to make payroll, stay stocked, and figure out what my customers wanted so I could deliver it …. My BOP was a way of ensuring that I wouldn’t lose that investment because of something outside of my control.”
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