Business owner’s insurance – packaged commercial insurance protection for your business.
Complete Vermont Business Owner’s Policy (BOP) Guide
Owning and running a business is the dream of many people working in Vermont; many people act on that dream—over 600,000 small businesses start up each year, with hundreds starting in Vermont.
Potential business owners and professionals transitioning from employee to employer don’t realize the number of potential financial risks involved. From disgruntled clients to workplace accidents to property damage, several issues can negatively impact your business’s bottom line. While your company can always learn from mistakes and take alternative measures, you need protection for your finances and assets so your mistakes don’t hinder your ability to maintain operations. A Vermont Business Owners Policy (BOP) provides financial protection for your business and assets.
Do I Need a Vermont Business Owner’s Policy?
Overlooking the importance of business insurance means putting the financial stability of your business at risk. A business owner’s policy is several insurance coverages bundled into one policy offering basic coverage for your company. It’s often a good starting point for small-to-medium-sized businesses. A bundled Vermont commercial insurance policy like a BOP helps simplify the process for business owners.
Not all businesses are eligible for a business owner’s policy because it offers protection for specific types of businesses with certain characteristics. Such as fitting a particular risk profile, being within a specific revenue range, falling within a certain property size, and type of operations, to name a few. Insurance providers will have different requirements, but generally, you can expect these to include:
- The business location
- The size of the business location
- Business revenue amount
- Your business classification
Insurance providers look at location and size as two indicators for eligibility. For example, most have a maximum square footage measurement for the business property and have a cap on the maximum number of employees. Many businesses in Vermont are a good fit for this type of commercial insurance package. As a result, a BOP works well for a retail store, café, or apartment building. In Vermont, there are also a significant number of home-based businesses. You can get a Vermont business owner’s policy on home-based business, too, for example, if you are a consultant working out of your home. With a business owner’s policy, you’ll have more coverage than if you just got a rider added to your homeowners’ insurance policy.
While a business owner’s policy is an excellent option for many businesses, you may not always want to keep it that way. As a company grows, it may not only need higher levels of coverage but more customized coverage for its niche and customers. At this point, you may need to upgrade to a commercial insurance policy. However, for thousands of Vermont small business owners, it’s a great fit and will provide all the basic coverage they require.
What Does a Vermont Business Owners Policy Cover?
We’ll now get into the coverages included in a business owner’s policy with some of the specifics covered. Because these policies are designed for general use for small business owners, you will see three main components: property insurance, business interruption insurance, and liability protection.
Vermont Property Insurance
Property insurance provides compensation and protection for your business property if you suffer a loss or damages. Business property applies to buildings owned or rented and items owned by the business such as tools, equipment, and inventory. If a third party owns a business item, but it’s in the care of the company, this will generally apply as well. Note that any property included in the policy must be stored or kept near the business premises. For example, you would be covered if you were loading a piece of equipment onto a truck and it fell and broke. However, if you took company property home and spilled coffee on it, it may not be covered. Some businesses expand their coverage to make sure such incidents are covered. Talk to your agent if you frequently use business equipment, computers, or tools off-premises to ensure coverage for these instances.
Insurance policies provide financial protection for covered perils. A peril is an event that happens, causing damage or loss to the company or its assets. Your policy will outline the types of perils included and those excluded in your policy. Excluded coverages are called policy exclusions. Depending on the terms of the policy covered, perils include:
- Fire damage
- Wind damage
- Smoke damage
The terms of your policy will determine the limits of coverage for property damage or loss. It will also specify the deductibles you will pay if you file a claim. A deductible is a defined amount that you’re obligated to pay if you file a claim, just like the deductibles you pay for health, auto, and home insurance.
Business Interruption Insurance
As you can imagine, any accident or disaster can result in several harmful impacts on a small business. Not only do you need to pay to remove damaged items and replace them with new ones, but while this is all going on, you may not be able to generate any income. This is where business interruption insurance comes in. This coverage is included in your business owner’s policy so that if a covered peril disrupts business operations, loss of income coverage will cover it. Coverage for tangential expenses may also apply, for example, if you need to move operations to a temporary location while repairs.
In Vermont, severe storms with heavy wind, rain, or snow can damage and disrupt business operations. Snow and wind can bring down trees and damage property, causing temporary closings for businesses while repairs are made. This is one example where business interruption insurance will help cover expenses and wages while the business is closed.
Liability Insurance for Vermont Businesses
Liability insurance is designed to protect the company by covering any legal responsibility for damages that may happen to other people. This isn’t for employees—that would generally be covered by workman’s comp. Instead, this applies to accidents or incidents involving customers, vendors, or someone else that enters your business. For example, say a delivery person is bringing something to your office, and they hurt themselves due to an accidental trip hazard in your reception area. Liability insurance would cover their medical bills and your legal responsibility.
Additional Commercial Insurance Coverage for Vermont Businesses
While a business owner’s policy (BOP) can help protect your business in various situations, it doesn’t apply to all cases. Depending on the needs of your business, you may need to upgrade your policy or add additional coverage. It all depends on the business risks you operate with. Here are some examples of coverages that you may want to add to your BOP.
Natural disaster coverage: Your base policy will cover things like wind or fire damage, but other events, like earthquakes or flooding, are excluded. You can purchase both flood and earthquake insurance through your independent insurance provider. These insurance policies are government-run and managed by FEMA. Consulting with an insurance agent specializing in commercial insurance will help you assess the risks to your business and whether you’ll need to add additional flood or earthquake coverage.
Errors & omissions (E&O) coverage: This type of coverage applies to liability if the information you provide/mistakes you make leads to an issue for your client. A good example is the work of a tax advisor. If your tax advisor provides services, makes a mistake, and their client gets audited, this coverage will help cover legal fees and settlements if you need to defend yourself in court against that client.
Employee dishonesty coverage: Employees partaking in illegal activity on your company’s time and property can lead to potential losses. This can be either through employee theft or customers/clients potentially being turned away due to their activities.
Business auto insurance: If your employees regularly drive as a part of their job with you, in a company vehicle or not, you may be legally liable if someone gets hurt in an accident and is at fault. This policy provides coverage for vehicles and drivers conducting business on your behalf. This is especially important for contractors or other companies where your employees frequently travel to different worksites, often in branded vehicles.
Personal/advertising injury: This is an all-inclusive term for a policy covering your legal fees if you need to go to court over a case involving slander, libel, or copyright infringement. For example, if someone steals a trademarked idea and you sue them over it, this can help with your legal fees.
Cyber liability insurance: Over 3,800 data breaches were recorded in 2019, and despite what media coverage tells you, the bulk of this attention was targeting small businesses. Vermont small businesses are not immune, and small businesses are uniquely vulnerable because they don’t have the money to invest in the protective software many other companies do. A breach can result in heavy fines and loss of income, resulting in a small business closing its doors. In today’s business climate, there are more and more opportunities for attacks making this policy something that companies should strongly consider.
What Does a Vermont Business Insurance Policy Cost?
One of the first things people want to know is how much a business owner’s policy will cost. This varies, but these policies are designed to be affordable for different businesses. Business owners’ policies range from a couple of hundred dollars to a couple thousand a year. There is often flexibility in the payment schedule, whereas you can pay annually, every six months, quarterly, or monthly. Exactly how much is going to vary by industry, type of risk, industry, and various other factors. For example, an e-commerce business run from someone’s house may not have much valuable property or liability, so their premiums will likely be lower than those of a building contractor who has more risk exposure.
By comparison, a construction company has both valuable property and large liability due to the nature of its work. Because of this, they may pay higher premiums. Also, this is just for baseline policies. Any additional coverage we mentioned in the last section will add to the cost but, in exchange, offers more expanded coverage. Other factors that can impact the price include:
- Your claims history
- The size of your staff
- The length of your policy term.
- The dollar amount of your deductibles
- The size and value of business property
- The nature of your operations and the industry you’re in
Both policy limits and deductibles can impact premium costs. For example, if you are willing to pay higher deductibles, that could reduce your premiums. It is also essential to balance policy limits. Lower limits mean lower premium costs but less coverage if you need to file a claim. It is often worth paying for the higher limits to make sure you have enough coverage in place to cover losses and or damages to the business.
How Do I Get a Business Owner’s Policy for My Vermont Business?
It’s easy to see that a business owner’s policy is a good solution for many small to medium-size businesses. Now, let’s find out how to shop for one. Remember, while the base policy is relatively uniform, you’ll want to work closely with your agent to discuss whether you’ll need a customized solution covering your business’s unique needs and liabilities and the specific risks of your industry. Be honest and upfront about your business and your operations. Agents will help assess risks and present coverage options for your business. If you withhold information, it could result in a lack of coverage if you have a claim. An independent commercial insurance agent specializing in business insurance can help guide you through the insurance buying process, starting with your application, risk assessment, quote, and payment options. They will help create a business insurance plan that fits your needs and budget.
The first step is to gather the information and documents you’ll need to fill out your application. Be sure always to fill these out as accurately as possible. This information determines the type of coverage you need and how much your premiums costs, but if you provide false info, your claims may be denied. Below is a list of information you’ll need to get started with your Vermont business insurance application.
- Estimated revenue numbers for the next 12 months
- Assessed value and type of all equipment, tools, and inventory
- Information on how long the business has been open and how long you have been in the industry
- Information about your current insurance policies
- Past claims history
- Details on if you work with the public, with hazardous materials, or anything else that may cause more liability
Next, to adequately customize your policy for your specific needs, your agent will ask you questions about your business, industry experience, employees, and operations to do a risk assessment. Assessing risk is one way an agent can establish the type and level of coverage you’ll need. For example, if you know you will be handling customer data, you want to have a cybersecurity policy. If you are opening locations in a flood zone, you may wish to get flood insurance. Your agent can advise you on whether your packaged business owner’s policy will cover you or if you’ll require policy endorsements to expand coverage. Endorsements do not replace the BOP; they are in addition to it.
Lastly, all businesses have a budget and are mindful of costs. Work with your agent to get the best value for your insurance, meaning the most coverage at the most competitive price.
Think of it this way. The amount of money you save with a slightly cheaper premium is far less than what you lose if you are underinsured in the event of a claim. Medical bills, legal fees, and significant repairs can quickly drain the financial resources of a small business without adequate coverage.
A business owner’s policy is essential for protecting your company and its assets. However, simply picking the first option you come across is a poor decision. Different business niches with different structures all have different needs for how they need to protect themselves. Finding the right match for you requires working with an insurance professional specializing in business insurance. Call Colby Insurance Group to speak with a commercial insurance specialist at 800-392-6532.
Business Owner’s Insurance in Vermont Quote Request
As an independent agency, we are here to help you find the right coverage.
Get a Quote
It only takes a minute to get started.
- Fill out the form, we’ll be in touch.
- Review options with an agent.
- Get the coverage you need.