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Business Insurance Primer


A Business Owner's Policy (BOP) includes business income insurance, often called business interruption insurance, which compensates business owners for loss of income should a disaster hit that disrupts operations or forces you to vacate your offices. So BOPs also cover the expense of operating out of a temporary location.

Extra coverage can be added for such specific risks as an outdoor sign or e-commerce that may slow or go down due to a virus or a hacker. BOPs are based on the size of your premises, limits of liability, type of business and extent of off-site activity. BOP premiums are based on these factors as well as business location, financial stability, building construction, security features and fire hazards.

Small businesses also need to purchase:

  1. Property insurance — Compensates if property used in business is lost or damaged due to fire or theft and covers your building or structure and personal property such as office furnishings, inventory, raw materials, machinery, computers and other items vital to your operations. Property insurance may also cover equipment breakdown, removal of debris following a fire and some types of water damage.
  2. Liability insurance — Pays out if you're sued due to customers saying you had a defective product, an error in service or disregard for another person's property. There also may be allegations that your business created a hazardous environment. Liability insurance pays damages if your business is found liable, up to policy limits, and legal defense expenses such as attorneys' fees. This coverage pays medical bills for injuries by or on the premises of your business.
  3. Business auto insurance — Covers autos owned by your business and costs to third parties resulting from bodily injury or property damage if your business is legally liable, up to policy limits.
  4. Workers' compensation insurance — Pays for medical care and replaces a portion of lost wages for an employee insured while working. If an employee dies because of injuries sustained while working, workers' comp provides compensation to the worker's family. Every state except Texas demands this insurance if you employ more than three to five workers, depending on the state.

Umbrella insurance serves as extra insurance beyond the dollar limits of a general policy. Claims large enough to reach umbrella limits are rare, so this coverage is relatively cheap. There are some specific insurances you may want to consider, such as internet business insurance, crime and fidelity insurance, business interruption expense insurance, home-based business insurance, and sprinkler leakage insurance.

A BOP fits the general needs of many small businesses but may not cover everything. Every business has inherent risks. Protecting your investments with insurance potentially covers such sensitive areas as data risk and wireless transactions. Don't get bogged down with options as the market becomes increasingly complex — essential small business insurance is what you're after. Give yourself room to breathe, and make sure you're covered. Give us a call.

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Davis & Graves CPA, LLP
Davis & Graves CPA, LLP
700 N Main Ave
Gresham, OR 97030
Office (503) 665-0173
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