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A Business Owners Policy (BOP) is insurance that allows a business (that meet certain criteria) to combine coverage from multiple policies into one convenient package. BOPs are created for businesses that face similar risks and often appeal to small and medium-sized businesses. However, larger companies can purchase a commercial BOP package and customize it to fit their needs. These days, there’s a BOP for most mainstream businesses, from hair salons to hardware stores, which makes the process easier.

Errors and omissions insurance (or E&O) is a form of professional liability insurance. It covers a business for services rendered that did not have the expected or promised results, or that result in a loss or personal injury suffered by the person receiving those services. It also covers situations where the individual or company failed to render services at all. Engineers, stockbrokers, accountants, insurance agents, and lawyers may be covered by E&O.

Malpractice insurance is also a form of professional liability insurance. Malpractice insurance covers healthcare professionals, physicians, dentists, pharmacists, and others.

In order for your business insurance to cover flood damage, your company must carry a separate flood insurance policy or endorsement. A typical commercial property insurance policy covers specific water damage situations but excludes flooding.

The wording and water damage exclusions vary from one insurance company to another. Be sure to review your policy carefully and discuss your specific risks and concerns with an independent insurance agent who can help you get the coverage you need.

If your business carries commercial crime/theft coverage, your business insurance will cover employee fraud and embezzlement.

There are several different forms of employee dishonesty coverage. You can purchase several types of fidelity bonds to protect the business in the event of dishonest acts by all employees, or by named employees.

Depending on the nature of your business and any insurance that you are legally obligated to carry, the following types of business insurance should be considered essential:

• General liability insurance: Coverage against accidents, injuries and negligence claims.
• Product liability insurance: Coverage against product defects.
• Professional liability insurance: Covers professionals against malpractice, negligence or errors.
• Commercial property insurance: Covers against damage to your business property, such as from a fire or a severe storm.
• Business interruption insurance: Protects your business if you are no longer able to conduct your business because of a loss.

Some businesses need specialty coverage for equipment, shipping and other risks. Because commercial insurance needs to be tailored to each business based on risks, it is critical to work with an agent, who will get to know your company and ensure that your coverage adequately protects your business investment.

Business insurance is required by law, but only under certain conditions. The following business insurance is required by law if it is applicable to your situation:

• Unemployment insurance: Applies to a business that has employees and may be obligated to pay unemployment insurance taxes under prescribed conditions. If these conditions are applicable to your business, then you must register your business with the state work force’s agency.
• Workers’ compensation insurance: If your business has employees, you are most likely legally obligated to carry workers’ compensation insurance, either on a self-insured basis or through a commercial insurance carrier or a state workers’ compensation program. Workers’ compensation laws vary by state.
• Professional liability insurance: Some states require specified professionals to carry insurance against professional liability.
• Disability insurance: Several states require that a business have partial wage replacement insurance coverage for eligible employees for non-work related injury or illness. These states are California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island.