By Rakesh Gupta
Seventy-five percent of small-business owners are underinsured, and 40 percent of small businesses have no insurance at all, according to Marshall & Swift/Boeckh. More than 9,000 on-the-job accidents happened in the landscaping industry in 2015 (Bureau of Labor Statistics), so it’s frightening to think that so many small-business owners are leaving themselves vulnerable to an accident that could destroy their whole business.
A business owner’s policy, or BOP, is an insurance coverage that combines general liability and property coverage into a single policy.
Each business is unique – with different numbers of employees, different services and different locations. These differences mean that each business also has unique risks, meaning the coverage can’t be one-size-fits-all. Furthermore, as the enterprise evolves, so should its coverage.
A standard BOP for a landscaping and irrigation company needs to provide the following protection:
General liability coverage protects the business from costs incurred through third-party claims or lawsuits if the business is responsible for bodily injury, property damage or personal injury. Considering the high amount of physical labor required in the landscaping industry, this coverage is critical for owners to hold.
If the company operates out of a building that it owns, the business owner will need to purchase property coverage for that building. In addition, some lease contracts require the company to insure the business space. It’s important to note that insuring the building for at least 80 percent of the replacement cost is typically required in order to avoid a penalty at the time of a loss. This is the section under which the company’s irrigation tools or an arborist’s equipment are covered in case of a fire, for example.
Business personal property
In addition to insuring the building, a company would also need coverage for the contents of the building. Business personal property coverage insures the “stuff” used to run the business. For a landscaper, that could include office furniture, seeding and mowing equipment, and the like.
Business income and extra expense
In the case of a covered loss like a fire or natural disaster, there could be additional expenses incurred if the operation must shut down for a time. Examples of this include payroll or rent. Business income and extra expense coverage replaces lost income, and also covers other costs required to get the business back up and running.
In addition to these typical coverages, a business owner’s policy can be customized. Adding endorsements addresses the needs and circumstances of the specific industry and policyholder. Endorsements, also known as riders, amend or add to an existing policy – like the base BOP – to change the terms or scope of the agreement. They can be added or changed at any time with the help of your insurance provider.
A landscaping or irrigation business owner should consider the following endorsements in their BOP:
Losing time due to equipment breakdown or malfunction can be incredibly costly. An equipment breakdown endorsement provides coverage for the failure of mechanical equipment used to conduct business, as well as the breakdown of electrical systems, air conditioning and office computers.
Professional liability coverage is also referred to as errors and omissions insurance, or E&O. This endorsement covers claims that a company caused damage by committing an error in performing a service or duty or that they failed to do something that should have been done in performing a service or duty. E&O coverage is especially important for professionals such as landscape designers and landscape architects.
As technology is an ever-present piece of daily business, data compromise coverage is crucial for any business that stores customer data in any way. This endorsement covers the response and defense liability for lawsuits and damages resulting from the loss, theft or accidental release of personal information. Response expenses can include notifying affected individuals, forensic IT review, legal review, and public relations services. Defense liability covers defense and settlement costs if an affected client files a lawsuit against the company.
Running a business is complicated, but business insurance should be simple. Although a BOP allows almost endless possibilities and coverage combinations, navigating the options doesn’t have to be difficult. An experienced insurance provider can help an owner build the customized policy that is right for their unique situation. With the addition of big data and predictive analytics, some insurance companies like biBERK offer business owners quotes in minutes after answering just a handful of questions online or over the phone – so that business owners can have peace of mind knowing that their business, in all its unique risks, is safely protected.
Rakesh Gupta is the chief operating officer at biBERK, part of Warren Buffett’s Berkshire Hathaway company, specializing in commercial insurance for small businesses. In his role, Gupta is spearheading efforts to use predictive analytics, big data and other technology innovations to simplify the insurance-buying process. His 25-plus years of leadership in technology services have paved the way for major breakthroughs in the travel, media and transportation industries. Gupta holds a dual M.S. in computer science and operations research from North Carolina State University in Raleigh, North Carolina, and a MBA from Creighton University in Omaha, Nebraska.