What is a Business Owner's Policy?

As a dentist, it’s important to make sure you’re prepared for as many contingencies as possible. A business owner's policy generally provides broad protection against both property damage and certain legal claims. Think of it as the rough equivalent of homeowner's insurance for your business.

If you have ever thought about managing a dental practice of your own, it is a policy that you will need to secure. Take a closer look at what it includes, how it works and how it may protect your practice.

How Does a Business Owner's Policy Work?

A business owner's policy is typically a comprehensive policy — that is, it combines different forms of coverage in a single policy. Although many business owner's policies are customizable, they generally contain two main forms of protection: liability insurance and hazard protection.

The property insurance portion of a business owner's policy typically provides coverage only for the events listed in the policy. Commonly covered events are fire, explosion, vandalism, and smoke damage. Some business owner's policies offer "open peril" coverage that protects in the case of all known risks, but this is not the norm. The insurance generally provides coverage only to property housed inside or within close proximity of the actual business premises. Policies may also provide coverage to third-party-owned property that is being kept temporarily in the care of the business owner.

The liability portion of the policy covers the insured party's legal responsibility for damages it may inflict on others in the course of normal business operations. This coverage is not all-inclusive, and variations occur from policy to policy. Generally speaking, however, business owner's insurance covers damage due to defective products, faulty maintenance or improper installation of equipment, personal injury and errors in provided services.

Business owner's policies may also contain business interruption insurance, which replaces lost business income in the event that a fire or other natural disaster destroys your workplace. It may also cover the additional expense of operating at a temporary location while your premises undergo repair.

Who Can Have a Business Owner's Policy?

Businesses in low-risk industries that occupy a relatively small footprint are good applicants for a business owner's policy. In order to be eligible, your business may need to:

• Have fewer than 100 employees.
• Occupy a small and contained workspace, building or office.
• Operate in a low-risk industry. Financial institutions categorize businesses in terms of risk. Because dental practices have a high profit margin, and dentists generally pay back their loans, banks consider them to be low risk.
• Require less than 12 months of business interruption insurance.

What Does a Business Owner's Policy Cover?

Typical provisions of the policy may include:

• Business and personal property. The policy could provide coverage of your premises and the personal property housed within them, allowing you to repair or replace structures, equipment, furnishes, or fixtures you own.
• Business income. The policy may protect your business if you experience a loss of income from an unexpected event, such as a fire or act of vandalism, that interrupts your ability to generate revenues. This provision is generally referred to as business interruption insurance.
• Equipment breakdown. This provision could provide coverage when you experience income loss as the result of damaged or malfunctioning equipment.
• Accounts receivable. If your accounting records are damaged, this feature can protect collections.

• Computers, media, and records. The policy helps make sure that your computer and attendant devices are covered in the event of loss or vandalism. The policy probably does not cover losses or corruption of data due to cyberterrorism; it is important to check with your insurance company to see if additional coverage is needed.
• Business liability. The policy may cover injuries and damages sustained on your premises due to faulty equipment, environmental hazards, or the actions of either you or your employees.
• The legal expense for disposal of medical waste. If your business is accused of violating waste disposal regulations, this provision may cover the legal costs of rectifying the situation.
• Reimbursement of legal expenses. The policy covers the expense, up to a specified limit, of dentists who need to appear before a legal review board or court review, in the case of disciplinary action.

In addition to these typical provisions, most insurance companies allow their clients to add endorsements in order to adapt a business owner's policy to meet their specific needs.

About Treloar & Heisel

Treloar & Heisel is a premier financial services provider to dental and medical professionals across the country. We assist thousands of clients from residency to practice and through retirement with a comprehensive suite of financial services, custom-tailored advice, and a strong national network focused on delivering the highest level of service.

Treloar & Heisel and Treloar & Heisel Risk Management are divisions of Treloar & Heisel, LLC.

Insurance products offered through Treloar & Heisel and Treloar & Heisel Risk Management.

This information is intended for general informational purposes only. The provisions and definitions discussed are not binding. You should review your insurance policy for binding provisions and definitions.

Treloar & Heisel, LLC. and its divisions do not offer legal advice. Please consult a professional concerning these topics.