The business owners’ policy (BOP) is the commercial equivalent of the homeowners’ policy. It provides property and liability protection for small businesses. The BOP offers business property and liability protection for small and medium sized offices, apartments, manufacturing, service and processing businesses. It provides broad coverage on a simplified basis. The BOP contains its own declarations and common conditions form similar to those found in the commercial package policy for larger businesses.

Whether or not a business is eligible for a BOP depends upon the size of area of the small business. Office buildings may be no more than 6 stories high and contain no more than 100,000 square feet, apartments and wholesale services may not exceed 25,000 total square feet with less than $3 million in gross annual sales. Property coverage is provided under one of two available forms: 1. Standard Property Coverage form 2. Special Property Coverage form

These coverage forms include a definitions section, conditions and exclusions. Property coverage is subject to a deductible. The standard form provides coverage against cause of loss including: • Fire • Lightning • Extended coverages • V&MM • Sprinkler leakage • Sinkhole collapse • Transportation The Special Form provides open-peril coverage except for those causes of loss that are specifically excluded.

Both forms have available optional coverages for an additional premium. Optional coverages available under the Standard Form include: • Burglary and robbery • Employee dishonesty • Outdoor signs • Glass • Mechanical breakdown of objects The optional coverages available under the Special form include money and securities in addition to the available coverages of the Standard form.

The BOP is comprised of Section I and Section II coverages. Section I covers the insured's buildings and business personal property. The business personal property is covered in the covered building, on the covered building or anywhere within 100 feet of the insured premises. Section II of the BOP provides coverage for commercial liability similar in scope to that provided by the CGL. Coverage is provided for the legal liability of the insured arising out of the ownership of the business premises and the business activities. Products liability, fire legal liability, medical payments and supplementary payments are also provided by the liability section in the same fashion they are provided by CGL coverage.

The basic liability limit is $300,000 and can be increased to $500,000 or $1,000,000. As mentioned previously, only certain types of small businesses are eligible for BOP coverage. The following are examples of eligible risks for BOP coverage: • Small repair shops of any kind • Drugstores • Bake shops • Beauty salons • Small convenience stores • Pizza shops

There are several classes of risks that are not eligible for BOP coverage including but not limited to: • Most types of contracting businesses • Any large manufacturer of products • Hospitals • Auto dealerships • Pecuniary institutions (i.e. savings bank.) Under both policy forms losses, except money and securities, are settled on a replacement cost basis. This includes coverage for the buildings and the business personal property. Deductibles are available starting at $500 standard and may be increased to reduce the premium (maximum of $2,500).

An important feature of a BOP is that it offers replacement cost and no coinsurance coverage to small and medium size businesses. The property not covered by the BOP is very similar to the excluded property listed in a CGL. Note: Unless at least 31% of a buildings' total square footage is rented or used to conduct customary operations the building owner would have no coverage for: Vandalism, sprinkler leakage, water damage, glass breakage, or theft. Other perils, such as fire, are still covered.

Workers' Compensation Insurance Worker's Compensation insurance provides protection for employees who are injured as a result of their employment. This type of insurance coverage also protects an employer against legal action that an injured employee (or survivors) may pursue. Worker’s Compensation law is based on the following principles: • Negligence is not a factor in determining liability for bodily injuries sustained by an employee. • The injury cannot be intentionally self-inflicted. • Benefits will be paid to an injured employee on a periodic (monthly) basis.

• The cost of coverage is paid by the employer (non-contributory). • The purchase of insurance coverage is required. • Worker's Compensation insurance provides coverage for work-related injuries and sickness only. It does not provide benefits to employees who suffer non-work related injuries. Premium Determination for Workers’ Comp: Premium charges are based on the type of business involved (work or job classification), the number of employees, and the total payroll.

Workers' Compensation insurance is available from commercial insurers. If an employer is qualified it may self-insure. If an employer is unable to secure Workers' Compensation insurance in the standard market, most states operate an assigned risk pool which allows these employers to obtain Workers' Compensation protection. The Workers' Compensation policy consists of several parts. Part I Coverage under Part I applies to mandated or statutory benefits. The insurer providing coverage agrees to pay the injured employee all benefits required by the Workers' Compensation law. The benefits available to an employee who is injured as

a result of his/her employment include: • Medical Expense Benefits The insurer will cover unlimited reasonable medical expenses related to the occupational injury or sickness. • Income Benefits Loss of income benefits are paid to qualified injured or diseased employees. Generally, a waiting period must be satisfied by the injured worker before income benefits will be paid. • Dependent Funeral Expense Benefit Benefits will be paid if a worker dies as a result of his/her employment. Two types of benefits are provided including burial expense and survivor benefits.

Reasonable burial or funeral expenses will be covered by the policy. In addition, a survivor or dependent benefit is also available if the worker is fatally injured. • Restoration Benefits It not only aids the injured worker to recuperate more quickly but helps the employer, since his/her injured employee will return to work sooner. Covered expense or services include: • Physical, occupational and speech therapy • Vocational training • Wheelchairs, mechanical appliances and prosthetic devices (artificial limbs) • Transportation and lodging during the rehabilitation period

Employer's Liability Part II of the Workers' Compensation policy protects an employer against legal suits filed by an employee. The standard limits of liability presently available for this protection is $100,000 per accident; $100,000 per occupational disease; and a $500,000 aggregate for occupational diseases. An employer may purchase higher limits for an additional premium. Other States Insurance Part III of the Workers' Compensation policy provides optional coverage. Part I and II are mandatory if the policy is purchased.

Other states insurance provides Workers' Compensation coverage in additional states to which an employee may travel as part of his/her employment duties. A Workers' Compensation policy also includes the following policy sections: • Part IV duties to be performed by all parties when an injury occurs. • Part V description of premiums. All premiums will be determined by the insurer and will be based upon: the type of work in which the employer is involved; the payroll of all workers; and the number of workers employed. • Part VI conditions of the insured and insurer.

Longshoremen and Harbor Workers Compensation and medical benefits for disabled or deceased employees of maritime employments are provided under federal law. Employments such as longshoring, harbor work and ship repairing fall under federal guidelines. Coverage is furnished by a Workers' Compensation policy with an added endorsement. The employee's death or disability must result during travel upon navigable waters of the U.S. The Jones Act The Jones Act, a section of the Merchant Marine Act, allows an injured seaman to elect to sue for damages and to have a jury trial.

Insurance is provided under the Employers Liability section, but when the exposure exists, the insurer usually requires the Maritime Coverage Endorsement that actually limits the insurance and adds a few more exclusions. Federal Employees Compensation Act Employees of the federal government are provided (civilian employees) benefits administered by the federal government. Private insurance is not involved.

Federal Employers Liability Act This Act protects interstate railroad workers only. It allows the injured worker (or representative of the deceased worker) to sue the employer for negligence and removes contributory negligence and assumption of risk as available defenses.