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When it comes to insurance, you never stop learning. Even the most grizzled vets don’t know everything.

Here at Whiteboard, it’s our firm belief that continued education is imperative if we want to stay effective at our jobs, relevant to our clients, and innovative in our industry (Oh… and also it’s mandatory if we want to keep our license, which would be helpful as well).

Anyway, we bring this up because Whiteboard recently attended a quick webinar on Business Owner Policy (BOP for short) Coverage. For those of you who have no idea what we’re talking about, let’s get the basics really quick. Our friends at Google tell us that a BOP is:

Insurance policies that combine protection from all major property and liability risks in one package. A Business Owner Policy or BOP is an insurance package that assembles the basic coverages required by a business owner in one bundle.”

Similar to a Commercial Package in that it brings multiple lines of insurance together, BOP coverage is tailor-made for “main street” businesses and designed to take care of most small business insurance needs in one transaction.

Back to the Webinar.  Most of the session was fairly basic, but then something was said that stood out.  It’s a fact that affects a huge percentage of the people with BOPs, but we’d guess that an even higher percentage know nothing about it.

See, one of the coverages that is bundled into a BOP covers the property owned by a business.  This means that if there’s a fire in your building and you lose a bunch of stuff, you’ll be covered.  One neat little feature of the standard BOP coverage form is that any of your business’ property within 100 ft of your building is also covered.  That’s a great thing for those businesses that have to store things, but don’t necessarily want to bring them inside.

But here’s the hiccup:  the standard BOP form states that it covers property “in or on the buildings at the described premises or in the open (or in a vehicle) within 100 feet of the described premises.”

What about sheds?

It turns out that if property has been placed in a shed within 100 ft of your building for more than 90 days, there’s a very high probability that it’s no longer covered under your insurance policy because it no longer meets the qualification of being “in the open.”  This can cause big problems (and disappointments) for all types of businesses that store tools, equipment, extra stock, etc in their sheds.

So, what can you do?

  1. Talk to your broker.  Not every insurance carrier handles this the same way.  Some will follow the “letter of the law” and not cover losses, while others will simply cover everything within 100 ft of your building regardless of whether it’s locked up or not.  Still other carriers have gone above and beyond, creating their own BOP forms that are more clear.  In any case, make sure you know how your carrier handles these claims.
  2. Schedule your shed. In insurance talk, “schedule” is just a fancy term for specifically listing something on your policy.  If you’re able to go this route, it’ll take care of the gray area, and the problem goes away.  The drawback here is that it may cost you some money to do so.
  3. Get creative. If all else fails, you can always change the way you store your property or (and this makes more sense to me) you can look into a different coverage to specifically take care of the exposure.

The Bottom Line: Whether you have a BOP or you don’t, whether you have a shed or you don’t, no matter what insurance you have, always make sure you know where you’re covered and where you’re not.