A guide to insurance for those who rent their business location

If you're a business owner who rents a bricks and mortar location, a business owner insurance policy is still crucial to protecting the equipment inside your place of business -- as well as protecting against liability, crime, loss of use and more.

Nathan Brown, an insurance producer with W.E. Walker-Lakenan LLC in Jackson, explains a business-owner policy, or BOP, as a package of coverages that he puts together and customizes for clients. The BOP itself has just about everything a business owner should need -- namely, liability and business personal property coverage -- and other items can be added to the policy.

General liability is the base of the insurance pyramid, says Brown -- a coverage that every business should have first and most importantly. You can put a number on how much insurance you need for the contents inside your place of business, then write a policy for exactly what that amount is. But you can't put a number guarantee on the "catastrophic amount you could be sued for in a liability claim," says Brown. "General liability is most important because although there is more frequency of claims from a property standpoint, the severity of claims ... comes from general liability lawsuit claims," he adds.

Most BOPs come with business income and extra expense coverage, also known as "loss of use." Says Brown, loss of use provides coverage when you lose the ability to do business -- say a tornado rips the roof off your office and you need to shut down for repairs inside and out. Brown had clients out of business for months after the 2009 ice storm, for example, and loss of use coverage helped them keep up with bills and payroll, rent temporary locations and make up for lost sales.

"Make sure your policy has adequate coverage for business income and extra expenses -- anywhere from four to six months, even up to a year," says Brown.

As an add-on, Brown recommends employment practices liability insurance -- EPLI -- which is fairly inexpensive and covers cases of discrimination, harassment and wrongful termination. Brown also recommends crime coverages, or policies protecting against employee dishonesty (e.g. employees stealing or embezzling money from the business) and money insecurities (e.g. theft of money or securities).

Also important: coverage for leasehold improvements, says Bo Shantz, an agent with State Farm Insurance in Cape Girardeau.

"Most of the coverage needs are the same regardless if it is a tenant or owner-occupied risk," he says. "One of the biggest things for tenant business owners is to cover their leasehold improvements they made or paid for. Most of the other coverages are standard."

Utility interruption and identity theft coverage are two more coverages that are often overlooked but important for business owners to have, says Shantz.

"I know some look only at cost, and that is a factor, but also they should look at the financial strength of the insurance carrier, the reputation and experience of the agent or agency. It doesn't matter what you pay if you don't have the business covered correctly, and it's never a problem until it's a problem," says Shantz. "One of the biggest issues is getting the business owner to take the time to discuss and review their business insurance needs. Most don't want or take the time to look at what they have or need, but want everything covered when there's a problem."

If damage does occur at your place of business, Brown says the first thing business owners should do is make sure everyone is OK, then do damage control to make sure the problem can't get any worse. Then, call your insurance agent.

"My advice to my clients is to call us and discuss the best course of action," Shantz agrees. "Sometimes it's best to turn the claim in as soon as possible and sometimes it might be better to get an estimate of repair or have a contractor look at the damage to determine the extent of damage first. Either way, good communication is the key to success."