5 Coverage Gaps That Are Costing Colorado Small Businesses Money
Most small business owners in Colorado Springs assume their Business Owner's Policy has them fully covered. In most cases, it doesn't. Here are the five gaps I see most often — and what to do about each one.
The BOP Is a Starting Point, Not a Complete Solution
A Business Owner's Policy, or BOP, bundles general liability and commercial property coverage into a single convenient package. It's a solid foundation for most small businesses. But the word "bundle" can create a false sense of completeness — as if the BOP is a comprehensive solution rather than a starting point.
Here are the five gaps I see most frequently when reviewing small business policies in Colorado Springs.
Gap 1: No Commercial Auto Coverage
If you or your employees use personal vehicles for business purposes — making deliveries, visiting clients, transporting equipment — your personal auto policy almost certainly won't cover an accident that occurs during that business use. Personal auto policies typically exclude business use beyond commuting.
Many small business owners don't realize this until a claim is denied. A commercial auto policy, or a business use endorsement on a personal policy, closes this gap. If you have employees driving their own vehicles for business, you need hired and non-owned auto coverage as well.
Gap 2: No Workers' Compensation
Colorado requires most employers with one or more employees to carry workers' compensation insurance. Yet a surprising number of small businesses — particularly newer ones — either don't have it or have allowed it to lapse.
Without workers' comp, you're personally liable for employee injuries sustained on the job. Medical bills, lost wages, and rehabilitation costs can be substantial. And if an employee sues rather than filing a workers' comp claim, your general liability policy typically won't respond to employer liability claims.
Note: Operating without required workers' compensation in Colorado can result in fines, penalties, and personal liability for employee injury claims. Don't skip this one.
Gap 3: No Cyber Liability Coverage
Small businesses are targeted by cybercriminals more often than most owners realize. Large corporations have security teams and incident response plans. Small businesses typically have neither — which makes them attractive, lower-resistance targets.
A standard BOP has no cyber liability coverage. If your business experiences a data breach, ransomware attack, or phishing scheme, you're looking at notification costs, regulatory fines, credit monitoring for affected customers, and potential lawsuits — none of which a BOP will cover.
Cyber liability coverage has become increasingly affordable for small businesses, often $500–$1,500 per year for meaningful limits. For any business that stores customer data, accepts payments electronically, or relies on computer systems to operate, it's no longer optional.
Gap 4: Insufficient or Missing Professional Liability (E&O)
General liability covers bodily injury and property damage. It does not cover claims that your professional services caused a client financial harm. That's what professional liability — also called Errors & Omissions or E&O — is for.
Any business that provides advice, consulting, design, or professional services is exposed to E&O claims. A client who loses money and blames your recommendations can sue for damages well beyond what general liability will cover. Consultants, contractors, architects, accountants, real estate professionals, and many other service businesses need this coverage and frequently don't have it.
Gap 5: Business Interruption Limits Are Too Low
Most BOPs include business interruption coverage, which replaces lost revenue if a covered event forces you to temporarily close. The problem is that many small businesses accept the default limits without calculating what they'd actually need to survive an extended closure.
Ask yourself: if your business location became unusable for six months, what would your fixed costs be? Rent, payroll, loan payments, utilities, insurance premiums — these continue whether your doors are open or not. Your business interruption limit should be high enough to cover those fixed costs plus a meaningful portion of lost profit for a realistic recovery period. For most businesses, that number is higher than the default limit.
What to Do
Pull out your business insurance policy — or ask your agent to send you a summary — and work through this list. If you can't clearly identify coverage for each of these five areas, you have gaps worth addressing before a claim reveals them for you.
Business insurance reviews are one of the most valuable things an agent can offer. It costs nothing, takes less than an hour, and can prevent a claim from turning into a business-ending financial event. If you'd like to schedule a review of your business coverage, reach out directly.
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Ryan Reardon
Ryan grew up in Littleton, CO, graduated from Colorado State University in Fort Collins, and now calls Colorado Springs home. Agency License #920206 · NPN: 21766210