Property Insurance covers the building or buildings and contents of the business. Outdoor signs, vehicles, crime coverage, property of others, and glass coverage can be covered as well. Business policies are often written for a combination of property and liability insurance.
Almost all policies, exclude such events as wear and tear, as insurance is intended to cover sudden and accidental occurrences. For instance, if the motor in your copier suddenly dies, your insurance will not replace the copier. However, if the short in the motor causes a power surge that shorts out other equipment, replacing the other equipment might be covered, provided there are no exclusions for shorts.
Property insurance will cover the building in which you do business, the fixtures utilized to run that business, carpeting, and drapes. The contents of the building can also be covered, if you elect that coverage. Contents includes all non-permanently affixed items, including your computer, equipment, supplies, inventory, and stock.
In deciding how much property insurance you want, you need to ask yourself three questions:
What do you want covered?
The more that is covered, the more the insurance will cost; but you want to make certain that your losses don't jeopardize the continuation of your business. If there is a fire or other catastrophe, what do you absolutely have to replace.What risks do you need to insure against?
Fire, flood, theft are some of the possibilities. Find out what risks are covered where you live and then choose which ones you feel are critical for you. Some risks are not covered in certain "high-risk" areas. For instance, flood insurance may not available or may be prohibitably expensive in some places that have a high probability of floods. If you live in such a location and insurance is not available, you may want to self insure.What dollar amount do you want to insure your property for?
The higher the amount of coverage, the higher the premium. You don't want to spend all your money on insurance, but you do want to be able continue your business should a disaster happen. Think about what the replacement value of your property would be. What would it take to keep your business operational. One way to reduce this cost is take a higher deductible. The deductible might be a financial strain at the time of a disaster, but you could continue operations. It is up to you to determine what you can live with should disaster strike.
Most of these coverages require that you choose a deductible. The deductible is the monetary portion of the damages which you, as the insured, will bear when a loss occurs. The good news is the higher the deductible, the lower the premium. However, you do not want to take such a high deductible that you place your business in financial jeoparday should a loss occur. Consider carefully how much loss you can handle in choosing your deductible amount. You need to balance what you can afford in cash outflow for premiums against what you can afford to lose should a catastrophe happen.
