Your livelihood is dependent on the survival of your business, so it is imperative that you protect it against any potential threat – big or small. For instance, a fire could destroy your business’s warehouse and the contents inside, or a burst frozen pipe could damage important documents and valuable papers. Worse, you could have trouble paying your employees during a loss because your time and funds are devoted to repairing damage.
It is wise to obtain property insurance. This coverage comes in many forms to suit your specific needs. Before purchasing coverage, take a complete inventory of all your business property to determine how much you need to insure. This important step ensures you will have adequate coverage to continue your business in the event of a covered loss.
Types of property to insure
- Buildings and other structures - leased or owned
- Furniture, equipment and supplies
- Money and securities
- Records of accounts receivable
- Leasehold improvements and betterments you made to the rented premise
- Computer hardware & software
- Valued documents, books and papers
- Mobile property such as construction equipment or laptops
- Signs, fences and other outdoor property
- Intangible property such as goodwill and trademarks
- Salaries and payroll
- Extra expenses as a result of loss
Are you buying enough property insurance?
One of the most important aspects of purchasing property insurance is making sure that you have not purchased to much or too little. No one wants to be over or underinsured. A typical policy will provide the replacement cost value for your building and for your business property. Replacement cost value is the amount that is necessary to replace or rebuild your building or repair damages with similar materials, without considering depreciation. Actual cash value, on the other hand, is the value of your property when it is damaged or destroyed. This amount is typically determined by subtracting the depreciation from the replacement cost value. Actual cash value usually applied to stock or inventory coverage.
Some property insurance policies include a co-insurance clause, which requires limits to insured to 80-90% of the replacement value of the property. This will allow you to receive full coverage for your losses. If for some reason inadequate limits of insurance for the property insured are not to value, the insurance company may force the property owner to pay a percentage of any loss as a co- insurer. For example, if you insured for only 50% of the replacement cost, you would only be paid 50% of any type of loss including partial loss. Insuring to 100% replacement cost would avoid this potential penalty and ensure full payment for any loss or damage. The co-insurance clause is negotiable, and can be deleted from the policy subject to some simple requirements.
Reliance Insurance understands that determining your business’s value is critical, so we’re here to help. Contact us today to learn more about our property insurance and loss control solutions to protect your business.