Small business property insurance can be purchased on the basis
of the property's actual value (the replacement cost minus depreciation),
its replacement value (the cost of replacing an item without deducting
for depreciation), or on an agreed-upon amount (commonly used
for art objects and other unique items).
Basic property insurance will generally cover your losses in
the event of a fire or a lightning strike, and will pay the cost
of removing property to protect it from further loss. Additionally,
a standard small business insurance policy will usually cover
losses from windstorm, hail, explosion, riot and civil commotion,
and damage caused by aircraft, automobiles, or vandalism. Optional
business insurance coverage can insure against earthquakes, floods,
building collapse, and glass breakage. Property insurance can
be categorized by what is insured and by the events leading to
a loss.
For example, you'll want to make sure your building is covered,
as well as your inventory, furniture, equipment, and supplies.
Even if your business rents space, your lease might require certain
types of insurance coverage that you must carry. However, just
because the building owner carries all the necessary insurance
on the building in which you operate, doesn't mean it will cover
any of your equipment, furniture, and other business possessions.
Named-peril policies will cover certain losses resulting only
from those perils that the policy names; all-risk policies offer
coverage for all perils except those specifically named in the
policy. An all-risk policy is usually sufficient for the average
small business, but keep in mind that all businesses, and thus
their insurance needs, are different.
Some insurance companies specialize in small business insurance
coverage. For instance, some policies offer additional protection
that pays out if your building is destroyed and it costs more
to demolish and rebuild it to code than its previous value; provides
full glass coverage and full sign coverage; additional coverage
for damaged landscaping; and extends coverage limits for newly
acquired buildings. So, if you shop around, keep in mind that
these types of business insurance coverage are not always standard.
Deductibles for property insurance can be calculated on a per-claim
or on an aggregate basis. The out-of-pocket cost for per-claim
deductibles is often lower, so if you're in a business that has
a relatively low chance of filing a claim, you might consider
this. Business insurance with a lot of claims would do well to
consider calculations on an aggregate basis.
Make sure the full value of an item is insured and check the
terms for reimbursement. Just because you may have $1 million
in coverage doesn't necessarily mean the whole amount is going
to be applied in a given category of property. Also, think about
whether or not you want the policy to automatically renew each
year. If your company has a variable growth pattern, you may want
to adjust your coverage annually.