What To Look For in Property Insurance

What should I look for in property insurance for my business?

Commercial property insurance offers different options for coverage with a number of variables.  It doesn’t matter whether you are insuring the building, the business property or any combinations, a variety of options are available to pick from.  It is important to understand how the property is valued at the time of a loss, and whether replacement cost or actual cash value was chosen.  This question is really what needs to be answered first, before a claim, to help determine what works for your business.

Replacement cost is coverage which will pay with “Like kind or quality” up to the policy limit in place and subject to any deductible. Guaranteed replacement isn’t normally found in commercial insurance like it is in homeowners insurance, but if you are fortunate enough to have that coverage, the loss will be covered to replace the building to its original state, even if it means exceeding the policy limit.

Remember, it’s like kind or quality.  If you had carpeting, the policy isn’t going to replace with mahogany or bamboo flooring or imported Italian tile.  It’s always a good idea to photograph or digitally record your space and hold those off site.  When filing a claim, it is much easier to determine “Like kind or quality” from visual records.

Actual cash value is the cost of repair or replacing the property less depreciation.  Depreciation is the loss in value of the property due to time and wear and tear.  Again, this coverage is subject to limits and deductible.

Choosing which type of coverage that is right for your business is difficult.  Normally, Actual Cash Value is less expensive than Replacement Cost.  The difference in premium can be substantial.  Sit down with your licensed insurance professional and determine scenarios and risk.

Meet with a commercial contractor and ask for an estimate for rebuilding.  Make sure you review this policy at least annually with your agent and update them during the year of any changes or additions to your location.

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Business Insurance Isn’t Complicated

Business insurance isn’t complicated; break it down by these categories.

Often, we hear things like “business insurance is complicated and difficult to understand” or that it seems like many policies may do the same things in terms of coverage. Let’s break down business insurance in its simplest forms.

Buildings and Property

Property and Casualty insurance covers building and property. As simple as that seems, there are a number of losses that aren’t covered, such as flooding as one example. Just because your business is in leased space and not owned also does not mean you can go without property and casualty insurance. So, in addition, it’s possible you need to consider certain types of disaster insurance, like flood insurance. Ask your licensed insurance professional their recommendations and why.

Employees

Every business must have workers compensation in place to protect them if an employee is injured on the job. Some states also require disability coverage be provided. Meet with your licensed insurance professional to determine what coverage is mandatory.

There are a number of additional insurances available to business. Ask your insurance agent/broker about options available for your business. Have a frank discussion about what risks your company faces while conducting your day to day business.

Benefits like health and life insurance are not mandatory, but are put into place to attract and keep qualified employees.

Liability Insurance

Your general liability coverage will include legal fees and damages in a covered claim and/or lawsuit. Bodily injury, property damage, personal injury, and general damages are normally covered. Professional liability however, is written under a separate policy and is often referred to as Errors and Omissions insurance.

Vehicles

A commercial auto insurance policy will cover your business vehicles and their drivers. Again, while seeming quite simple, many business owners assume a variety of risks by using their cars and assuming a personal auto policy will cover any risk. Sometimes, the auto coverage can be combined with Property and Casualty in a Business Owner’s Policy.

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Use this as a guideline in reviewing options with your licensed insurance professional.