Property Insurance for Small Businesses
One of the most basic and important forms of insurance for companies of all sizes, property insurance provides financial protection against the loss of, or damage to, buildings or equipment a company owns or leases.
Typical types of losses against which a property insurance policy is designed to provide protection from include:
- A fire that destroys or damages your office or any company-owned (or leased) facility
- A burst water pipe that damages computers or unsold inventory
- A storm that damages equipment
- Similar accidents or events.
Along with losses from a fire or natural disaster property insurance will also provide coverage if equipment is stolen or vandalized.
Lenders or landlords may require property insurance before your company is able to borrow funds or lease real estate.
Types of property small businesses need to insure often include:
- Buildings or storage structures
- Equipment, furniture and supplies (including IT equipment)
- Business records
- Intangible property (applicable trademarks, patents or goodwill)
Because property insurance comes in many forms, it’s important to talk with your agent or broker to understand the types of coverage you are considering.
For instance, ask whether a policy offers replacement value (the cost of replacing damaged or stolen property or equipment) or actual cash value (the depreciated cost of an insured asset). The difference between these two figures can be considerable, and it’s important to know which policy form would apply.
Another important question to ask is how the insurance company would value any lost inventory. Some property forms cover lost inventory at your cost to produce it, while others value inventory at its projected sale price.
Another important consideration to understand while you’re shopping for property insurance is the fact that the coverage won’t cover any losses stemming from flood damage. Businesses interested in protecting their property from flood-related property or equipment damage should ask agents about the availability of coverage through the federal government’s National Flood Insurance Program.