Business Property Insurance
Property insurance for a business provides umbrella coverage for the business premises which includes the building, all the business assets contained within as also the intangible assets which the business possesses from damage, theft and losses of other types.
Property insurance can be a contract to provide compensation for specific incidents, such as fire or theft. Most business property insurance policies provide protection for common and well known reasons for loss, such as fire, theft or natural disaster. Most insurance companies also allow buyers to purchase and add coverage for other reasons, as suitable. For example, a business in California might cover itself against earthquakes, while a company in Florida would prefer to add a rider for covering its business against hurricane related losses. This reasoning also extends to intangibles, in the sense that a software company might opt to purchase coverage against loss of data, while a research lab might cover itself against intellectual property theft.
The premium is calculated by the insurance company based on a number of factors, including the nature of the business and its exposure to risks, risk management measures implemented by the company, location of the business, business policies and a study of the businesses’ history and previously filed claims, if any. It goes without saying that a business which has comprehensive risk management procedures and policies in place along with well trained personnel who are not likely to be the cause of mishaps will definitely be offered relatively lower premiums. While the subject of risk management is too vast to be covered as a sub-topic within this article, it has to be said that a professional and comprehensive risk management strategy is something which every business needs to implement, regardless of the type and scope of property insurance purchased.
Business owners may opt to purchase a business owner’s policy (BOP), which combines property and liability insurance into one policy, albeit with lower coverage. For businesses which require a high amount of coverage, it might be more advisable to conduct an internal survey of the business, and come up a risk analysis which pin-points urgent requirements. The business owner can then purchase specific policies which deal with differing situations and assets.
Another aspect of business insurance is one which covers loss due to interruption of business, whatever the reason. This becomes especially important for a business to tide over the situation until such time as business is restored back to normal. Business interruption insurance can be used to pay for salaries, immediate expenses, payments which need to be made as also any loss of profit due to the interruption. Similarly extra expense insurance can be used to relocate, reorganize and build up the previous infrastructure enjoyed by the business, in case of severe and permanent damage to the existing premises.
Business insurance is a highly flexible concept, and the coverage amount and areas, premiums and other relevant aspects are often finalized after discussions and an agreement on the terms of the contract between the policy purchaser and the insurance company. You are advised to consult with your financial planner, a trusted insurance agent, valuation specialists and risk management experts in order to be able to protect and grow your business without any interruptions.