Business property insurance is typically offered by specific risks. For instance, you may purchase fire and theft insurance. There are some insurance companies who will offer broad-based policies that will cover a variety of risks and potential hazards to your business. When determining the risks that are most likely to occur and potentially destroy your business property and disrupt your business, insurance companies will take into account the type of business you run, your business’ physical location, and the region in which you do business.
The pricing for business property insurance varies based on how well you are protecting your business against such potential risks. If you already have top-notch security measures in place, working sprinklers and pay close attention to fire and building codes, then maybe you will choose to pay less for fire and theft insurance. The amount of business property insurance needed is different for everyone. Evaluate your business and your needs to determine the right amount of coverage for you.
A lot of businesses choose to purchase business property insurance and liability insurance under one policy, as a general business owner’s policy. Keep in mind however; the coverage under this general business owner’s policy is not as great as it would be should you purchase the two types of insurance separately. Again, evaluating your specific business will help you determine if you should combine the two insurance types, or have them be separate.
If there is a loss that occurs and it is one that is covered under your business property insurance policy, the insurance company will, in most cases, pay most of the costs. However, there is typically a deductible, which is the amount the insurance company will require you to pay. For example, if a loss occurs and damages are in the amount of $10,000, and your deductible is $1,000, you will be responsible for paying the $1,000, while your insurance company will pay the remaining $9,000.
A business property insurance policy with a low premium rate will typically have a higher deductible, while a higher premium rate will mean a lower deductible. Once again, depending on your business and associated risks involved, you can best determine which option is better for you and your business. In some cases, it is better to pay a higher premium and lower deductible at the time of an incident or accident. This is because at the time the incident or accident occurs, you will want to spend your money as sparingly as you can, as your business operations may be slower or temporarily halted. However, if you need a lower premium in order to heighten your monthly cash flow, it may be better to opt for the higher deductible. Just be aware that your business will then carry a greater risk, should any incident or accident occur.
Business property insurance deductibles can be determined based on individual claims or an aggregate basis. To make this decision, assess how many claims you anticipate making, which will help determine what deductible will work best for your business. If you are a small company and anticipate just a few claims, you will find that paying per claim may be to your advantage. If you are a larger company and expect frequent claims, then you would fare better with cumulative payments made on an aggregate basis.
With business property insurance, there are also numerous ways in which you can recoup money for property damages. An assessment of the actual cost it is to replace the lost or destroyed item (less depreciation) is known as a “cash value” basis. Replacement costs refer to the replacement or repair of an item at the current valued cost. This type of coverage, known as replacement coverage, is however less common, and will have you paying higher premiums than you would for a cash value basis of payment.
It is recommended to do your business insurance research online, as well as speak to a business property insurance professional who can help you best assess your business property insurance needs.