Business Owners Insurance Part 1: Property Damage CoveragePosted on Oct 16, 2017
Property damage coverage is called many different things by different insurance carriers. It may be referred to as business property insurance (BPI) or commercial property insurance. Whatever it is called, it is one of the essential components of a solid Business Owner’s Policy (BOP).
What Does Property Damage Coverage Protect?
Insurance is all about protection. As a business owner, it is essential that you protect the investment of time, money, talent, blood, sweat, and tears that you’ve put into your business. You do this with a business owner’s policy. In part, you need this type of insurance because it helps to protect the physical property that houses your business from damage related to fires, windstorms, thefts, and acts of vandalism.
In other words, if a fire destroys your retail store, the property damage coverage available as a part of your business owner’s policy will help you pay for the repairs to the building, as well as assisting with the costs involved in replacing merchandise, fixtures, and other equipment that was damaged in the fire.
Even if you don’t own the physical building where your business is located, you do own equipment, inventory, tools, and other property that may be difficult, if not impossible, to replace out of your own pocket after a covered event has happened.
What Kind of Property Damage Coverage Does Your Business Need?
You will typically have a choice of two options for assigning value to the property that is covered by your property damage coverage. These include actual cash value coverage (ACV) or replacement cost coverage.
The difference is that ACV policies take things like depreciation into account when assigning value to the items being replaced while the replacement cost policies offer coverage for the actual cost of replacing lost or destroyed property.
If budget is a priority when purchasing insurance, an actual cash value policy might be more attractive. Just remember, this type of coverage comes with a greater financial risk if a covered event occurs. Replacement cost coverage brings a higher monthly premium, but the sticker shock when covered events occur is considerably less with this type of business property insurance protection.
Business Owners Insurance Basics
Now that you know a little more about the property damage aspect of your business owner’s insurance policy, it is wise to explore the other types of coverage commonly included in your BOP.
In addition to the property damage insurance, you are also likely to need general liability protection for your business and business income insurance.
Liability coverage helps to protect your business from the financial fallout if someone is injured on your property, your products are defective, or there are errors in the services you provide. It does not include professional liability (or malpractice) coverage as part of your business owner’s liability coverage. You will need to purchase a separate policy specifically for that type of protection for your business.
Business income insurance will help cover the loss of income that occurs in the aftermath of covered events. This can be while the business is closed for repairs and it helps with things like paying bills that are coming due even though your business isn’t operating or the added expenses of operating in a temporary location while repairs are being made to your business.
Do You Need a Business Owner’s Insurance Policy?
The fact is that all businesses need the basic protection a business owner’s policy provides. You may even find that you need additional property damage coverage beyond what is included in your standard business owner’s insurance policy – along with other types of protection this policy does not provide.
The BOP is considered the minimal essential protection for businesses. Working with a trusted insurance agency that understands your community is essential for getting the right types and amount of business insurance protection for your business.
Why Otterstedt Insurance Agency for Your Business Owners Insurance?
Buying a BOP is a critical decision for businesses of every size. Otterstedt Insurance Agency understands how important this decision is for the health and recovery of your business when disaster strikes.
We have served the personal and business insurance needs for residents and business owners in New Jersey and beyond since 1919 and continue to do so today thanks to our dedication to the people we serve and not the policies we offer. Call us today, at 201-227-1800, to learn more about your business insurance coverage needs and options.
View Parts 2 and 3:
Business Owners Insurance Part 2: General Liability Coverage Client
Business Owners Insurance Part 3: Income Insurance