In Part 2 of this three-part insurance series, we will continue our discussion of the types of insurance available for small business owners in today’s marketplace. If you haven’t yet read Part 1, read it here.
In our last article we discussed one type of commercial liability insurance – General, Professional, and Products liability. Now, let’s look at commercial insurance that covers your business assets, which is called property insurance. After all, while we are caring for others, we need to care for ourselves and our business, including those items we use in day-to-day operations.
Commercial Insurance Package Coverage
Commercial insurance is as broad and varied as the world’s business community. This is what makes it specialized – and confusing. Your insurance agent/ broker can help, but if you know the basics, what she recommends will make much more sense.
Many small business owners don’t realize how easy it is to accumulate assets, most of which, when taken individually, are not expensive. But when your total assets are added up, it can be surprising to see how much they are worth. Could you handle the financial strain of replacing all your business assets at once? If not, consider obtaining this optional commercial property coverage.
While large enterprises often have specialty policies written just for them, many national insurance companies have prepared Business Owners Package (BOP) Policies that are designed to cover the majority of circumstances that a small business owner could encounter. The insurance company puts several types of coverage together in one policy which can include not only General, Medical Payment, and Products Liability, but also that all-important Property Coverage for your business assets. The one drawback to these policies is that they are unlikely to include Professional liability (malpractice) insurance and you will need to purchase that separately.
A quick look at the Property Coverage section of a Business Owners Policy shows that it covers damage to buildings, machinery, equipment, items used to maintain or service these, floor coverings, and appliances. If improvements that you have made to the property as a tenant become damaged, that is covered. If equipment you lease is damaged, that is also covered.
When there is a loss to property, there can be additional expenses that you’ll incur, such as debris removal, fire department service charges, and even loss of business income, as well as the extra expense incurred to keep a business operational after a loss. These are also covered to a certain extent.
The Business Owners Policy also covers property you own that’s used in your business, as well as property of others that is in your care. This includes office furniture, printers, supplies, reference books, and even your favorite mug.
For an additional cost, your income itself can often be protected, up to a stated limit. For example, some policies will reimburse you for counterfeit money that you accept in good faith, as well as for forged or altered checks.
What’s Often Not Covered
Of course, not everything that happens is covered by insurance. The most obvious exclusion is wear-and-tear of your property, including equipment and machinery that becomes obsolete and needs to be replaced. When an extreme occurrence such as war and nuclear explosion happens, it is so devastating and widespread that no insurance can begin to pay for it. Earthquake, volcanic action, or flood requires separate policies or payment of additional premium to be covered.
Other Limitations on Coverage
Lastly, there are sublimits and/or time limits within the policy for specific types of property and losses, such as for cash, computer equipment and records storage, outdoor property and signs, and business continuation. This is why it is important to read your policy and know what these are, as they can vary from policy to policy. These sublimits keep the price of a policy affordable by limiting payments to a basic level. Most of the time, if due to the nature of your business you need more coverage than is provided in the Business Owners Policy, it can be purchased separately.
While you certainly hope to never use your insurance coverage, it can prevent a bad day from destroying your ability to run your business, allowing you to continue seamlessly serving those who need your help the most.
In our third, and last, installment of this insurance series, we will discuss how to read an insurance policy.
Read Part 3 >>
About Resolute Michaels, NTP, BCHN
Resolute Michaels, NTP, BCHN® is the owner of Primal Perspectives. She is certified in nutrition by the Nutritional Therapy Association and the BioIndividual Nutrition Institute and is Board Certified in Holistic Nutrition®. She and has a private clinical practice in Burien, WA and Federal Way, WA. Prior to becoming an NTP, Resolute spent 30 years as an insurance claims adjuster, handling bodily injury claims, as well as litigation involving policy language interpretation. She has earned the prestigious Certified Property Casualty Underwriter (CPCU) and Senior Claims Law Associate (SCLA) designations. She can be reached at email@example.com