One of the most important categories of insurance for nearly any small business is property and liability, also known as property and casualty. With that in mind, there are a number of important considerations you need to bear in mind when it comes to determining what types and how much property and liability insurance coverage you need for your business enterprise.
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Property and Liability Insurance Defined
At its essence, property insurance is coverage to protect your business from damage or loss associated with property associated with your venture. This can include everything from equipment to furniture in your business to a building you may own in which you operate your venture.
Liability insurance is coverage for your business for negligent acts or omissions. In other words, this type of insurance protects your business in the event that a product or service you provide through your enterprise somehow damages someone.
Property Insurance Coverage Up Close
There are three basic categories of property insurance coverage for a small business. The first of these categories is what is known as basic form. Basic form includes coverage for losses causes by things like fire, lightning, windstorm, hail and explosion. Under basic form, your business is covered only for actual losses. The specifics are contained with an insurance policy.
The second category of coverage is known as broad form. Broad form contains all of the coverage found in basic form. Broad form also includes losses caused by things like the collapse of a roof because of snow or ice as well as damage caused by accidental release of water. The extent of coverage is specifically delineated in an insurance policy.
The final category of property insurance coverage for a small business is special form. In some instances, special form is referred to as all risk. Special form covers all physical losses except for those that are explicitly excluded within the provisions of an insurance policy. This represents the most comprehensive type of property insurance coverage available. Because its coverage is so broad and comprehensive, special form is also usually the most expensive property insurance coverage derivation for a small business.
When it comes to property insurance coverage you have two other options for your business. First, you can obtain actual cash value coverage. This type of coverage pays compensation for loss based on the value damaged property taking into account depreciation.
Second, you can obtain replacement cost insurance. With this type of insurance, you receive compensation for damaged property based on its value without taking depreciation into account. This type of insurance has more costly premiums than does cash value coverage.
Liability Insurance Coverage Up Close
The importance of liability insurance coverage for your small business cannot be underestimated. This insurance is designed to protect your business from financial loss arising out of injuries, deaths, and damage to the property of another party caused by your products, operations, or employees.
Premises liability or operations insurance provides coverage for someone injured at your business. A common example of the type of injury covered by this type of insurance is that arising from a slip and fall accident.
Products liability insurance provides coverage for someone injured caused by a product or some sort of work performed by your business. The defect in a product could be in regard to its design or improper manufacturing.
Commercial Automobile Insurance Coverage
If you have an automobile, or automobiles, that you use for your business, commercial automobile insurance coverage covers this vehicle or vehicles. The coverages available through this type of policy is similar to what is found on a personal or individual automobile insurance policy.
Other Types of Property and Liability Insurance for a Small Business
Depending on the nature of your business, you may need some other types of insurance coverage that generally fall within the property and liability category. One type of insurance is called bonds. Bonds are a type of insurance that guarantee a specific type of performance by your business enterprise.
Business income and business interruption insurance provides coverage if your business operations are interrupted because of some sort of covered property loss. For example, if a major storm damages your business premises, rendering them unusable for a period of time, business income or business interruption insurance coverage may provide compensation for the income or revenue loss.
An insurance professional can assist you in ensuring you obtain appropriate property and liability insurance coverage for your business. Obtaining proper property and liability insurance coverage needs to be a priority for your business and not an after thought.
Jessica Kane is a professional blogger who focuses on personal finance and other money matters. She currently writes for Checkworks.com, where you can get personal checks and business checks.