Business Property Insurance

A significant aspect of every business is your business property insurance. Aside from wages, the single most important asset you have in your business is your business premises and to protect that, you need business property insurance.

What is business property insurance?

Business property insurance is a way for you to protect your business assets. Business property insurance provides coverage for your office space, building structure, and equipment. If during the unfortunate event of a fire or other disaster and you incur some damages, business property insurance is something you can depend on when the cost of damages is great. Business property insurance can help you pay for the reconstruction and replacement of losses caused by events specified in your business property insurance contract.

What does business property insurance cover?

Business property insurance covers two basic things: buildings and contents. Business property insurance covers these two from damages caused by fires, lightning, explosion of gas and boilers.

Damage or loss caused by "special perils" like explosion, riot, malicious damage or vandalism, storm, flood, impact by aircraft, road and rail vehicles, and pipe and sprinkler leakage is not generally covered by business property insurance. However, if you wish to add these damages, you may get a tailor-made policy for business property insurance that includes coverage for special perils.

An "all-risk" business property insurance policy is also available for you if you want wider coverage. All-risk business property insurance covers accidental damage or loss that are not specifically excluded. Wear and tear, electrical or mechanical complications, and gradual deterioration are not covered by an all-risk policy however unless it is specifically stated in the business property insurance contract.

How much business property insurance should I purchase?

The amount of business property insurance you should purchase depends on the type of coverage you need. However, if you want to take full advantage of the kind of protection that business property insurance provides, you need to insure your business premises for the full rebuilding cost. This means that when you purchase business property insurance, you need to consider the replacement value of your building, including professional fees and the cost of site clearance.

Most buyers make the mistake of using the market value of their building premises as basis for how much business property insurance they ought to purchase. The market value of a property depends on so many things and may go up or down, depending on the overall movement of the economy. So if you buy business property insurance that is equivalent to your building's current market value, there's no telling whether in the future that amount can provide enough coverage in case of accidents or disasters.

When calculating the rebuilding cost of your building premises, you might need expert advice from your business property insurance agent or broker.

In addition, when you buy business property insurance for content coverage, you should insure enough to cover the cost price and no additional for profit. Business property insurance can cover your stocks for its full cost price. Also should stocks fluctuate with the seasons, business property insurance may also cover that if stated in a provision. Business property insurance may offer either "replacement as new" or "indemnity" coverage for your plant or business equipment. If you business property insurance uses indemnity as basis, claims may include wear and tear.