It is important for a business owner to take a complete inventory of all business property, determine its value, and decide what’s worth insuring. If the items that need insuring are not covered within the basic policy, adding more coverage may be necessary.
For example, a business owner will want to make sure the building is covered, as well as inventory, furniture, equipment, and supplies. Even if the business rents space, the lease may require certain types of insurance coverage. When renting property, it is important to note that while a building owner may carry all the necessary insurance on the building, the business owner’s equipment, furniture and other business possessions will not likely be covered.
“As for home-based businesses,” adds Oleh Mahlay, “You should be careful in making sure your business work area and business property is identifiable from home and leisure use. This is important not only for business purposes but also for tax purposes if you take home-based business tax deductions.”
Named-peril policies will cover certain losses resulting only from those perils that the policy names; all-risk policies offer coverage for all perils except those specifically named in the policy. An all-risk policy is usually sufficient for the average small business, but keep in mind that all businesses, and thus their insurance needs, are different.
Find a company specializing in small-business insurance
Some insurance companies specialize in small-business insurance coverage. While shopping for business insurance, a business owner should keep in mind that coverage are not always standard between companies.
A common breakdown of a small business insurance policy would include: accounts receivable coverage up to $25,000 (higher limits are available); coverage for contractors’ equipment that is both at the job site and that is in transit; building materials that will become a permanent part of the structure, plus the labor involved with completing the installation; and peak-season coverage that automatically increases limits by 25 percent during peak inventory periods.
Deductibles for property insurance can be calculated on a per- claim or on an aggregate basis. The out-of-pocket cost for per- claim deductibles is often lower, so if a business owner is in a business that has a relatively low chance of filing a claim, he or she may consider this. Companies with a lot of claims would do well to consider calculations on an aggregate basis.
A business owner should make sure the full value of an item is insured and check the terms for reimbursement. Just because a $1 million in coverage was purchased doesn’t necessarily mean the whole amount is going to be applied in a given category of property. If a company has a variable growth pattern, the business owner may want to adjust coverage annually.