Business Property Insurance

Role of Property Insurance
Insurers are in the unique position of having encyclopedic information about the many different ways your business property could be damaged or destroyed, from fire and flooding to embezzlement. Property is also vulnerable as a result of a variety of other events such as electrical surges, accidental activation of a chemical sprinkler system or a computer virus.

Because insurers know so much about what can go wrong, they can provide your business with the insurance coverages your particular type of enterprise requires. Without appropriate insurance, property losses can easily cause the entire enterprise to fail.

The purpose of property insurance for the small business is to provide critical financial assistance in the event of a loss, so that the enterprise can continue to operate with as little disruption as possible.

Property insurance alone is seldom enough, however. It should be but one part of an overall risk management and disaster recovery plan. On average, businesses that devote resources to risk reduction and risk control have fewer insurance claims. Firms with a good record on claims generally have more insurers competing for their business, so that they are able to find coverage more easily and often at a lower price than companies that have more losses.

The purpose of property insurance for the small business is to provide critical financial assistance in the event of a loss, so that the enterprise can continue to operate with as little disruption as possible.

Property insurance alone is seldom enough, however. It should be but one part of an overall risk management and disaster recovery plan. On average, businesses that devote resources to risk reduction and risk control have fewer insurance claims. Firms with a good record on claims generally have more insurers competing for their business, so that they are able to find coverage more easily and often at a lower price than companies that have more losses.

A BOP or Business Owners Policy

It may sound like a dance craze from the 1950s, but a BOP—a Business Owners Policy—can protect your small business against today’s most common risks. Fire, burglary, liability and business interruption losses are all covered under a BOP.

Since a BOP is prepackaged, there is only one policy to review and it can be more cost effective than purchasing separate policies. Additional coverage can be added in the form of endorsements or riders.

Since a BOP insurance policy is specifically designed for small and medium-sized businesses, the type of business can influence eligibility. Normally, companies with 100 employees or fewer and revenues of up to about $5 million or less are candidates for a BOP. Some types of businesses, such as restaurants, may be ineligible for a BOP because of the specific risks inherent in the business and may need to consider buying the individual coverages separately.

Combining three insurance policies into one package

In a single, convenient package, a BOP provides the core insurance that most small businesses need, including:

Property insurance—Protection for your building or office space, as well as property owned by your business, such as equipment and inventory.
Liability insurance—Coverage for costs that arise if someone is injured at your business or by using your products or services.
Business interruption insurance—Also known as Business Income insurance, this coverage replaces lost revenues in the event that your business has to shut down due to fire, wind damage or other covered losses.

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