Points to Consider for Property Insurance | Wednesday December 31st, 2003 | |
What are the basics of insurance? How do I get property insurance? How can I choose an insurance provider?
You can ‘get’ property insurance by meeting with an insurance company, broker or agent and buying a policy. Choosing an insurance provider is an important decision, and you should consult industry experts and other small businesspersons to get their opinions on who will best provide for your needs. The basics of insurance are discussed below.
What is insurance, and how can it help your business? Insurance is a system in which you, the businessperson, pay a premium (sum of money) to insure that your business is protected in case of loss, damage or theft. Insurance has been described as a “system in which winners pay losers.” This is because those people who pay premiums and never have to collect from their insurance pay for those people who pay premiums and do have to collect from their insurance. If you never have to collect from your insurance, consider yourself lucky, and consider your premium an investment to both help other businesspersons and give you financial piece of mind. If you do have to collect from your insurance, you can consider yourself fortunate because your losses are covered by the premiums of yourself and other businesspersons.
Specifically, property insurance will protect your property in case of theft, damage, fire or other disaster. Having the right coverages to protect your property is essential to your business. Property insurance can both protect your livelihood and provide you with peace of mind. Some businesspersons see insurance as a burdensome expense, but spending the extra money to pay for coverage is well worth not worrying about what will happen to you, your business and your family if your property is stolen or damaged.
You will need to carry additional property insurance even if your business is in-home. Most home owner’s policies cover only minimally or do not cover at all business losses. You will want to insure computers, printers, fax machines and other office equipment that you use specifically for your business with a policy separate from your homeowner’s insurance. Sometimes you can add a “rider” to your homeowner’s policy to cover for business losses, so you will need to discuss your options with your insurance broker or agent.
As with any other type of insurance, you will need to consult an insurance agent or broker to draft and buy your insurance policies. Before you visit an agent or broker, you should take a careful inventory of the machinery, tools, supplies and other property your business owns. Note the market value of each item, and write down any serial numbers on your property. If you keep careful records when you start your business, it will be easier to maintain these records as your business grows and you acquire more property.
After taking an inventory of your property and considering what your general insurance property needs are, you will need to meet with an insurance company, broker or agent. How do you choose an insurance company? One of the first steps in choosing an insurance company should be talking to other small businesspersons—who do they have property insurance policies with, and would they recommend that you deal with this agent or broker? Consult industry groups and ask if they have a list of insurance providers they recommend. You may also want to look at trade magazines and ask your local small business assistance agency if they can recommend any insurance companies.
After compiling a list of insurance agencies, you will probably want to do some ‘background’ research on them—make sure that they are properly licensed in your county, district or state, and make sure that they do not have any consumer complaints filed against them. It might be a good idea to call your local Better Business Bureau to find out if the company has had any problems in the past.
As with considering any other type of insurance, it is a good idea to consider what risks you run of losing certain pieces of property. You will want to consider these risks when you discuss premiums and deductibles with your insurance agent. If you are not at a high risk of losing a certain piece of property, you will probably need to pay only a small premium and agree to pay a larger deductible if loss occurs. Conversely, you will want to pay a larger premium and smaller deductible for items that are more likely to be lost.
Find out what “special” types of insurance you need.
For Example: You are opening your own jewelry store, and have chosen to have glass display windows and cases line the front of your store. You will also have a number of glass display cases inside your store. You will probably want to ask your insurance agent or broker about ‘glass insurance’ to cover damages to your doors, windows and display cases. Depending on the type of business you have, you may also need to purchase additional fire protection or add clauses to your existing fire insurance policy.
Remember that it is important for you, as a business owner, to be informed. Don’t be afraid to ask questions when you meet with an insurance broker or agent. As a start-up businessperson, no one will expect you to know everything about insurance, and it’s better to ask a hundred questions before you buy your policies than to buy policies you do not understand and cannot use effectively. Remember that insurance will be essential to your business, so take your time to review policies and guidelines, and talk to your agent or broker about any concerns you may have.
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