Property Insurance Contingency Planning | Wednesday December 31st, 2003 | |
What are the basics of property insurance? How can I use property insurance in contingency planning?
By having appropriate property insurance coverages, you can insure that your business is safe from suffering losses that will cripple or dissolve it. An insurance company, broker or agent can help you determine what coverages you will need. The basics of property insurance are covered below.
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.
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.
As a medium business owner concerned with the growth and expansion of your business, you will also need to consider how you can use your insurance coverage in your contingency planning. What happens to your business if you are sued? If your equipment is damaged or loss? If a fire destroys your property? By securing the appropriate types of insurance, you can assure that your business will retain stability even in case of a mishap or disaster.
You may want to check into types of insurance that are specific to your industry or situation, such as rent and business interruption insurance. By securing types of insurance specific to your industry and personal situation, you can insure that your business will continue even if you become ill, can no longer run it, or pass away. Planning ahead is always a good idea—it will save you, your family and any business partners you might have time, money and headaches in the long run.
Discuss your long-term goals with your insurance company, broker or agent. She or he should be able to help you determine what types of insurance will help you accomplish your goals and protect your business. You may also want to talk to other successful business owners in your industry and geographical area to find out what types of insurance coverages they use, and how they have integrated them into their business’ contingency plans.
Finally, don’t be afraid to ask questions when you meet with an insurance broker or agent. As an independent 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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