Property Insurance

Property insurance, or commercial property insurance, is often the most important kind of insurance an enterprise can have. Property insurance covers the cost of repairing or replacing property that is damaged or destroyed.

Most businesses need property insurance because they do not have enough money to pay for the repair or replacement of property or equipment needed for its operations. The types of materials that should be insured include buildings, vehicles, equipment, furniture, computers, and, in some cases, documents.

Types of Commercial Property Insurance
There are two types of business insurance quotes you can get from an agent: at-risk policies and peril-specific policies. Most businesses are able to get by with an at-risk policy.

At-Risk Insurance
An at-risk commercial property insurance policy covers losses caused by all events except those specifically excluded in the policy. The average at-risk policy covers losses from crime, fire, weather, accidents, and other common losses that an ordinary business might face.

Peril-Specific Insurance
There are certain losses that normal at-risk policies will not cover. These include damage caused by natural disasters such as floods, earthquakes, and some other kinds of weather; catastrophes such as terrorist attacks; and other uncommon occurrences.

Insurers may also find certain business activities — including some kinds of construction work, mining, and recreational activities like river rafting — too risky to insure in a normal policy. You will need a business insurance quote for a policy that specifically covers possible unusual occurrences such as flooding, an earthquake, or losses related to working on a roof. This is called a peril-specific business insurance quote, which can take the form of a separate policy or a rider on an existing policy.

Actual Cash Value and Replacement Value Insurance
You should familiarize yourself with the concepts of actual cash value and replacement value before you purchase property insurance for a business.

Most business owners should make sure that their property insurance policy specifies replacement value and not actual cash value. Replacement value insurance is a better deal because it covers all the costs of replacing lost equipment or property. Actual cash value policies cover only part of the losses.

Business insurance companies' coverage of property is determined by the market value of the item replaced. The market value is the amount that you could get by selling the item used, not the price you would pay for a new one. A business with actual cash value insurance would receive only a fraction of the cost of replacing most of its equipment.

Replacement value insurance, on the other hand, covers the cost of purchasing and installing a comparable new item. A business with replacement value insurance would have the cost of replacing all of its lost equipment covered.

A business owner should always read a property insurance policy carefully and discuss it with an agent before purchasing it. Taking the time to research the business insurance company and to make sure that property insurance meets a business's needs can prevent many future problems and disputes.