Property insurance protects a business from the loss or destruction of its property due to catastrophes. As an entrepreneur, insuring your business' material assets is practical and advantageous. It serves as a safety net to secure commercial properties from unfortunate events.

Types of Property Insurance Policy

Your property can be insured in two different types of policy:

  • named peril policy -This policy specifically enumerates the catastrophes it covers. The insurance will only pay the cost of damages caused by accidents that are mentioned in the contract. Basically, this policy is limited.
  • open or all-risk peril policy - This policy covers all types of disastrous events. However, natural calamities like earthquake and flood are not included. Compared to named peril plan, the coverage of this policy is more comprehensive.
Additional Coverages

A business owner can purchase additional coverages to be included in the policy. This may require an extra cost for the premium, but you are assured that your business property is protected. Other coverages you can add in the property insurance plan are:
  • debris removal insurance - the costs involve in debris removal due to fire, flood, explosion, hurricane and other calamities are covered
  • building code upgrades insurance - provides coverage on upgrades or repair of the damaged building that is stricken by a disaster
  • boiler and machinery insurance - covers the costs of equipment, machinery, boilers' breakdown, as well as the replacement of damaged properties caused by the malfunction
  • inland marine insurance - reimburses damages or losses to other people's property found within your premises or while being in transit
  • extra-expense insurance - compensates the costs of temporary business relocation
  • business-interruption insurance - indemnifies loss of profit, salaries, debts when the business operation is interrupted due to a tragedy
Cost of Premium

The premium cost of the insurance depends on the type of policy and the perils listed on the contract. Other factors like the business location and the nature of business you operate will also affect the premium price. The insurance company evaluates the kinds of risk your business is exposed to and base the amount of the insurance plan according to the result of the assessment.

Reimbursement of Affected Properties

Depending on the type of policy you buy, the insurance company can pay you the damaged or lost properties in three ways:
  • replacement cost - the actual cost of the item is replaced regardless of depreciation of the damaged property
  • extended-replacement cost - replaces the damaged property above the coverage limit of cost stipulated in the policy
  • actual cash value - reimburses the replacement cost with deduction for depreciation of the affected property

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