If you own a business or non-residential property, you will need some form of property insurance. Even if you lease or rent the property or equipment for your business, your contract with the owner of said property will likely stipulate your purchase of adequate insurance, as a mandatory requirement. The premiums you pay for insurance will depend on the value of the property insured, as well as the number of perils covered. Your premiums may also be affected by the deductible you choose, should you be given a choice in the matter.
There are two main types of property insurance policy. An open perils policy will cover all of the events that could cause a financial loss, apart from those that are specifically excluded. Some common exclusions on this type of policy are damage by earthquake, flood, acts of war, acts of terrorism and nuclear incident. A named perils policy will require the specific possible causes of loss to be noted on the policy, in order for cover to be provided. Some of the common causes of loss found on a named perils policy are fire, theft and damage caused by lightning.
An insurance company will rarely pay more than the coverage limit, which is stipulated on the policy. It is important to ensure that your chosen policy provides adequate coverage for possible financial loss. There are three types of replacement coverage for your property, and you should assess which you will need in the event of a claim, before obtaining quotations and accepting an offer. Replacement cost cover will ensure that you are reimbursed the amount it shall cost you to replace the item or structure, regardless of depreciation. Extended replacement cost coverage will pay up to 25 percent over the coverage limit, should the cost of construction have increases during the policy term. Actual cash value cover will mean you are reimbursed the cost of the lost item, minus any depreciation. Actual cash value coverage may carry a lower premium, but it may be detrimental to you, should you suffer a loss where property has depreciated significantly.
Endorsements may be added to your property insurance policy mid-term, should you business require it. This could include such situations as operating from a temporary location, or renting certain equipment for a period of time. Endorsements are especially helpful for businesses where changes occur frequently. You should note that adding and removing endorsements mid-term will likely affect your premium. You may be asked to pay an additional premium for specific endorsements, or receive a return premium should they be deleted. These premiums will be calculated on a pro-rata basis, and you should not be required to pay the full annual premium, so long as you are able to give the insurer specific dates where additional cover is required.
Obtaining the lowest premium possible for your property insurance may leave you vulnerable to financial loss in the future. It is important that you assess the true value of your property, and acquire the best coverage for your situation. In order to obtain the right property insurance for you, discuss your needs with an experienced insurance agent, who deals with multiple property insurance companies.