For insurance, most small business owners choose to invest in a business owners policy, also called a BOP. It helps them easily optimize their commercial insurance. BOPs usually contain several types of insurance, among them property coverage. This is important coverage because of how it can protect your assets and possession when damaging accidents occur.
When putting together your BOP, talk to your agent about the ways to optimize your commercial property coverage. The more carefully you put together your policy, the better your financial benefit.
Why BOPS Help
BOPs are business insurance that generally cater to the needs of small businesses. They help small business owners get several types of coverage in one place and ensure that coverage is cohesive. BOPs are usually more affordable than separate policies.
To start, most BOPs usually offer property, general liability and business interruption insurance. However, policyholders can usually add extra coverage to work in conjunction with the BOP. Therefore, you can expand your coverage appropriately.
Property Coverage in a BOP
The property insurance within a BOP insures property owned by the business. Some of the items the policy might cover include:
- Buildings owned by the business.
- Furnishings and certain fixtures.
- Equipment and materials.
Should a hazard damage or destroy this property, then your BOP can pay to help you rebuild, restock or replace lost items. A variety of hazards might qualify for a claim under your coverage, such as:
- Theft & Vandalism
- Storm Damage
The policy can then indemnify the business owner for the costs caused by the lost property. You won’t have to spend hard-earned income trying to recover from a lost. You’ll be able to get back on your feet in a more stable way.
Limits, Exclusions & Deductibles
The thing about property insurance is that BOPs won’t cover every type of property from every type of loss. The policy will likely limit the amount of money that a business can receive from lost property.
When you sign up for your BOP, you can choose the value of property coverage that you want to carry. This reflects the maximum that your policy will pay for your losses. It’s important that you choose a value that reflects the cost of the property you own—buildings, inventory, equipment, etc. Verify the cost and value of these items through appraisal or research.
For certain items, the policy will further limit how much it will pay. Some policies agree to pay based on a lost item's cash value at the time of the loss. This is not the same as the cost of a new item. However, you might be able to expand your coverage on such items by talking to your agent.
Property insurance will not extend to every loss of every item. For example, it might not insure certain specialty equipment or outdoor items. It also won’t cover damage from certain hazards such as floods or intentional damage by the owner.
Most property coverage includes deductibles. The deductible is a flat amount that the business agrees to pay for property damage before insurance pays.
So, suppose that you have a $2,000 deductible on your policy, and the business sustains $10,000 in structural damage from a fire. You will pay $2,000 toward the loss, while your insurer pays the remaining $8,000. It is important that you choose a deductible you can afford. Damage costs that are worth less than the deductible cost won't have coverage.
Keep in mind, when it comes to specialty items and special loss situations, you can often increase your BOP’s coverage. Therefore, the policy can remain malleable to your needs for your property. Ask your agent about the best way to insure specialty items.