What is covered with Business Insurance?
A business insurance policy can help you pay for the damages your company sustains and also helps replace any lost income due to a disruption. Some of these are obvious, while others might surprise you.
What is your potential loss?
The potential loss is the monetary value of property damage, lost revenue and profits, increased expenses and increased risk. For example, if you have a fire in your building that causes $100 million in damages, this is your potential loss. Your insurance company will then pay you up to this amount. To determine what your insurance policy limits should be for each type of coverage (such as property damage), consult with an independent commercial property & casualty insurance broker who specializes in business insurance policies for businesses like yours.
The property protection section of your business insurance policy helps protect you against damage to the physical properties that are used to operate your business. Property can be damaged by fire, vandalism or natural disasters such as tornadoes, hurricanes and earthquakes. Additionally, coverage may include loss of use due to repair or replacement expenses. It also covers temporary relocation expenses if you're forced to shut down for an extended period because of damage from a covered peril. Keep in mind that coverage is only available while the property is being used as part of your business activity and not while it's vacant or under construction.
Business interruption insurance
The main objective of business interruption insurance coverage is to keep your business afloat in case of a covered disruption. If a fire or flood destroys the building where you operate, this type of insurance would reimburse you for lost revenue during this period.
In addition to reimbursements for lost revenue and any physical damages sustained, some types of business interruption insurance also cover the costs associated with hiring replacement workers while yours are out of commission. It’s important to inventory all the physical assets lost so that they can be replaced. You may also want to consider getting excess property coverage that covers additional property that isn't included under basic property insurance policies (e.g., tools or machinery).
These are the expenses that could be covered by the policy.
Business insurance covers the cost of repairing or replacing damaged property, as well as restoring the site to its original condition. The policy may also include a provision that allows you to hire a contractor to repair or replace damaged equipment.
Depending on your business and location, additional coverage could be required under state law. In addition, some businesses are required by law to have workers' compensation insurance or pay into unemployment funds in certain states or provinces—this is beyond what is included in most business policies.
If you are still unsure about whether or not your business needs coverage, contact an insurance professional who can help determine the right amount of insurance for your business.