No matter how successful your small business may be, it is likely not ready for a natural disaster. In 2012 there were 33 recorded catastrophes which resulted in $14.5 million in insured losses. Unpredictable weather and dangerous conditions can hurt or even destroy any business, so it is important to protect your investment with the right business insurance: property insurance.
When starting a small business, it’s important to figure out a location and type of property that will allow you to run things smoothly. You should also consider what type of property insurance you will need to protect that business and the space you operate in. If starting a business and running it from your home, you will need another kind of additional insurance; this is separate from your homeowner’s insurance policy. So, consider what you need before a disaster strikes.
Commercial Property
If your business is run out of a commercial property, you will need commercial property insurance. If you are renting the space from a third party, they will usually be the ones who hold the insurance policy as long as you follow your lease without question.
However, if you own the commercial building then commercial property insurance will protect your space from fire, theft, vandalism, weather damage, and other events that are outside your control. It will also cover damage to other company property and material assets. Some companies will offer all-risk polices which offer slightly wider coverage for businesses.
Remember that if you company is at a higher risk of a specific type of damage, for example electrical, it’s important to find a policy that caters directly to your needs. Peril-specific policies are for certain types of locations that are susceptible to specific types of damaging weather such as wildfires, earthquakes, or flooding.
Home-Based Businesses
Home-based businesses are becoming the norm for startups, but are not always covered by regular homeowner’s insurance. For example, when homes were destroyed by the 2006 hurricane Katrina, many homeowners’ insurance policies did not cover “water damage,” though in most cases the damage was much more serious than simple flooding.
- An In-home business policy can be purchased, which also includes general liability insurance and states your private residence as your business property. If your house is damaged and you are not able to work, the insurance will also cover your loss of income expenses and ongoing expenses such as pay roll, just as businesses run out of commercial properties.
- A Business Owners Package policy, or commonly referred to in the industry as BOP is a package deal for medium to small sized businesses. This is an excellent option in that it is relatively simple and straightforward, and allows home-based businesses to operate from more than one location.
It is important to review a number of policies before deciding on the one that is right for your small business. Prices and amount of coverage will vary depending on what kind of protection you may need, and knowing your options is a step in the right direction.
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