Whatever type of business you run, you have important property that you rely on to get the job done. If you own the building you know you need coverage to protect it. But don’t forget about your other property. The physical property required by your business, from office equipment to manufacturing equipment, is vital to your operations and not easily replaceable. Think about how much it would cost you to replace everything your company uses each and every day to make your business run. Could you afford to start from scratch if everything were lost?
Property Evaluation Basics
If you have merchandise, equipment, or other items that you can’t afford to replace out of pocket, having a good commercial property insurance policy is vital to protecting your business in the event of theft, accident, or disaster.
Depending on your unique circumstances, being able to replace a tractor, repair a freezer, rebuild a warehouse, or restock your goods can be the difference between long-term survival and shutting your doors forever. And for many companies, the only way they can replace lost items like these is by having a good property insurance policy.
Property is considered to be anything that has value and includes:
- Real property, which is the land and the permanent things on it. Things like buildings, outdoor fixtures, permanent machinery and equipment
- Business personal property, which is all other property that’s not classified as real property and can be easily moved, such as computers, telephones and office furniture
Most business properties insurance companies use two different methods for determining the value of the property:
- Replacement cost, which refers to the amount it takes to replace damaged or destroyed property with new buildings, equipment, and furnishings
- Actual cash value (ACV), which is the replacement cost of the property, less the accumulated depreciation for age and wear
In simple terms, if you have a spinning widget machine that blows up one fine day, replacement cost coverage puts you back where you started before the loss with a brand new spinning widget machine. ACV, on the other hand, calculates the depreciated value of your spinning widget machine at the time of its destruction and compensates you for the appropriate amount.
But which do I choose?
As a smart business owner, you already understand the need to protect your company from catastrophe by having the right property insurance for your business needs. Obviously, replacement cost is better if you can afford it, but there’s a significant difference in premium. And in some instances, you’ll need to insure items that can’t be directly replaced.
You could easily spend a whole work week doing nothing but researching different policy options and providers. But why spend the time you could devote to items that demand your personal attention when you can let one of our property insurance specialists select the right policy for you?
We recognize that no two businesses are exactly alike. As an independent insurance agency, we have a wide selection of top-rated insurance carriers to choose from and we can help tailor customized coverage that specifically meets your firm’s unique needs both today and as it evolves. Call us, stop by our Main Street office, or use the request form to find the best protection you can get at the right price.