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Property Insurance–Covering Your Assets

Property Insurance can be written as a standalone policy or can be written as coverage within a package policy. The first step in obtaining property insurance is to make sure you have identified all of your property that is at risk and then decided which of those properties to provide insurance on.

There are several broad categories of property that you should consider in your asset protection analysis and your resulting choice of business property insurance. We will look briefly at those categories below.

  • Real property. This typically includes your buildings, land, and improvements and betterments. Once you have determined what real property you want insurance for as well as the limits that you desire, you would need to determine what kind of perils specifically you want to insure for. Some of the most common types of perils with regards to real property could be losses from fire, wind, hail, riots, vehicle damage, explosion, smoke, vandalism and malicious mischief,, weight of snow or sleet, water damage, backing up of sewers, landslides, earth movement, volcanic eruption, and difference in conditions.
  • Personal property. This property is more mobile in its nature. This would be your personal contents, personal property, your personal effects, your business inventory, raw materials, work in progress, finished products, mobile equipment, contractor’s tools and equipment, and property of others. This category of property also is subject to the same kind of common perils that were listed above under real property, such as fire theft and vandalism and the like.
  • Intangible property. Many small business owners tend to forget their intangible property which can and normally does have substantial value. A financial loss of intangible assets can create financial hardships on a small business owner. Accounts Receivable is one of these types of intangible properties that you could suffer financial loss. If you cannot reconstruct your Accounts Receivable after a fire loss, chances are that many of your Accounts Receivable clients will not automatically be sending in their payments without first receiving an invoice and/or statement from you. Not having the names and addresses of your Accounts Receivable clients and/or the amounts due and balances owed can have a severe financial impact on your bottom line. Once again many of the same perils that have been listed above are also the same perils that can cause claims and losses to your intangible property. The flipside of Accounts Receivable is that of Accounts Payable. If you do not have the names and addresses of your accounts payable and amounts due and amounts owed you may not be aware of your financial condition in the midst of the loss that you have just suffered via a fire, theft, or embezzlement for an example.

Property Insurance is the type of insurance that specifically covers your tangible and intangible assets from direct losses. The steps of identifying which broad category that your property is exposed as well as what perils you are at risk of suffering a loss will then lead to you designing the proper property insurance portfolio for your small business insurance program.

Hopefully this brief summary of property insurance will help you as a small business owner to ascertain whether you have addressed all of your property assets in the coverage that is needed to protect the financial health of your small business.

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