The Basics of Property Insurance

The Basics of Property Insurance

| February 22, 2024

Your livelihood is dependent on the survival of your business, so it is imperative that you protect it against any potential threat—large or small. For instance, a fire could destroy your business’s warehouse and the contents inside, or a burst frozen pipe could damage important documents and valuable papers. Worse, you could have trouble paying your employees during a loss because your funds are devoted to repairing damage.

Property insurance serves as your first line of defense in such situations. This customizable protection comes in various forms to cater to your specific business needs. Before embarking on this journey, it's essential to take a complete inventory of all your business assets. This meticulous assessment ensures you have the resources necessary to recover and resume operations smoothly after a covered loss.

Types of Property Insurance Policies

Basic property insurance covers losses due to fire or lightning, including the cost of removing property as a way to protect it from further damage. Should you want to purchase more than basic coverage, you can buy a standard policy that provides coverage for extended perils, such as floods, windstorms, hail, earthquakes, acts of terrorism, explosion, riots, smoke, civil commotions and vehicles that damage your property. Beyond that, coverage for vandalism and malicious mischief can also be included.

Are You Buying Enough?

One of the most important aspects of purchasing property insurance is making sure that you have purchased enough coverage to be adequately protected. A typical policy will provide the replacement cost value for your building and the actual cash value for your business property. Replacement cost value is the amount that is necessary to replace or rebuild your building or repair damages with similar materials, without considering depreciation. Actual cash value, on the other hand, is the value of your property when it is damaged or destroyed. This amount is typically determined by subtracting the depreciation from the replacement cost value.

Most property insurance policies include a coinsurance clause, which requires you, the policyholder, to share the cost of covered services up to a moderate percentage of the actual cash value of the property. This will allow you to receive full coverage for your losses. Should you decide to purchase inadequate coverage for your property, you may be obligated to pay a percentage of all losses, even if they are listed in the policy.

DiNicola Insurance Services understands that determining your business’s value is critical, so we’re here to help. Contact us today at 415.564.4400 to learn more about our property insurance and loss control solutions to protect your business.