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What Type of Business Insurance coverage Do I Need to Obtain for My Business?

With regards to the individual risk characteristics of your business, the broker-agent will present you with various insurance coverage options for purchasing business insurance. A broker-agent's proposal is simply that, a proposal. When all is said and done it is your responsibility
to make an educated choice and select the insurance coverage that best fits your business plan. The partnership that you build with a broker-agent is incredibly valuable in this critical decision making process. A seasoned broker-agent has handled hundreds of businesses similar to yours. Because commercial insurance can be complex, you need to feel free to discuss any terms, conditions, or concepts that are cloudy to you with your broker-agent. It is a broker-agent's obligation to answer your questions and to help you comprehend the insurance coverage you are purchasing. Even while your business may not need all commercial coverage lines, it's a good idea to possess a basic knowledge of the types of insurance coverage obtainable. As your business changes and grows you will have the essential knowledge to purchase insurance coverage
as new exposures develop. The following commercial lines of insurance
protect broad areas of exposure present with most business operations:

Property Insurance
Commercial Property
Inland Marine
Boiler and Machinery
Crime
Casualty Insurance
Commercial Automobile
Commercial General Liability
Commercial Umbrella
Workers Compensation

Commercial Property Coverage Sections, Limits of Insurance, and Coinsurance Buildings you own or lease as a part of your business, your business personal property, as well as the personal property of others make up the standard coverage sections of commercial property insurance. Commercial property insurance may be sold separately as an individual line policy (referred to as a monoline policy), or it may be offered as part of a Commercial Package Policy (CPP), which
includes 2 or more commercial coverage parts for instance commercial property, general liability, and commercial auto. Building coverage includes buildings or structures and any completed additions, which are listed on the declarations page of a commercial policy. Permanently installed fixtures, machinery, and equipment are also insured as a part of building coverage. The
limit of insurance is the actual estimated amount required to rebuild your
building and to replace permanently installed fixtures, machinery,
and equipment in the event of a total loss. You are required under the insurance policy to fully insure the value of your respective buildings.

If a building isn't covered to value, you may be subject to a monetary penalty at the time of a loss. This penalty is often referred to as "coinsurance." It is important to read and fully understand the coinsurance clause of your commercial property policy and to
go over any questions with your broker-agent.

Business Personal Property consists of furniture; fixtures, machinery, and equipment not permanently installed; inventory; or any other personal property owned by and utilized in your company.

Personal Property of Others refers to property that's in your business's care, custody and control. The type of business you run will determine if you need to protect the personal property of others.

Covered Causes of Loss
Regardless of whether or not a property loss is covered is determined by the policy language, exclusions, and endorsements. Causes of loss are divided into 2 primary categories: specified perils and open perils.

Specified Perils consist of a list of each peril to be covered against, for example fire, explosion, windstorm, vandalism, et cetera. You are able to usually request basic specified perils or broad specified perils protection.
Broad specified perils protection increases the list of protected perils found within basic specified perils.

Open Perils coverage includes all losses unless they are specifically omitted. Earth movement (including earthquake) and flood are generally two common perils that are excluded within open perils coverage. Because open perils coverage provides more comprehensive protection,
it's more expensive than a specified perils policy.

Valuation Types - Commercial property coverage will include a provision to determine what valuation technique is to be used to pay the loss. The most
common policy valuation technique is Actual Cash Value (ACV).
Unless otherwise described within the policy, ACV is considered to be Fair Market Value. There are 2 other techniques of property valuation: agreed value and replacement cost. Agreed value waives any coinsurance penalty and pays 100% in the stated amount (agreed upon amount) for any protected loss. Replacement cost addresses the amount it requires to replace your property with new property of like kind and quality up to the limits of insurance. Similar to ACV, replacement cost is subject to coinsurance.

Coverage Forms and Endorsements - There are numerous coverage forms and endorsements in addition to
the basic property coverages by now discussed that can customize coverage within a commercial property insurance policy. What follows are classified as the most common coverage forms and endorsements used in commercial property insurance:

Builder's Risk - Included with a policy for a one-year minimum term to cover a new building or structure under construction or an existing structure undergoing additions, alterations, or repairs. Termination is allowed on a pro rata basis upon project completion; but, midterm cancellation will result in a short rate penalty. A reporting form or renovations form enables coverage to be carried according to the phase of finalization (i.e., as more
of the project is finished, more value is reported, leading to the proper amount of protection for each stage of construction). Legal Liability or Fire Legal Liability - Protects your legal liability for loss or damage to real and personal property of others as the result of your negligent acts and/or omissions. The loss or damage must be caused by a covered peril (including loss of use). The loss must be accidental and the coverage most often is purchased for tenants in commercial buildings.

Building Ordinance or Law - Gives protection if the enforcement of any building, zoning or land use law results in loss to the undamaged part of the building (Coverage A); demolition as well as removal costs of undamaged parts of the structure (Coverage B); or any elevated cost of repairs or reconstruction (Coverage C). Replacement cost has to be in effect for Coverage C to be applied.

Improvements and Betterments - Usually applied by a lienholder. Covers all permanently installed improvements and betterments, which cannot be removed when a tenant vacates the building.

Glass - Standard specified perils for glass coverage include any resulting damage to other property from broken glass as a result of
vandalism and in addition vandalism to glass building blocks. Broad
and specific perils covers $100 per pane of glass up to $500 per occurrence. A glass form has to be added for scheduled
glass coverage whenever there's a substantial glass exposure to insure. The glass form consists of the number of panes, dimensions, location, lettering, and ornamentation. A separate glass deductible could be scheduled also.

Peak Season - An endorsement that provides extra limits on personal property inventory throughout a designated duration of time. This is exclusively used to cover fluctuating inventory values before and during peak shopping seasons.

Inflation Guard - Automatically modifies the limits of insurance to keep up with inflation. The modification could be tied to the
construction cost index within a regional area or a specified percentage per year. This particular endorsement can be very essential in assisting to maintain sufficient coverage limits, which can protect against possible coinsurance penalties in a property loss.

Time Element - Insurance that covers additional losses stemming from a direct loss by a covered peril to business property. Business interruption, additional expense, and loss of rents and rental value are the most common time element coverages. Business interruption coverage restores lost business income following a covered loss. Certain key employees may be named, allowing the company
to continue to pay their wages until the business restarts operations
following a loss. Extra expense coverage mainly applies to service or product related companies in which the business has to continue to guarantee the survival of the company. Extra expense can pay for office space, equipment rental, advertising, or most costs considered reasonable for keeping the company operating after a covered loss. Loss of rents and rental value protect loss of rental income to the property owner brought on by damage or destruction of a building rendering it unfit for occupancy. Just what Type of Insurance coverage Do I Need to Purchase for My Business?

Depending on the individual risk characteristics of your business, the broker-agent will present you with various insurance coverage choices for purchasing commercial insurance. A broker-agent's proposal is simply that, a proposal. When all is said and done it is your responsibility
to make an informed decision and select the insurance that best fits your business plan. The relationship that you develop with a broker-agent is extremely valuable in this critical decision making process. A seasoned broker-agent has handled hundreds of businesses similar to your own. Given that commercial insurance can be complicated, you need to feel free to discuss any terms, conditions, or concepts that happen to be unclear to you with your broker-agent. It is a broker-agent's obligation to answer your questions and to help you understand the insurance you are acquiring. While your business may not require all commercial coverage lines,

To learn additional information about business insurance policy types, please visit Monument Commercial Insurance Agency to compare business insurance quotes without cost or obligation