Property Insurance Definition

The "Legal-Ease" Glossary
Property Insurance

This is insurance coverage that protects your small business’s property. If your commercial real estate, products, or equipment are damaged in a covered event, your policy can compensate you for the cost to repair or replace the property.

Usually, Property Insurance covers loss or damage caused by…

  • Fire.
  • Theft.
  • Windstorms.
  • Vandalism.

But that doesn’t mean all is lost for businesses located in flood zones or earthquake hotspots. You can add riders to your policy to cover losses caused by…

  • Floods.
  • Earthquakes.
  • Hurricanes.
  • Pollution.
  • And more.

You can also purchase an Inland Marine Insurance rider to cover your business property while it’s in transit or at sites other than your primary business location. If you travel with your products or tools for work, Inland Marine Insurance could be a lifesaver – most Property Insurance policies only cover losses or thefts that happen at your primary address.

Typically, Property Insurance policies have several coverage options. For starters, if you purchase a named-perils policy, that means you have coverage for any event explicitly described in your policy. By contrast, an open-perils policy covers all events except for those listed in the policy as exclusions.

You can also choose to insure your property at its actual-cash value (AVC) or its replacement value. ACV policies pay out based on an item’s depreciated worth, which usually isn’t enough to cover the cost of buying brand-new replacements. Replacement-value policies pay out the current-market value of a similar item so you can buy new gear. On the downside, these policies usually cost more.

You may think you don’t need Commercial Property Insurance if you only rent your office or if you run a home-based business. However, most landlords require you to carry your own insurance to cover the building’s contents, and your homeowner’s insurance policy may not cover your commercial property. Fortunately, you can buy Property Insurance to insure your business's structures, its contents, or both.

To learn more about the limits of a homeowner’s insurance policy, check out our infographic “Is Your Home-Based Business Covered?

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