Property damage

There are two types of property damage: physical injury and loss of use. Physical injury involves damage to tangible property such as a cash register, a forklift, or a desk.

Loss of use involves something that hasn’t suffered physical damage, but your normal usage of it is interrupted. If a truck broke down and blocked customers from accessing your business, or if someone’s construction work shut off the water supply to your business, these could be considered a loss of use.

The most common types of property damage insurance are:

Commercial property insurance, sometimes referred to as business hazard insurance, covers damage to your business property from things like theft, vandalism, and fire.

Business interruption insurance, also known as business income insurance, can help offset a loss of income if your business has to close temporarily because of a catastrophic event, such as a hurricane. It can help pay for lost revenue, day-to-day expenses, and rent or relocation costs.

Inland marine insurance covers your business property while it’s in transit or being stored away from your business, such as a warehouse or a customer’s property. It can also cover high-value assets that property insurance usually doesn’t cover.

Property damage liability insurance is a type of vehicle insurance that's required by most states. If you are at fault in an accident, this would cover the damages your vehicle caused to someone else’s property, such as a building or vehicle. It does not cover damage to your own vehicle.

The following types of policies include property damage protection:

Commercial general liability insurance covers third-party damage claims, in case you or an employee damages someone else’s business or personal property.

Commercial auto insurance covers third-party claims from your use of business vehicles, in case you or an employee are at fault in an accident with a personal injury or property damage. This coverage can also include your own vehicle during work-related use, such as making deliveries.

Railroad protective liability insurance covers liability from railroad operations, safeguarding against third-party damages that may arise from business-related accidents.

Many businesses purchase a business owner’s policy (BOP) from their insurance company. A BOP combines general liability and commercial property insurance into one policy, with premiums that typically cost less than if you bought these coverages separately.

Your vehicle’s bodily injury liability coverage, also referred to as bodily injury liability insurance, helps cover the cost of medical expenses and lost income if you face a liability claim for an at-fault accident. It may also cover any tort costs in case of a lawsuit.

Collision insurance is often required for leased vehicles and those with outstanding loans. It’s worth considering even if you own your vehicle outright, as it helps cover the cost of repairs or replacement of your vehicle if it’s damaged in an accident with another vehicle, or damage from a stationary object through an act of nature, such as hail or a fallen tree limb.

Keep in mind that you can’t rely on your regular liability car insurance policy and collision coverage for work-related activities. While your insurer would cover a car accident on your way to and from work, it would likely reject your claim if you’re in a work-related accident using your own car. Also, make sure you meet your state’s minimum insurance coverage limits for vehicle liability coverage.

You also may require additional coverage if your business rents or leases vehicles for its operations. If you or one of your employees gets into an accident involving a vehicle that your business uses but does not own, hired and non-owned auto insurance (HNOA) can help cover your legal costs.

The amount of property damage insurance your business needs depends on its total insurable value (TIV), which is the combined value of your building (if owned), equipment, inventory, furniture, and other assets.

Small business owners should consider:

• The cost to replace essential equipment today
• Seasonal inventory fluctuations
• Whether their business could continue operating after a major loss

Working with a licensed insurance agent can help ensure your coverage reflects your real-world risks and replacement costs.

Your policy limit is the maximum amount your insurer will pay for a covered property damage claim. If your limits are too low, your business may be responsible for part of the repair or replacement costs.

Small businesses should also consider:

• The value of equipment, inventory, and furnishings
• Whether rising replacement costs could outpace older valuations
• How deductibles affect out-of-pocket costs after a loss

Reviewing limits regularly can help prevent underinsurance, which is a common issue for growing businesses.

Insureon helps small business owners compare business insurance quotes with one easy online application. Start an application today to make sure your business has the business interruption insurance it needs to weather an unexpected event.