Casualty Insurance Coverage
Property insurance coverage is addressed from two sides of the same idea. "Named
Perils" names each peril to be insured against; such as fire, explosion,
aircraft damage, windstorm, etc. Other perils may be added along the
way. "All Risk" starts from the other side, assuming all perils are covered
except those named in the "Exclusions" of the policy. Obviously, the
exclusions are an important part of the All Risk policy. Perils often excluded
are: flood, and earthquake. Since the All Risk policy affords better
protection, it is more expensive to purchase than the Named Perils policy.
Remember, your agent is there to help you to understand your coverages.
Insurance of property is based on its value. There may be "co-insurance"
penalties for failing to insure to value. These penalties may be applied to
a loss settlement. Determination of value is important for calculating the
premium and settling for a loss. Some terms often used are: "actual cash
value" meaning fair value market, "replacement cost", "selling price" for
unsold inventory, and "business interruption".
Large deductibles, although they afford a reduction in premium, can have
a critical affect on your cash flow if you are operating with or have access
to very little capital. You cannot rely on insurance to always or completely
cover your losses. A frequency of claims will have a definite affect on the
insurer's willingness to continue to insure your business. Although
business-owners generally purchase replacement cost coverage, insurers
often limit their initial settlement for the loss to actual cash value until such
time as the owner has replaced the items lost.
Liability insurance - In general, liability insurance protects you from claims presented against
your business for unintentional negligent acts. Additionally, this coverage
provides a defense if a lawsuit is filed against your business. Example:
someone slips and falls on your business premises;
2) your covered truck
is involved in an auto accident.
In order to protect the assets of your business, it is very important to
purchase both adequate coverage and limits of liability insurance when you purchase
your business insurance. You should discuss liability insurance in detail
with your insurance agent.
Major types of business liability insurance you should be familiar with are:
premises/operations, lessor's risk, contractual, products/completed
operations, personal injury, non-owned auto, and professional liability.