Owning and operating a business is a risky endeavor. Not only do business owners face general risks such as theft and fire, but also specific risks that are inherent to the operations of each individual business. For these reasons, it’s vital that you have the right type and amount of insurance for your business. To help you get the coverage you need, the Insurance Information Institute (I.I.I.) has developed the following list of questions every business owner should consider when determining their insurance needs:

1. Do I have enough insurance to rebuild my business property and replace all of my merchandise and possessions? A Building and Personal Property Coverage (BPP) policy covers any combination of the following three categories: The building, your business personal property and the personal property of others. The covered building can be owned by the insured, or it can be leased. Your business personal property coverage includes:

  • 1. Furniture and fixtures
    2. Machinery and equipment
    3. Stock
    4. All other personal property you own that is used in your business
    5. Labor, materials or services furnished or arranged by you on the personal property of others
    6. Improvements you have made while a tenant
    7. Leased personal property that you are contractually obligated to insure

2. Do I have enough insurance to protect the personal property of my employees? Adding Personal Effects and Property of Others coverage to your policy will extend up to $2,500 worth of its business personal property coverage to your personal effects, as well as that of your partners, staff, and others in your care, custody or control. The personal effects coverage does not include theft, even if theft is a covered cause of loss.

3. Do I have enough insurance to keep my business open? Closing a business down completely while needed repairs are being made could spell financial ruin. That’s why you should have Business Interruption insurance. The following types of Business Interruption insurance can be purchased individually, or in any combination that meets the needs of your business:

  • Business Income Coverage – If your company has to vacate the premises because of disaster-related damage that is covered under your property insurance, Business Income Insurance will compensate you for the profits you would have earned, based on your financial records, had the damage not occurred. The policy also covers expenses that continue even though business operations are temporarily stopped.
  • Extra Income Coverage – Provides reimbursement for a reasonable sum of money spent over and above normal operating expenses to avoid closing during repairs.
  • Contingent Business Interruption Insurance – Protects your earnings if your suppliers or customers suffer physical loss or damage to their property.

4. Do I have enough insurance to protect my assets in the event of a lawsuit? A Commercial General Liability (CGL) policy cover claims in four categories of business liability:

  • Bodily injury
  • Property damage
  • Personal injury (including slander or libel)
  • Advertising injury

Commercial General Liability policies also cover the cost to defend or settle claims.

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