Think about it for a minute: Where would you begin if you showed up to your business to find only a smoldering pile of ash and rubble? While a total loss is not likely to happen to everyone, what if it happens to you? Are you ready? Is your insurance policy ready? So you’re thinking, “that won’t ever happen to me.”

Hopefully it won’t, but most business owners experience some kind of insurance loss at some point in their careers. Will your policy be ready when it is your turn?
Protecting your business assets properly requires careful thought and planning. While there are many types of insurance, Business Property and Business Liability Insurance form the foundation of a well-constructed insurance program.

Property coverage is the easiest type of insurance for most people to understand. The thinking is, “If my things get damaged and I have insurance, the insurance company buys me new things.” This is mostly true, but did you know that most polices have severe penalties for underinsuring? There are also big differences between Replacement Cost Coverage and Actual Cash Value. Do you know how your policy will respond? What about property that leaves your premises, or the Improvements and Betterments you made to your leased space? Will they be replaced in the event of a loss?

Looking around your business, it is fairly easy to assign values to the things you see. Your inventory, your furniture and your fixtures are pretty easy to tally up. Have you thought to compare your peak season inventory numbers to the limits on your policy? According to Murphy’s Law, the loss that occurs will be at the most inopportune time, probably right after you received your last shipment of goods for the busiest week of the year.

What about the things you don’t see? Did you spend money on Improvements and Betterments when you moved in? Your lease probably requires you to cover them, as your landlord will likely only be required to put back the basic building (you should check your lease). What about the extra expenses you will incur after a loss as you clean up and try to get operational again?

Most property policies limit coverage to the designated premises or within a thousand feet of those premises. Do you take property off premise? Do you have merchandise or other property stored off premise? Will your policy respond in the event of a loss?


Insuring Rental Items

Rentals of items such as tables, chairs, tents and decorations create some additional insurance issues. Valuation becomes a primary concern, as the equipment is subject to excessive wear and tear. Many insurance companies will not cover rentals, and many that do will limit the valuation to Actual Cash Value on those items. If you are engaged in rentals, have you had this discussion with your insurance agent? Are your rental items covered for theft?

Another property concern is covering your goods while in transit. Because the property policy limits coverage to designated premises and immediate surrounding areas, your goods may not be covered once they pull out of your driveway for delivery. Transportation coverage is required for this exposure. Have you properly handled this exposure on your policy?

Liability protection is another cornerstone of your insurance program. It protects your business assets from lawsuits. Bodily injury or property damage to a third party can trigger expensive lawsuits against your business. A properly written liability policy will provide defense coverage and damages in the event of such action. In today’s litigious society, you don’t necessarily have to do anything wrong to find yourself in the midst of litigation. Your policy should defend you and protect your hard earned assets.

In retail operations, it is not uncommon to see slip and fall nuisance suits. In addition to slip and fall protection, a well-written policy will protect against allegations of libel, slander, defamation of character, advertising liability and property damage.

Retail operations that rent party supplies such as tents, tables and chairs have some additional liability exposures. The nature of such operations leads to premature wear and tear, yet promotes maximizing the life of these items in order to create more profits. Worn tables and chairs, bent tent stakes and frames, frayed straps and ropes are some of the symptoms of an accident waiting to happen. To prevent losses, these operations must maintain a standard level of care to keep dangerous items out of circulation.

Many things can be done to prevent such incidents from occurring in the first place. Proper housekeeping such as keeping aisles open and clear, parking lots and sidewalks in good repair and free from snow and other debris can go a long way toward protecting your bottom line. Proper loss prevention coupled with a well thought out insurance program will protect your business and let the party go on as planned.

David W. Goodman, CIC, is the president of InPro Insurance Group Inc. He can be reached at 248-526-3269, 800-569-6465 or dgoodman@inproagent.com.To learn more about InPro, visit www.inproagent.com.