A Publication of WTVP

Q: I'm just getting my business started. Do I need insurance right away?
A: Yes, because the chance you could suffer a loss begins the first day. If you suffer a loss and have no insurance or improper or insufficient coverage, there's very little your agent can do to help you. Also, many states and cities require businesses be insured to begin operating. And if you rent space for your business, your landlord probably requires that you be adequately insured as well.

Q: I don't have any major business assets. Do I need insurance?
A: Every business has some property, and, when you think about it, your business is your property. Just like your home and car, your business needs to be protected from loss, damage, and liability. In addition, your business is your source of income, so you need protection from the potential loss of that income. Generally, there are two types of insurance-property and liability. Property insurance covers damage to or loss of the policyholder's property. And if somebody sued for damages caused by you or your possessions (other than a vehicle covered by your insurance policy), the cost of the suit would be covered by your liability insurance.

Q: What types of property do I need to insure?
A: Your business may not possess all the following types of property, but you can use this list to make sure you've considered all the property categories and any insurance coverage that may be warranted: buildings and other structures; furniture, equipment, and supplies; inventory; money and securities; records of accounts receivable; improvements you made to the premises; machinery; boilers; data processing equipment and media; valuable papers, books, and documents; mobile property such as automobiles, trucks, and construction equipment; satellite dishes; signs, fences, and other outdoor property not attached to a building; intangible property (good will, trademarks, etc.); and leased equipment.

Q: Who decides how much my business property is worth?
A: Property insurance can be purchased on the basis of the property's actual value, on its replacement cost, or on an agreed amount. Actual cash value is the replacement cost of the item minus depreciation. For example, a new desk may cost $500. If your seven-year-old desk gets damaged in a fire, it might have depreciated 50 percent. Therefore, insurance would pay you $250. Replacement coverage pays the cost of replacing an item without deducting for depreciation. So today's cost for a desk of a size and construction similar to the seven-year-old one would determine the amount of compensation. If it costs $500 today, that would be the replacement coverage. Agreed amount includes art objects, antiques, and other unique items, which usually are insured at an amount agreed upon when the policy is being written. An appraiser values the goods to be insured, and the business owner and the insurer agree upon an amount the insurer will pay if the goods are destroyed due to a covered peril. Check your policy. If you prefer replacement coverage and don't already have it, this coverage can be added to your policy. Inflation-guard coverage, which automatically increases your insurance amount a certain percentage, protects against rising construction costs. IBI