Review your insurance coverage every year to ensure it still meets your needs. You should also:
- Know what is covered and how much before a disaster strikes
- Maintain an inventory and equipment list
- Have complete copies of your business or commercial policy on-hand
Tip: Insure your property at replacement value
According to Farmers Insurance agent Ben Frihauf, you should have building and business personal property insured for replacement value to avoid a claim being paid on an actual cash value (depreciated value). This information is usually found in the settlement clause of your policy. For example: 25-year-old tables and chairs may be determined to be at the end of their lifespan at the time of loss so that no reimbursement will be made. If properly insured, the tables and chairs will be reimbursed at the full cost to purchase new items.
Frihauf cautions that underinsuring property may save money until there is a loss. At the time of settlement, if the property is underinsured, the claim will incur a co-insurance penalty and you may not get a full payout. Make sure you understand your policy’s co-insurance clauses and requirements so you are not underinsured.
A note about flood insurance…
Unfortunately, flood damage caused by natural disasters is not covered by general liability or property insurance policies. Through the National Flood Insurance Program (NFIP), all businesses are eligible for flood insurance to a maximum of $500,000 for the building property and usually up to $500,000 for business property. Visit FloodSmart.gov to learn more about flood insurance. Also, there are private insurance carriers who offer flood coverage. Contact your agent to learn more about those options.