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  • Business Insurance for Startups
    Game Plan

    Property Insurance for Startups

    Property insurance covers your business’ physical assets from loss or damage. A good policy will encompass the obvious, like buildings, equipment, inventory, computers, furniture, and fixtures, and the not-so-obvious—like protection for your accounts receivable records. You should be able to get a policy written that will cover all of these assets, whether they are owned or leased. Coverage may include personal property belonging to others if it is in your business’ care, custody or control.

    This type of policy will provide for the repair and/or replacement of your covered losses in the event of man-made disasters like theft and fire, and natural ones like tornados and hurricanes. Flood insurance requires a separate policy. And keep in mind that if yours is a home-based business, your homeowners’ policy will typically not cover any business property losses, such as property damage, that you may encounter.

    Carrying a property insurance policy is typically a requirement if you are carrying a loan on your business from a bank or other financial lender. A co-investor such as an angel investor or business partner may also require you to have this coverage.

    Finally, many property insurance policies will include business interruption insurance coverage. If unexpected events cause your operations to be suspended, this type of insurance would help you replace the loss of income you incur, to help you meet your continuing financial obligations such as rent or payroll. It may also include coverage of the expenses that would be required for you to keep operating in the event of loss or damage, such as renting temporary office space.

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    Game Plan

    • The National Association of Insurance Commissioners’ (NAIC) website offers useful “Tips & Considerations Concerning Property Insurance.”
    • If you are leasing property, don’t assume that the owner is providing your business property insurance coverage.
    • Pay attention to the policy fine print. Is it based on actual cash value—or replacement value? Is replacement value an important consideration for you?
    • Your property insurance should be based on a recent property assessment. If you don’t have one, get that done. And make sure you maintain good records, purchase receipts, as well as photographs, of high-value equipment and other property—and safeguard these off-site.