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Basics of Property and Liability Insurance

Property Insurance

The building structure and permanently installed fixtures, machinery/equipment and outdoor fixtures are covered. You want to make sure your Building is insured on a replacement versus an actual cost basis. Replacement cost equates to the cost to replace your building with a new structure, where as actual cost is the amount the property is worth, which takes into consideration the depreciation of an asset. The policy will cover most property on or near the premises that are used in the business, including machinery, computers, raw materials or inventory. Leased property and the property of others (in which is in your care, custody and control) would also be included.

Liability Insurance

Provides coverage for your own negligence (failure to exercise reasonable care) or that of an employee of your business who may cause injury to someone else or damages property. When damages occur, you or your business may be legally liable to pay those damages to someone who suffers a loss through your or your employees actions or inaction.

In addition to any agreement or judgment rendered against you, liability insurance also pays for the cost of your defense. Remember, even if you are cleared of any wrongdoing, the cost you may incur to defend your business against a lawsuit may be substantial.

The Liability policy will cover “bodily injury”, “property damage”, or “personal and advertising injury”. Bodily injury means injury (physical or emotional), sickness or death. Personal and advertising injury includes libel, slander or any defamatory or disparaging material or a publication or utterance in violation of a person’s right to individual privacy; including the infringment on the privacy or copyrights of another in your advertisements.

Medical payments coverage under a Liability policy pays for bodily injury to third parties injured on the premises you own, rent or as a result of your business operation, regardless of whom is at fault.
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