General and Specialized Property Policies

Insurance is the last line of defense for a small business owner executing an asset protection plan. So once an owner has a basic understanding of some general coverage guidelines, it's time to choose the types of policies.

Care should be taken to distinguish liability coverage, which protects against losses that arise from damages to another person or the person's property, and property insurance, which protects against losses that arise from damages to property owned by the insured. This is especially important because a single comprehensive policy may include both types of coverage, but with each subject to separate limitations.

Most property insurance policies are issued on an "all-risk" basis. This means the policy covers all damages to property subject to the specific exclusions in the policy. Where the insured desires coverage for what is an excluded occurrence under a standard policy, an endorsement, or a separate specialized policy, must be purchased.

In contrast, a property insurance policy may be issued on a "named-peril" basis. This form insures only against the specific risks listed. Any risk not specifically listed is automatically excluded.

Hazard/fire insurance and automobile insurance represent two common examples that will offer protection for the insured's property. Other specialized types of property insurance that also deserve attention are fidelity insurance, long-term care insurance, and various types of mortgage insurance.