Fire/Hazard Property Insurance

 

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A small business owner needs to carry various types of property insurance coverage, and hazard property insurance is certainly a must.

Hazard insurance, or fire insurance as it is frequently called, covers losses caused by acts of nature or accidents. Typically, a single comprehensive policy is issued offering both liability and property protection. Property protection in a hazard insurance policy covering a building will apply to the real property (i.e., the building) and to the personal property associated with the real property (i.e., the building's contents). The real property and personal property coverage will be subject to separate limits and exclusions.

Property coverage in a hazard insurance policy usually is issued on an all-risk basis. A universal exclusion from property coverage involves losses (to the building and its contents) due to flooding. To obtain property coverage for thus type of loss, a separate specialized flood insurance policy, which is underwritten by the federal government, must be purchased.

General property coverage comes in all shapes and sizes, and comparing policies can sometimes be similar to comparing apples and oranges. But a number of common variables should be considered before making a decision on a policy:

• coverage for data as property
• coverage for defective property
• business interruption coverage
• guaranteed replacement value
• deductibles
• co-insurance clauses
• proof of loss

Warning Don't confuse hazard insurance with title insurance, personal mortgage insurance (PMI), or mortgage life insurance. Each is a form of property insurance associated with real property. However, each form insures against very specific and unique risks. Hazard or fire insurance is the form of property insurance familiar to almost all homeowners.