Learn how to buy the right policy to protect your business without breaking the bank with these helpful hints and tips.
Make a list and check it twice. The first step is buying the right policy is to make sure that all your items are included in the policy. Create a list of all items, original purchase price, whether they are owned and used exclusively by the business or not, and condition. It is a good idea to take photographs whenever possible.
Decide upon coverage. Depending upon the type of asset, coverage may be limited to present value, or may pay for full replacement. Common considerations to keep in mind include whether or not the item was purchased new or used, lease terms, and depreciation schedules. Determine deductibles and your desired level of coverage prior to obtaining a quote.
Understand limitations and exclusions related to use. Employees, owners, and others should fully understand and agree to the limitations and exclusions of coverage. For example, unauthorized personal use of a business asset such as a vehicle may place the company at increased risk should an accident take place. Be sure to ask about additional riders to provide protection for dual-use items or special situations where workers use company equipment off-site or during personal time off.
Update annually. It’s a good idea to review and update insurance at least once per year. Pay special attention to newly acquired equipment and take time to update agent files related to disposed or fully depreciated property. Ask about discounts for safety measures, security systems, identification, and other steps designed to deter claims.
Weigh options and alternatives carefully. One final consideration to keep in mind is whether or not to allow employees and/or subcontractors to provide their own equipment (and coverage) or not. Not only are there important liability considerations to keep in mind, it doesn’t always save as much money as expected. Variations in quality, compatibility, and time savings may erode anticipated savings while increasing risk for the company as a whole. Carefully evaluate how employee-supplied equipment will impact your company prior to creating or purchasing a policy.
Buying business and equipment insurance is often considered little more than a necessary evil when, in fact, it might be one of the most important business decisions you make. Business equipment insurance does more than simply protect against theft or vandalism. Depending upon the policy it can protect against most commonly encountered perils, including:
- Equipment failure due to power surge or equipment malfunction
- Repair or replacement cost of a covered item
- Ancillary expenses required to restore vital parts, materials, or covered services
This is especially important when you consider the value derived from many computer storage systems or other common pieces of business equipment. For example, a computer that originally cost $2,500 may contain tens of thousands of dollars in data, client contact listings or other specialized information. Knowing how to insure both the computer and the content is essential to running a successful business, especially in today’s challenging economy.