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Analyzing the Need for Business Contents Insurance

By Edited Sep 6, 2015 0 1

Many businesses face a wide range of risks on a daily basis. An injured customer or employee could bring a lawsuit. One or more of any number of governmental agencies could bring sanctions upon the business. So how does a business protect itself from these risks?

Business People

Many businesses purchase insurance to reduce their exposure to these types of risks. When a business does not adequately protect itself from risk, it can face closure. Then the employees lose their jobs, customers must seek new suppliers and no one is happy. It is a lose-lose situation.

Now let's consider some examples. Suppose for example a newly opened business purchases a building containing office space. The business purchases property insurance to protect its interest in the building. The building was financed and the lender required this type of insurance anyway.

However, the business did not consider the risk to the contents of the building. For example, if there were a fire in the building, the property insurance would likely cover the damage to the structure. But it might not cover the loss to the business's contents such as computers and other office equipment.

So now what is the business to do? If it cannot raise the required capital quickly to replace its computers and other contents that were lost in the fire, it may face closure. In today's business environment, it is difficult for business to serve its customers without its computers.

Computers are mission-critical. If the business does not have the capital available to replace this equipment, it might qualify for leases. However, since it is a new business leasing companies might not be willing to extend it the required credit.

So all this is to say that if the business would have carried business contents insurance, it might not be in this situation. The business contents insurance might provide replacement value for the computers and other equipment that were damaged in the fire. One obtaining quotes for such insurance, it is important to compare the details. For example, one policy might not cover certain types of losses while another policy does.

Imported Business Delivery Vehicle

Sometimes businesses import delivery vehicles to obtain features and accessories not available on domestic models. In this case, imported car insurance can help reduce the business's exposure to risk in using these vehicles.

For example, if a delivery vehicle is stolen, it could impact the businesses ability to meet its customers needs. So, the business needs a contingency plan for this eventuality.

In conclusion, the proper types of insurance can be an essential part of the business plan and business continuity plan. With the right attention to detail and preparation upfront, the business can head off many potential disasters.

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Comments

Mar 2, 2011 1:06pm
marckolius
Just a sidenote, if you run a business from your home, you may still want to consider business contents insurance as some homeowners policies may not cover items damaged belonging to the home office... learnt that one the hard way! Cheers.
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