Every day, a small business faces a variety of potentially detrimental or catastrophic risks. Property & casualty insurance provides protection against many of these risks. In general terms, property insurance protects a business’s physical property against a loss or loss of its revenue-producing abilities. On the other hand, casualty insurance protects a business against legal liability imposed as a result of losses suffered by another individual or business. Let’s take a look at property & casualty insurance in more detail.
The property side of a property & casualty insurance policy insures the physical items of a business, such as commercial buildings and its contents, such as business inventory. Property insurance includes specialized forms of insurance, such as fire insurance.
Property insurance covers three different categories under Causes of Loss:
- Special - This type of policy covers all causes of loss due to perils not specifically excluded in the policy.
- Broad – Broad causes of loss adds several additional perils to the Basic Causes of loss such as falling objects, water damage, weight of ice and snow, and collapses caused by other perils.
- Basic – This policy insures against the loss resulting from a specifically identified and named peril, such as fire, lightening, theft, or explosion. For example, a fire insurance policy will provide against a loss due to fire at the location, but will not provide coverage from a loss due to another peril, such as a tornado. Loss due to certain perils, such as earthquakes and acts of terrorism are often excluded.
The casualty insurance side of property and casualty insurance, also referred to as liability insurance, covers you and your business from losses caused to another individual or business. Casualty insurance is typically bundled with property insurance, however the two are different.
Casualty insurance is a broad classification of insurance that includes Commercial Auto Insurance and General Liability, Crime Insurance, Workers’ Compensation Insurance, Professional Liability Insurance, Fidelity and Surety Bonds, and Umbrella Liability Insurance to name just a few.
Property and casualty insurance can protect a small business in the event of a liability claim, property loss, or loss of its income-producing abilities. A small business needs to consider all potential exposure to risks and speak with an insurance professional when deciding how much property and casualty insurance coverage is needed to provide adequate protection.