It can be easy for Business Owners to underestimate the value of their Business Personal Property (BPP).
The “eye test” will reveal mainly what is required to operate your business
· File Cabinets
Outside of the items above, let’s venture a guess what other property a Business Owner that rents their office space may be responsible to Insure. To determine, it is necessary to review their lease ageement.
Let’s say the owner requires alterations or improvements and betterments (I&Bs) to their space in order for them to operate (this is very common for Restaurant Owners). Or, maybe the space is already ready to go because the I&Bs required have already been completed by the prior tenant.
Who has the duty to Insure these improvements should be defined in the lease agreement. If it is the Business Owner’s, the value of the I&Bs should be considered when determining their Business Personal Property limit. The cost and corresponding value of improvements and alterations to leased space can be significant.
Another easily overlooked item is Heating and Cooling equipment. Often lease agreements will shift this responsibility to the tenant.
Not only is it important to determine an appropriate limit to make certain you are adequately insured, but also to make certain you are not subject to a costly coinsurance penalty.
If I’ve piqued your interest, or you need a sleep aid, here’s a Post on Coinsurance: Don’t get blindsided by a coinsurance penalty
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