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Nearly every small business relies on equipment to operate. Whether you’re a graphic artist depending on a computer to create your inspiring designs or a landscaper using your trusty backhoe for bigger jobs, if your equipment is damaged, destroyed, or stolen, it could shut down your entire business.
You can’t always avoid an accident or event that leads to the loss of your business equipment, but you can take steps to protect your business if something goes wrong. That’s where business personal property insurance (BPP) comes in.
To make sure your business has the protection it needs, read on to understand what BPP is, what it covers, and what it doesn’t. Below, we’ll explain all of that and more.
What is business personal property insurance?
Business personal property insurance provides protection for what the insurance world calls “business contents” or, in other words, the moveable objects that are owned by a business and located at the business. In other words, BPP insurance applies to all of the assets that are at the business address listed on the policy, from the large machinery down to the paper clips.
Depending on your needs, you can buy business personal property insurance on a standalone basis or as a complement to a commercial property insurance policy. With Thimble, BPP is a part of commercial property insurance that we include in our business owners policy (BOP). But what exactly does it cover?
What does business personal property insurance cover?
BPP insurance covers the contents of your business’s building, including moveable property the business owner owns. It also covers property that is in the open, or contained inside of a vehicle, within 100 feet of the building or 100 feet of the premises (whichever is greater). Examples of what is covered include:
- Office furniture – Chairs, desks, ergonomic furniture, printer stands
- Office supplies – Staplers, mousepads, hole punchers, label makers
- Furnishing – Rugs, drapes, curtains
- Electronic hardware – Desktop and laptop computers, tablets, monitors, smartphones, digital sketch pads
- Heavy equipment – Packaging machinery, forklifts
- Machinery – 3D printers, industry-specific machines
- Betterments – Fixtures, additional work, or any alterations and installations made to the business’s building or office
Given that BPP is tailored to the owner of the equipment, the list can go on. Typically, BPP encompasses what the policyholder wants to insure and what the insurer is willing to include in the policy.
As we’ve already mentioned, BPP policies differ in their structure and scope of protection. Typically, they provide coverage against perils (e.g., fire, natural disasters, “acts of God”), theft, and damages.
BPP and actual cash value vs. replacement cost
If you’re wondering how business personal property insurance will value the items that are covered, a good general rule is that the higher the value, the higher your premium will likely be. When you’re exploring business personal property coverage, your insurer will typically provide two options:
Actual cash value — Cash value policy BPP coverage will reimburse the covered equipment by its current market value, which will take depreciation into account. If you purchased the business equipment or material and years have passed, your insurer will reimburse you for what it is currently worth.
Replacement cost — Replacement value BPP coverage assigns value based upon what it costs to buy a brand-new replacement for a specific covered item. The policyholder may also be required to try and repair the item before receiving compensation for a replacement. The policyholder will typically be required to attempt repairs in a stated time frame of the damage before receiving compensation for its replacement — six months or 180 days is common.
Will BPP cover you if your business is interrupted due to property loss?
Not directly, but if you have a BOP policy, you’ll be covered if you need to halt business operations temporarily. Most insurers classify losses as either direct or indirect. Direct losses include items lost due to fires, storms, theft, or “acts of God.” Indirect losses, on the other hand, involve financial losses that are a consequence of direct loss.
So, in other words, if the laptop you use in your consulting business is stolen, the direct loss is the laptop. The indirect loss is the negative financial impact on your business from having your laptop stolen. For example, if your company loses income during the time it takes you to get up and running on a new laptop, the lost income is the indirect loss.
Most business personal property insurance only covers direct physical losses. While business personal property coverage will likely replace the computer, it won’t cover the financial loss due to a work stoppage.
Business interruption coverage, also known as business income insurance, is a separate coverage that covers indirect losses. Sometimes, it’s included in a “bundled” policy that offers multiple types of coverage. Thimble’s commercial property insurance, for example, includes protection for both business income and business property. If your business owns the building in which you operate, it will also cover the building.
What does BPP insurance not cover?
It’s important to note that if your business contents are not being used for your day-to-day business operations, it’s likely that they will no longer be covered by business personal property insurance. Consider the following situation:
You switch professions years after purchasing BPP coverage, so you no longer use some of your equipment. Should this unused equipment incur damage or loss, then your policy may no longer cover the business’s contents that are no longer in use.
As with any coverage, make sure you know the ins and outs of what you’re signing up for. Given the specificity of BPP insurance, it’s important to review the details with your insurance carrier.
Business personal property insurance protects your business contents against loss, damage, or theft. But no matter the type of insurance, if you’re in the market for a policy, you should understand the ins and outs of what’s covered.
Cover your assets with business personal property insurance
While BPP protects your business contents, are you protected if you damage a third party’s property while providing your services? Thimble makes general liability insurance and business property insurance simple for small businesses. Our business owners policy (BOP) insurance combines commercial property insurance and general liability insurance.
Why Thimble? Because it’s insurance that works when you do. You can purchase coverage by the job, month, or year. Click Get a quote or download the Thimble mobile app, answer a quick set of questions, receive your quote, and click to purchase — all within minutes.