Your ability to recover from any one of these disasters is heavily dependent on your property insurance. Property insurance protects your business against physical damage to, or loss of, your assets. Assets, broadly defined, include the area in which your business operates and the property housed there. In the case of catastrophes like fire, explosion, theft, or vandalism, property insurance helps cover your costs - whether it's to repair damaged property or replace what you've lost. Events that do damage are known as perils or causes of loss, and include weather-related events such as lightning strikes or hail, or human causes such as robbery or vehicular accidents.
Property is valued in two main ways.
If you are covered for the actual cost of replacing your property, this is known as a replacement-cost basis . The premiums for ACV policies tend to be lower, as they usually pay out less, but the reimbursement could be inadequate if you actually need to replace items. Therefore, most brokers will tell you that you are better off with replacement-cost insurance, unless your industry's used equipment is easily obtained at its physically depreciated value. The answer to this question will affect your premiums. Insurers make it their job to understand the statistical frequency of major risks such as fire and theft, and policies can be easily adjusted to take into account greater amounts of protection.