Small business · The limit is a rebuild, not last year’s invoice
Inflation shows up in insurance when the cost to replace the building or the equipment rises and the limit does not. This page will not quote an inflation rate or a percent your premium will move.
A business property limit is what it would cost to replace the insured property, not last year’s revenue and not what you paid for the used machine. If that cost rises and the limit stays put, a partial loss can pay less than the invoice. Many property forms have an insurance-to-value or coinsurance condition. When the form has one, insuring below the required fraction reduces the payment. Example, not a quote and not a statute: replacement cost $400,000, the form wants 80 percent, that is $320,000, you carry $240,000, and an $80,000 repair pays $60,000 before the deductible. Your form may use a different fraction or none. Business income, or business interruption, pays lost income after a covered peril shuts the operation, for the period the form prints. It is not a stipend because sales are slow. General liability pays other people’s injury and property damage. It does not replace your own inventory.
The product: business insurance. Why the limit matters, without a city requirement: a small business and its limits. Liability is the other people’s side: liability. The vehicles: commercial auto. A piece of paper is not the policy: certificates of insurance. Longer explainers: commercial insurance videos.
