Commercial Property Valuable Papers and Accounts Receivable
Many times because valuable papers and accounts receivable are not as visible and obvious as other property they can be overlooked in the risk management process. Small business might have a large exposure nonetheless and it could represent a large value to the small business owner.
Valuable papers can take on many forms within your company. Depending on your industry if you are a design engineer then it is pretty clear what kind of valuable papers, such as your drawings, that need to be insured. The amount of time, effort, and materials that go into creating your valuable papers can be substantial if they were lost or destroyed. If you have the ability to easily re-create the valuable papers that might alleviate you from having to have insurance to provide this protection. If you’re able to make complete copies and replicate all necessary documents via having copies off site or at some other safe, secure location then you might not need to provide insurance and pay a premium for protecting your valuable papers. In larger companies usually a gap in coverage comes from a person or department that is organizing the risk management portfolio and not knowing what a valuable paper within the organization actually is. Somebody in sales could have a valuable sales contract in place as could the CEO of the company might have a special addendum in a lease modification. Both papers are valuable and represent high value for the organization. If you have not identified what indeed is a valuable paper to your organization then you could have gaps in coverage.
Accounts receivables also fall under this category a type of special property. Having accounts receivable files, paperwork, or software database that has been destroyed or compromised, can lead to severe cash flow problems in the inability to collect monies that are due the organization. Clients that owe you money will have a field day in not paying monies that are owed to you if you are not on top of the Accounts Receivable collection process. If the accounts receivable documentation is lost, stolen, or damaged, you will have a hard time in a court of law trying to collect monies due your organization. Commercial property insurance can cover both valuable papers and accounts receivable quite readily. You will have to have some historical data to justify the numbers and limits that you choose come claim time. The insurance company is not going to just write you a check because that is the amount you show as a coverage limit. You are going to have to have a paper trail to justify your numbers. The old axiom of the person who has the most paper wins is very applicable in this circumstance.
The premiums and rates for valuable papers and accounts receivable are very inexpensive as compared to building and contents premiums and rates. Having this coverage in place is not very expensive. The difficulty usually arises in having historical data to justify the limits you are requesting a claim payment on as well as identifying in the first place what papers and receivables are valuable to your organization.
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