When choosing disaster insurance, you basically have two choices — a named peril policy or an all-risk policy, also known as a comprehensive policy or an open peril policy. The primary difference between them is that one type of policy covers what is "named" (included) in the policy while the other covers what is not included.

A named peril policy is often a good choice for those business owners whose business is located in an area frequently hit by natural disasters such as hurricanes, tornados, or floods. Such a policy spells out the specific events for which you are covered. The cost of the premiums will depend on the location of the business and the likelihood of the specific peril(s). Anything not specifically named in such a policy is not covered.

An all-risk policy covers your business from damages caused by any type of disaster with the exception of those specifically excluded in the policy. Floods and earthquakes are two events that are typically excluded, but coverage for these types of disasters can be added to the policy for an additional fee. The National Flood Insurance program underwrites coverage for flooding, making it more easily available to business owners. (For another informative government Web site, visit Floodsmart.gov.)