Why You Need Commercial Property Insurance
Dan Levenson January 05, 2016
Let’s hope it never happens, but suppose a fire destroys the building that houses your business and all of its assets. Or imagine instead that you’re an artist with a studio, and a water pipe bursts and ruins your drawings, documents, or other valuable papers. Suppose a storm ruins your outdoor sign.
For a business owner, these are all nightmare scenarios, right?
These are only some of the things that could happen when you own or rent property for your business. Luckily, commercial property insurance can protect your company from a big financial loss if anything bad were to happen.
What Does Commercial Property Insurance Cover?
There are a number of things this type of insurance covers, including:
- The property of others
- Your building
- Your inventory
- Your furniture and equipment
- Your outdoor signage
- Your fence and landscaping
The nature of the incident also dictates coverage. According to the United States Small Business Administration, commercial property insurance covers everything related to losses caused by:
- Wind and hail storms
- Civil disobedience
According to the government agency, for insurance purposes, the term “property” is broad and includes business interruption, computers, lost income, money, and papers.
What Types Of Commercial Property Insurance Are There?
There are two types of commercial property insurance polices:
- All-risk policies, which cover a wide range of perils and incidents, except incidents listed in the policy.
- Peril-specific policies, which cover only those risks covered by the policy.
Peril-specific policies could include crime, flood, business interruption, and fire. On the other hand, all-risk policies could cover risks a small company might face. A business owner would usually purchase a peril-specific policy if his company were in an area where there is a high risk from a certain kind of peril.
Here are some specific types of coverage typically provided by commercial property insurance:
- Valuable papers coverage protects your company by providing limited coverage for valuable papers and business records. If you obtain an endorsement, you might be able to increase the amount of your coverage.
- Ordinance or law coverage will give you money for additional costs to rebuild or repair a structure to make it meet building codes after damage. Although limited, an endorsement can make it possible to increase your coverage.
- Extra expense coverage will pay additional money to return your business to its normal condition after damage.
- Business interruption coverage will pay for the income you lose after damage to your building that makes it impossible to perform your normal business operations.
- Boiler and machinery coverage covers air conditioning units, compressors, steam cookers, boilers, electric water heaters, and similar machinery. This coverage usually only covers any machinery listed in the policy from losses caused by malfunctions of machinery or boilers. An example would be if a water heater leaks, causing damage to other property, or there is a boiler explosion.
- Employees’ personal property coverage covers personal property your employees may have on your premises.
- Off-premises property coverage will protect you, in case of damage to your off premises property. If you want coverage, you may need a separate policy or an endorsement, if your policy doesn’t cover off site property.
- Inland marine coverage protects goods in transit by air, land, or inland waterways. It also covers tunnels, bridges, communications towers, communications structures–all considered under construction.
- Newly acquired or constructed buildings coverage covers any building you would add to your policy, if added within a certain amount of time. You must tell your insurance company within that time frame—often 30 days—or your new building won’t be covered. The policy usually only covers buildings listed in your policy.
- Building occupied by the insured coverage protects any building you don’t own, but regularly use. You might need this if you borrow or lease a building.
- Flood insurance is sometimes provided by insurance companies if a business is in an area with a low risk. Most flood insurance, however, is provided only by the National Flood Insurance Program.
- Windstorm and hail insurance can protect you if you are in a high-risk area for such events.
- Crime insurance can protect you against a number of crimes, including forgery, robbery or safe burglary, theft, destruction, and disappearance (also protects securities); and loss of money due to damage to glass caused by a break in.
A reputable insurance agent can help you determine the type of coverage you need for your commercial property. For more information, feel free to contact us or—even better—get a quot from one of our business insurance experts to make sure you’ve got all of your bases covered.