7 Tips For Business Property Insurance
Business property insurance protects physical assets like buildings, office equipment and inventory. It can also cover leased property that your company is contractually obligated to insure.
Your independent agent is well-equipped to help you determine the coverage that’s right for your unique business. They can even help you look at endorsements and options that will provide additional protection where needed.
1. Know Your Coverage
Any business that owns or leases a building should have commercial property insurance. Lenders often require it as a condition of the mortgage, and it helps protect the company’s assets from unexpected catastrophes like fires or break-ins.
It is sometimes referred to as an all-risk policy because it covers everything unless specifically excluded. This includes damage from fires, natural disasters and even theft of company equipment by employees or outsiders.
It can be bundled with other types of insurance, including professional liability insurance, directors and officers liability insurance, and business interruption coverage in a business owner’s policy (BOP). A BOP may also include general liability insurance, covering expenses associated with third-party bodily injury or property damage, as well as accusations of slander and libel.
2. Know Your Deductible
Business property insurance protects your company’s physical assets from events that can devastate a small business. It can include coverage for buildings and their contents, inventory, outdoor fixtures and more. Savvy business owners often get this insurance along with general liability and business interruption coverage in a policy called a business owner’s policy (BOP). It’s usually less expensive than purchasing these policies separately.
The deductible is the amount you will be responsible for before your insurance policy starts paying on a covered claim. It’s important to understand the different types of deductibles available when you choose a commercial property insurance policy. There are two common deductible types: per building and per occurrence. Your insurer can explain these options in detail to help you make the best decision for your company.
3. Know Your Limits
The limits of your commercial property insurance policy are important to understand. There are a few different ways to value property within an insurance policy, and the one you choose will drastically affect how much your property is covered for. We generally recommend purchasing replacement cost property limits for both buildings and business personal property.
It is also important to understand the difference between a building limit and a business personal property limit. A simple way to distinguish between the two is to imagine shaking your building upside-down, and whatever falls out would qualify as business personal property. It is also important to keep in mind that seasonal fluctuations can impact the value of inventory, raw materials and other items. These changes can result in a significant loss, even with adequate insurance coverage.
4. Know Your Exclusions
Business property insurance protects a company’s on-site physical assets from damage caused by certain perils. These perils can include fires, wind and hail. They also can include theft, vandalism and robbery.
A BOP usually will have two options for how to value the policy’s property limit: actual cash value or replacement cost. The former will reimburse the company for the value of the lost or damaged property minus depreciation, while the latter covers the cost to replace it with an item of comparable quality and materials without factoring in wear and tear.
Some policies exclude events like flood and earthquake. Others have exclusions based on factors such as robbery or changes in humidity and temperature. Still others have specific events excluded, such as viral contamination or the COVID-19 outbreak.
5. Know Your Options
Business property insurance protects a company’s physical assets, from buildings to on-site equipment. It may include options like burglary and robbery coverage. Business interruption insurance, which covers the cost of lost income due to a property loss, is also available.
Regardless of whether you rent or own your building, all businesses with valuable property should consider getting commercial property insurance. This includes companies with on-site equipment, such as beauty and hair salons that can have expensive products and tools. It also extends to outdoor property, such as fences and satellite antennas.
Often, small business owners choose to get both commercial property and general liability insurance in one package known as a business owner’s policy (BOP). This bundle can be cheaper than buying each of these policies separately.
6. Know Your Options for Additional Coverage
There are a number of options for coverage in addition to the basics, which usually cover buildings and their contents, office equipment, inventory and outdoor items like fencing. You can also add coverage for earthquakes and breakage of glass.
Some policies include business interruption insurance, which helps with income loss while the property is being repaired. Others provide coverage for a loss of valuable papers and records, and even the cost to replace computers that hold critical data.
Other coverages to consider include commercial umbrella insurance, which provides additional liability protection after the limits of an underlying policy are reached. And for those who run a service-oriented business, there’s inland marine coverage to help protect their mobile equipment. This can include everything from laptops to delivery trucks.
7. Know Your Options for Extensive Coverage
Business property insurance, or commercial property and casualty (C&C) insurance, protects a company’s physical assets on its premises. This may include the building itself, equipment and outdoor items like fences or signs. The coverage includes actual cash value (ACV) and replacement cost coverage, which pays to replace the lost or damaged property with similar materials and quality, minus depreciation.
You can help your clients choose the best policy for their needs by understanding the options available. Encourage them to add risk-management features, such as fire alarms or sprinkler systems, to qualify for lower premiums. You can also help them decide if they need extra coverage, like theft protection or business interruption insurance. You can even offer them umbrella insurance, which begins to pay after the limits of an underlying liability policy are reached.