Having the right type and level of coverage for your business property provides a critical financial safety net when things go wrong. A comprehensive commercial policy will protect your property from the most perils that may impact your business, such as fire, theft, weather, and natural disasters.
Your insurance representative should take several factors into account when quoting you for commercial property insurance, including where your business is located and the type of risk it faces. For example, if you own a shop or office in a high-crime area, your insurer will want to know about those risks when establishing your premiums. Also, if you live in a region with frequent severe weather events, such as Florida and Texas, those risks will influence your premiums.
1. General Liability
General Liability Insurance protects your business against claims of bodily injury and property damage that result from a product, service, or activity you provide.
This policy can cover medical costs, legal expenses, and settlement or judgment expenses if someone sues you because they suffered an injury or were damaged on your premises.
The coverage can also help pay for damages if you or your employees accidentally break someone’s property, like a customer’s laptop or desk. This coverage may be available as an add-on to your commercial property insurance policy or as an individual policy.
It can also cover personal and advertising injuries such as libel or defamation, including copyright infringement lawsuits. Professional liability insurance, or errors and omissions insurance (E&O), is essential for consultants and other businesses that provide services — accountants, doctors, lawyers, etc.
Most small businesses purchase general liability insurance and commercial property insurance together in a business owners’ policy, or BOP, which typically bundles the two into one policy. A BOP often offers a lower premium than buying separate policies for property and liability, so it can save your company money if your risk exposure is low.
2. Property Damage
A commercial property policy covers business-owned buildings, equipment, and other assets that are damaged or destroyed by a covered peril.
It also pays for any lost income or expenses that the business incurs due to the damage.
Insurance companies will consider the actual cash value (ACV) or replacement cost value of your business’s property when calculating how much you should receive as compensation for your loss. ACV payments will cover the current market value of your property, while RC payments will pay for the full cost of replacing your property.
Insurers will usually offer a variety of coverage types and levels to address the needs of businesses. These may include coverage for specific business-owned items such as furniture, tools and machinery, valuable papers or records, and even leased equipment.
Most commercial property insurance policies will have a deductible that the policyholder is responsible for paying toward each claim before coverage kicks in. Deductibles can vary depending on the type of peril that caused the damage.
3. Business Interruption
Business Interruption Insurance (BI) reimburses a business for lost net income and extra expenses while repairs are underway. This type of coverage can help cover rent or lease payments, employee wages, and taxes during the restoration process.
Traditionally, this coverage was included as an add-on to property insurance policies. However, it can be purchased separately.
This coverage is important for all businesses but can be especially critical for those that rely on traffic from a leader location, such as a popular restaurant or a sports or concert venue located near your business.
In addition, this coverage can provide a valuable backup plan in the event of a major disaster. It’s often difficult for companies to assess the costs of moving operations to another location and reopening while repairing their own.
Fortunately, this coverage is usually available for relatively low monthly premiums and can cover a wide variety of expenses if you suffer a loss. Make sure to review your policy for specific exclusions, deductibles, and other terms and conditions.
4. Business Income
Business income coverage helps pay for lost revenue resulting from a covered property loss, such as fire, wind, vandalism, or damage to a building. It is usually included as an option in a standard business owner’s policy (BOP) and offers up to 12 months of coverage.
However, after that time passes, business income coverage will stop. The amount of coverage provided will be based on your company’s documented business income and expenses.
To determine the proper amount of coverage, you will need to analyze your business’s past earnings and create contingency plans. This requires breaking down your expenses and income into individual items, as well as calculating forecasts for future profits.
5. Equipment Breakdown
A sudden breakdown of equipment could cost a business thousands in lost revenue. Especially in certain industries, it’s vital to have coverage for equipment that is critical to daily operations.
For example, if you own an IT firm that uses computer systems and phone systems, failure of the equipment would impact your ability to communicate with customers or send orders. In addition, data loss due to a breakdown would also be costly.
You can add Equipment Breakdown Insurance to your commercial policy, or buy it as a standalone policy. This coverage provides funds to repair or replace machinery and equipment that suffers a mechanical or electrical breakdown.
This type of insurance is most commonly available as an endorsement on a commercial property policy or as part of a business owner’s policy (BOP).
It’s important to note that this insurance covers losses from short circuits, power surges, and mechanical breakdowns that your commercial property policy typically excludes.
6. Crime
Employee dishonesty and theft of property from the business’s premises or a client’s location are common crimes that businesses have to deal with.
These incidents are typically excluded in a standard commercial property insurance policy, but crime insurance can fill the gap for businesses that need to cover these losses.
The costs of commercial crime insurance will vary based on the industry, revenue, and property owned by your business. Higher-traffic retail and technology industries will typically incur larger costs than less-risky businesses.
A good crime insurance policy will protect against theft by your employees, theft of property from customers’ locations, and fraud by third parties.
You can also add a range of enhancements and endorsements to your crime policy, such as coverage for theft by a non-employee or computer hacking.
Commercial crime insurance can be bundled with other policies, such as general liability, BOPs, or CPPs.
It is important to work with a professional who understands your industry and geographic risks to ensure your commercial crime coverage meets your specific needs.
7. Employee Dishonesty
Employee dishonesty insurance, or fidelity bond insurance, is important coverage for companies that place a great deal of trust in their employees.
It provides coverage against losses from employee theft and other forms of bad faith behavior.
It can cover a wide variety of crimes and losses, including theft of money, securities, and property. And can also help protect you against unreported crime and employees with criminal histories.
One of the most common forms of employee dishonesty involves asset misappropriation and financial statement fraud, which can be a devastating loss to a company.
These crimes are often committed by managers and directors who access financial accounts, especially in small and medium-sized businesses.
Commercial Property Insurance can include property of others coverage, which covers damage to business equipment or inventory that belongs to someone else.
This coverage is separate from contents insurance and generally has a very low limit by default.
8. Property of Others
The best way to get the most bang for your buck is to get commercial property insurance that fits your business needs. A comprehensive policy will provide peace of mind and financial security in the event of an accident or theft. It also covers loss of revenue, equipment and supplies, employee injuries, and more. Getting the coverage you need means a bit of research and some elbow grease, but a little effort can reap big rewards.
If you’re in the market for commercial property insurance, ask us for a quote to see how much it will set you back. The best way to do this is by requesting a quote online or a free consultation with an expert. Then, we’ll help you make the right decision to ensure your business is protected on or off the clock.
