Many entrepreneurs get so excited about launching a startup that they don’t spend enough time figuring out the right type of business insurance coverage they need. Depending on the type of business you run, enrolling in a standard business policy won’t cover everything. If you own property as a business owner, here’s a look at how commercial property insurance can protect you.
What Is Commercial Property Insurance?
Commercial property insurance is designed to protect physical assets from natural disasters. It protects your building and its contents, along with exterior features. The policy will specify what types of disasters are covered, which usually include fire, broken pipes, theft, and vandalism. Certain disasters such as earthquakes and flooding aren’t covered in a commercial property plan but can be covered with extensions.
One of the ways this insurance benefits your business is if you rent space and have to sue a tenant for breaching the rental agreement. It also helps if a tenant destroys your property or if anyone visits your establishment and gets injured. The plan will cover your legal bills if you face a lawsuit up to certain limits described in your policy.
Every insurance policy has its pros and cons. A key benefit to commercial property insurance is that it’s tax-deductible. Another benefit is you can conveniently combine different types of coverage under one plan.
Factors Considered in a Commercial Property Insurance
Various factors determine how much your insurance policy will cost. It will be based on your building’s location, how it’s built, and the number of tenants. Location matters because the closer your firm is located to a fire station, the better break you’ll get on your monthly premium. A business near a fire station is considered to be at lower risk by the insurance company. You can lower your rates further by showing the agent how your business emphasizes safety measures such as deploying a security and sprinkler system. Also, the placement of a fire hydrant near your establishment can help lower insurance rates.
Each insurance agency uses its own methodology for setting rates, but many generally use similar criteria. Businesses located in regions prone to storms, hurricanes, and earthquakes will usually pay higher rates than those in areas with lower risk. The construction of the building is also a key factor in determining your premiums. Builders have adopted more sustainable methods the past few decades, leading to safer new structures designed to withstand environmental elements. Older structures present greater risks to homeowners and their insurers. Upgrading to a new HVAC system along with modern plumbing and wiring helps lower risks, and can help lower your insurance costs as well.
Property to Consider for Commercial Property Insurance
The plan will likely cover all the items in the building, from computer workstations to furniture and inventory. It also covers exterior parts of your property such as landscaping and fencing. If a strong wind blows down your fence, the policy will cover replacing it. Your business is further protected if somehow your business causes damage to another person’s property.
Any type of machinery or electronics is usually protected under a commercial property plan. HVAC systems are covered for damage from disasters, but usually not for issues that could have been prevented with proactive maintenance. Find out from your insurance agent if you can get coverage for off-premises property.
Keep in mind certain items will have coverage limits that you may have to raise if you want maximum protection. Your specific policy may only cover damages up to a specified limit and then you will have to pay for the rest. It helps to make a list of all your valuable items and share it with your insurance agent to make sure they’re covered.
Examples of Commercial Property Insurance Coverage
A terrible storm devastates your building, requiring you to replace the roof to meet safety standards and local codes. Your commercial property insurance policy covers such roof replacement costs.
Your place of business burns down in a fire. The insurance pays for a new building.
Thieves break into your building and steal valuable equipment. You won’t have to pay out of your own pocket for replacing the items.
Someone slips and breaks their hip on your property. A hip replacement will cost at least a few hundred thousand dollars, but your insurance will cover it.
Inventory in your warehouse gets damaged due to a storm before you have a chance to sell it. The policy pays for the losses your business suffers.
A vandal throws a brick through your front window and damages the front desk. Again, the insurance covers it.
Don’t assume all plans cover these items because each insurance agency designs policies based on their target markets. Each state has its own insurance laws that shape business requirements, as well. In some states, you may need both commercial property insurance and liability insurance to ensure you’re covered if someone gets hurt on your property.
Chances are your commercial property plan won’t cover flooding, which is usually covered by a separate plan. In the age of climate change, the risk of flooding exists everywhere, not just in regions with flooding history. The commercial property insurance plan might also not cover windstorm and hail damage, which would require special coverage.
The key to getting the best value for your business insurance is to discuss your entire operation with your insurance agent. Find out if your insurer can bundle all your coverage so your business can receive a special discount.
Your physical assets at your business location will be protected with commercial property insurance. It’s best to review your business insurance needs with an experienced insurance professional who can make sure you’re not overlooking legal vulnerabilities. The experts at Udell Family Insurance are here to assist you in securing the right coverage for your insurance needs. Contact us today!