Commercial Property Insurance
The Top 5 Types of Property Damage Disrupting Businesses This Year
Most business owners are aware of the risks they face, but many may not realize how common certain types of claims are and how costly they can be. Property claims make up a significant portion of small business claims. Here are some of the most common property claims that have impacted small businesses recently:
Hail and Wind Damage
Freezing Water Damage
Hurricanes, floods, and earthquakes are also significant sources of property damage for businesses. While they may occur less frequently than the more common events above, every year they cause billions of dollars in losses for businesses of all sizes.
If you don’t recognize or understand the risks you face, you are more vulnerable to financial disaster and even bankruptcy if your business is affected by one of these events. As a business owner, you need to protect your assets with appropriate business property insurance that addresses the risks you face. And more importantly, you need to know what your building property insurance does and does not cover. In many cases you will need a variety of insurance policies to be sure that you are protected. A Trusted Choice® independent agent can help you compare multiple insurance quotes to get the best rates on business property coverage.
Commercial Property Insurance is Essential to Your Company's Survival
A commercial property policy is half of a basic business insurance portfolio. It provides coverage for many of the most common types of business insurance claims.
Commercial property insurance protects buildings and their contents, including computers, office equipment, furniture, artwork, and all of your business personal property—whether it is owned or leased—if it is damaged by fire, smoke, theft, vandalism, weather, or certain other covered perils. If you own your building, your business property insurance needs to cover damage to the structure and what is inside; if you lease your space, you need this coverage for your business personal property.
Business property insurance typically includes business interruption coverage. If you sustain covered damage that forces you to temporarily close or relocate, business interruption coverage reimburses you for ongoing expenses (rent, salaries, etc.) and lost income during the closure or relocation period.
Does Business Property Insurance Cover the Most Common Claims?
Business property insurance offers broad coverage for a wide variety of property claims. Does your commercial property policy cover the top causes of property damage for businesses, or do you need additional policies or endorsements?
Burglary and theft. Burglary and theft are two of the most common business property claims. A typical business property policy covers most burglary or theft claims.
Water damage and freezing. Water damage can be caused by floods, hurricanes, burst pipes, or simple leaky toilets. Like your home, your business is susceptible to numerous kinds of water damage, not all of which are included in your commercial building insurance. There is no standard for water damage coverage; you need to carefully read through your commercial property policy to understand what is and is not covered. Here are some examples.
- Flood from a hurricane or another weather event. Flood damage is not covered under your commercial property policy.
- Burst pipes. Commercial property insurance usually covers water damage due to burst pipes. But if your insurance company feels that you were at fault or failed to take precautions to protect your pipes, your claim could be denied.
- Sewer backup. Sewer backup is not covered under most business property policies; however, you can add sewer backup coverage with a policy endorsement.
- Slow leaks. Plumbing or HVAC leaks are common and can cause a lot of damage. Damage from leaks that are deemed to be sudden and accidental are covered by your business property policy. If your insurance company feels that you have been negligent (perhaps you failed to fix an ongoing leak or properly maintain your building systems), your claim can be denied.
- Ground water seepage. Most insurance companies will not cover damage due to ground water seepage. This is typically considered a maintenance issue.
- Roof leaks. If your roof leaks and the roof and the interior of your building sustain damage due to a covered peril—wind, rain, hail, or fire—the damage is likely to be covered by your business property insurance policy. If the leak and subsequent damage occur because you did not properly maintain your roof, your claim is likely to be denied. If your roof damage is caused by a flood (such as a storm surge during a hurricane), your business property policy is not likely to cover it.
Wind and hail damage. Wind and hail damage are typically covered claims on a business property policy. If you live in certain coastal areas, however, wind damage may be excluded from your policy, but you can purchase a wind endorsement. Note that you may be required to have separate hurricane deductibles and other special policy provisions in areas that are prone to hurricanes. Your Trusted Choice® agent can help you get the hurricane coverage you need if you live in one of these areas.
Fire. Fire is one of the most costly business property claims, and is covered under a commercial property policy.
Earthquakes. Damage caused by earthquakes is not covered under most standard business property policies, but you can purchase special earthquake coverage in areas where earthquakes are common.
How to Get Flood Insurance for Your Business
Floods cause major, costly damage to businesses every year. From 2010 to 2014, the average commercial flood claim was $89,000, according to floodsmart.gov, the official website of the National Flood Insurance Program (NFIP). At least 25% of businesses that experience flood damage close permanently.
Standard commercial property coverage excludes flood damage. Instead, businesses can purchase commercial flood insurance from the NFIP, which was created by the federal government to offer flood insurance to homeowners and businesses.
You can obtain flood insurance for your building and its contents (or contents only coverage), but there is a 30-day waiting period before your flood insurance policy goes into effect. Flood insurance covers certain elements of your structure as well as certain types of business property. Be sure you understand what is and is not covered by flood insurance.
Premiums for flood insurance vary based on a number of factors, including where your business is located. Businesses in high-risk flood areas have higher flood insurance premiums than businesses in low- to moderate-risk areas. Other premium determination factors include:
- Year of building construction
- Number of floors in the building
- The deductible you choose
Businesses that are located in a high-risk flood area or that have a federally regulated or insured mortgage are required to purchase flood insurance.
Does My Business Need Earthquake Coverage?
Statistics from the U.S. Geological Survey indicate that there are about 20,000 earthquakes each year in the U.S. While these are usually small and don’t cause a lot of damage, some type of earthquake damage has been recorded in all 50 states since 1900.
Not every business needs earthquake coverage, but if you live near a fault line or in a state that has frequent earthquakes, you should consider purchasing earthquake insurance.
Commercial earthquake coverage typically covers building damage as well as damage to your business personal property (inventory, equipment, etc.). It may also include business interruption coverage, which pays for lost income and ongoing expenses after a covered event.
Your earthquake insurance policy is likely to have a high a deductible that is based on a percentage of the value of your building, depending on its location, age, and condition. You may be required to make certain improvements or upgrades to your building in order to obtain earthquake coverage.
Where to Find Affordable Business Property Insurance
Insuring even small businesses can be complex. Your business insurance policies should be tailored to the type of business you have and the risks you face. Commercial property insurance is just one of the types of coverage you need, and it is essential for protecting your assets from some of the most common types of business insurance claims.
The cost of business property insurance typically depends on the degree of risk you face. An independent Trusted Choice agent can work with you to assess your business risks and find the coverage you need to protect your business from unforeseen events and financial disaster. You may need basic business property insurance, as well as numerous endorsements or standalone policies, to make sure you are protected. Find a local agent and get multiple commercial property insurance quotes.
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