Posted on May 17, 2014
Commercial property insurance is not only the most commonly purchased business insurance policy, it also happens to cover many issues and events needed by most business owners today. When considering property coverage for the first time or even reviewing existing business property policies, there are three tips to consider for making the right decisions concerning insurance protection.
Purchase the Right Amount of Coverage
When it comes to business property insurance, it is vitally important that business owners purchase the right coverage limits for the policy. There should be enough insurance to rebuild physical structures or replace interior contents in case of fire, theft or other covered events. Business owners should not use tax valuations or real estate marketing values. Instead, they should work with their insurance agent or broker to fully value everything that would need to be replaced if it was completely destroyed. Knowing replacement figures beforehand will take the stress out of shopping for pricing and services once a disaster takes place. It is always better to have more insurance than not enough.
Consider Excluded or Additional Types of Property Insurance
Business property insurance covers specific perils listed in the policy at the time it is written. Certain types of events are not included in standard property coverage. Most property policies do not cover flooding or hurricane (windstorm) damage. These natural events require separate policies. If a business is in a high risk area for flooding or hurricanes, they will often be required by landlords or mortgage holders to obtain and maintain these additional property policies. It is best to evaluate the potential risk for the business location and then determine if extra insurance is important.
Another property insurance policy that does not come in standard programs is business interruption insurance. This coverage will help business owners pay expenses when their company is closed for repair or replacement due to a covered or insured event. This additional insurance can be added by endorsement to standard property policies.
Evaluate Coverage for Compliance
When a standard business property policy is written, it typically does not include repair or replacement of a structure in compliance with local building ordinances or codes. Older buildings are often grandfathered in as existing structures; however, these buildings do not always comply with local codes. Should a covered natural disaster or event happen the standard property insurance policy would not be required to upgrade to code specifications. This situation can be handled by purchasing compliance or ordinance insurance coverage either as an endorsement or separate purchase.