Your business needs to be protected financially from the loss of buildings, equipment and business personal property in the event of fire, theft or other covered types of damage or destruction. If your business involves servicing other people’s property, you should have protection while it’s in your possession. Also, beyond physical damage to property, you can also protect your business from lost income resulting from a covered loss.
There are a variety of coverage options to help protect your business. Below you can find some of the insurance protection options best for your business. This is just a partial list of protection we can provide. To discuss specific property and equipment protection needs for your business contact us. We will help you develop a custom protection plan that fits your business.
Property insurance pays for losses and damages to real or business personal property from a variety of “perils” (occurrences that result in damage or destruction). Insurance can be purchased in a package covering a different combination of causes of loss, or you may purchase components separately depending on your specific needs. While covered perils vary depending on the policy you purchase, generally it provides for repair or replacement caused by:
- Fire – including damage from smoke and water used to put out a fire
- Weather - lightning, windstorms, hailstorms, tornadoes
- Equipment failure – damage from bursting of heating, plumbing or hot water systems
- Collapse of roof or walls
- Damage by vehicles
- Theft or burglary
- Vandalism and malicious mischief
If you lease your commercial space and have made significant improvements, you should have insurance with specified coverage limits that pays for damage
Business interruption insurance & extra expense
Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms. But, too many small business owners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.
- A business that has to close down completely while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential.Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
- Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate to get the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in; however, waiting periods can vary between policies, so be sure understand the specifics of your coverage.
- The price of the policy is related to the risk of a fire or other disaster damaging your premises. All other things being equal, the price would probably be higher for a restaurant than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.
Extra expense insurance
Extra expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period. Usually, extra expenses will be paid if they help to decrease business interruption costs. In some instances, extra expense insurance alone may provide sufficient coverage, without the purchase of business interruption insurance.
Boiler and machinery breakdown
This coverage protects you if machinery or other equipment breaks down causing property damage or a business interruption loss.
If you're building a new commercial or residential property, builder's risk insurance covers structures in the process of being constructed. If a partially completed building is destroyed in a fire, builder's risk insurance covers your losses. It can be purchased for one specific project or multiple ongoing projects.
As a contractor you may carry tools, equipment, spare parts and other items important to your profession in a vehicle that moves with you. An automobile policy doesn’t cover your business equipment, so you need special coverage. You may choose to schedule equipment or purchase a blanket policy depending on your needs.
As a contractor, electrician, plumber or other artisan, you may install some expensive materials or units as part of your job. You may need this type of coverage for damage or losses that could occur during installation as well as losses that can occur during transportation or temporary storage prior to installation.
If your building burns down, you will have to remove the remains of the old building before you can start construction. Basic property insurance covers costs to rebuild, but not debris removal. Debris removal insurance pays for removing debris after a covered loss so that you can begin to rebuild.
Ordinance or law
A fire causes major destruction to your building. Because more than 50% was damaged, a local by-law requires the building to be torn down and rebuilt to current building codes. You’re a responsible businessperson and take the necessary steps to maintain your property. You have replacement cost value on your policy, so you’d be fully covered…right? Not necessarily.
Property insurance policies generally have an “Ordinance or Law” exclusion, which means that the policy covers the building as it exists, but it does not cover the cost to upgrade the building to current building codes and ordinances after a loss. Therefore, having “replacement cost” coverage for your building does not mean that you have “upgrade cost” coverage, unless you purchase an “Ordinance or Law endorsement” for your property. Even if a property policy offers some built-in Ordinance or Law protection, often the amount of coverage isn’t sufficient in a major loss.
Building codes and zoning laws affect every piece of property no matter how big or small. These laws are continually changing…requiring new or improved features such as better wiring, handicap access, sprinkler systems and more. If a loss situation triggers code upgrades, it could be financially devastating unless you have Ordinance or Law coverage.
While some regard this coverage to be important only for older buildings, laws are always changing, and newer buildings can be affected. This is an area of concern for all building owners.
How ordinance or law protects you:
- Coverage for the undamaged part of your building. Your property insurance policy only protects you against actual damage caused by a covered cause of loss to a building. It doesn’t cover the cost to replace an undamaged portion of your building that is required to be torn down and rebuilt because of a local ordinance. The Ordinance or Law, Part A provides this protection based on the coverage limit you select.
- Demolition costs. While property insurance covers debris removal for a portion of property damaged by a covered peril, it doesn't cover demolition expenses for an undamaged portion of a building that has to be removed. Part B of Ordinance or Law provides this coverage. Since demolition costs vary based on building size and other factors, be sure that the limit you select reflects your building’s structure.
- Increased cost of new construction. It’s wise to assess exactly what types of upgrades could be required if you had a major loss, i.e. sprinkler systems, elevators, wiring, septic system, etc. The limit you set for Part C requires serious consideration and talking with a contractor may be helpful in determining the appropriate level of protection.
Service or care to others' property
If your business involves the service, repair or storage of other people’s property, you need Bailee insurance protection in the event that it is lost or damaged while in your care. This coverage provides comprehensive protection in most situations even if the property is away from your facility or is stolen. Another option is “personal property of others” coverage; however, it has more limitations and may not be the best choice depending on your line of business. Typically this type of protection is purchased by auto mechanics, computer technicians, dry cleaners, jewelers, veterinarians, etc.
Depending on the value of business assets your company owns or your exposure for financial theft from employees or outsiders, this may be a coverage option to consider. Even if your basic property insurance policy covers crime situations, you may want higher protection limits for your business.
Transportation and property in transit
Transit and transportation insurance needs can vary significantly depending on your business. You may need insurance coverage for a specific single shipment or an open policy covering all shipments and movement during your policy term. You may need insurance protection for all types of shipments by any carrier including third-parties or require only domestic transit coverage. Coverage is also available if your company is the provider of transportation services and requires protection while shipping cargo or household goods for others.