Don’t lose your business and income. Get the coverage you need.
Key takeaways:
- Commercial property insurance protects you from losses due to natural and man-made disasters like fire, weather, theft, and vandalism.
- Even if you work from home, you need commercial insurance if you have a business with assets.
- There are four types of policies to consider: business personal property, business interruption, equipment breakdown, and building insurance.
- You can look at additional policies for cyber incidents and floods, as well as commercial umbrella.
Commercial property insurance, which helps safeguard your business and physical assets, is essential to protecting your business. It helps cover your losses in a covered event, like theft, fire, water, weather events, and vandalism.
If you own a business, you need commercial property insurance whether you lease or own the building where you work. Commercial property insurance protects your equipment, tools, inventory, furniture, computers, and other personal property.
What type and amount of insurance you need depends on your business and whether you own the building. Let’s talk about why you need commercial property insurance, the four types of coverage it offers, and how each type protects your business.
Why do you need commercial property insurance (even if you work from home)?
If you lease space for your business, your landlord will likely require commercial property insurance.
If you work from home and have a mortgage, your lender will require it, and if you don’t have a mortgage, costs for a loss can be catastrophic.
Homeowners insurance, even if you have a rider to cover your computer, etc., won’t pay out for problems that occur because of your home-based business.
It always pays to check with your insurance agent to find out what is and isn’t covered by your current policies and to see if you need to beef up coverage. Customer slip-and-fall claims occur at the same percentage as fires at 10% of claims filed. Are you prepared?
The four types of business property insurance
The business property insurance you need depends on your business of course, but no matter what industry you are in, there are four main types:
1. Business Personal Property insurance
Business Personal Property (BPP) insurance provides coverage for your business personal property at a specified location. Protection extends to fire, burst pipes, storm damage, vandalism, explosions, and theft.
BPP covers anything movable, including:
- Office supplies like pens, staplers, and calculators
- Furniture like chairs, tables, and desks
- Furnishings including rugs, blinds, and curtains
- Desktops, laptops, tablet computers, as well as other electronics
- Electronics like smartphones and tablets
BPP also covers things like heavy equipment, machinery such as copiers, scanners, and 3D printers, and any other item that is not the building itself.
Note that this type of policy covers movable items in a specific location. If you have property that leaves your space, talk to your agent to find out if you need inland marine insurance.
2. Business Interruption Insurance
You might also hear this coverage referred to as “business income coverage.” This policy helps replace lost income if you have to close your business for some time due to a covered event such as those listed above: fire, burst pipes, etc.
For example, if you have burst water pipes that flood your retail store, you might have to close for weeks to pump out water, dry things out, mitigate any mold issues, replace lost inventory, etc. Business interruption insurance will:
- Replace the lost earned income you would have earned during the closure.
- Provide money for everyday operating expenses, including payroll, rent or lease payments, taxes, loan payments, and utilities.
- Compensate for additional costs you might incur for things like temporary relocation.
What business interruption insurance does not cover is things like a contingent business interruption or those that aren’t related to property damage. It also doesn’t cover short-term or partial interruptions.
3. Equipment breakdown insurance
Equipment breakdown coverage protects your company’s computers, electrical systems, production machinery, and other equipment from abrupt and accidental malfunctions, including such things as short circuits, loss of air pressure or vacuum, or power surges.
The five categories of equipment this type of coverage protects includes:
- Mechanical, such as motors, engines, generators, elevators, and water pumps as well as specialized production and manufacturing equipment.
- Electrical, including transformers, cables, and electrical panels
- Computers and communications equipment, such as computer, phone, security, and fire alarm systems.
- Air conditioners and refrigeration systems
- Boilers and pressure equipment
4. Building insurance
This insurance covers damage or loss to an actual building. If you lease space, your landlord will have this coverage, but if you own the building, you will need this type of policy to cover losses in the event of a fire, natural disaster, or incident that damages the actual building.
Before buying this type of coverage, it’s important to get an accurate appraisal for the replacement cost of the structure.
Additional commercial policies you might want to think about
While these four types of commercial property insurance are the must-haves, you might want to think about these additional policies:
- Cyber liability. This protects your business from the hefty costs of a data breach or malicious software attack and covers expenses such as customer notification, credit monitoring, and fines and legal fees.
- Commercial umbrella insurance. This policyprovides extra coverage if a claim against your business is higher than your policy limits and gives you a practical way to extend coverages such as general liability.
- Flood. Business property insurance doesn’t generally cover flooding, so if you live in a high flood risk area, talk to your agent. If your commercial property is in such an area and you have a mortgage from a lender that is federally regulated or insured, you must purchase a flood insurance policy.
You don’t want to worry about losing your business if disaster strikes. The cost of commercial property insurance is quite reasonable and crucial for any business with physical assets.
Protect your business assets and your livelihood with Avante
You never know when disaster will strike in the form of a burst water pipe, a sudden freak windstorm, or a power surge that takes out every computer in your office.
At Avante, we’ll work with you to build the complete coverage you need with a deductible that works for you. Reach out today because you never know what tomorrow will bring. At Avante, we’re always standing by.
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.
