Understanding Business property insurance

Posted on: Thursday, October 31, 2013

As a business owner, you are perpetually dealing with the daily strains of keeping your company going. Undoubtedly, you’ve purchased an insurance policy covering your business for loss to all physical property, such as the building, fixtures, equipment, and inventory. However, does your policy cover all your needs?

Various types of losses

There are man-made disasters, as well as natural disasters, and the coverage requirements are different. Vandalism can hit your building, equipment, or even your inventory. You need coverage to compensate for repairs or replacement of any business property damaged by vandalism. Consider adding an off-premise rider if you or your employees travel with expensive equipment such as laptops. If your business' transportation fleet is damaged by vandalism, your insurance will cover the damage only if you have comprehensive coverage. 

You may be covered for fire or certain natural emergencies, but you may need more than a typical policy will insure. Is your business on a flood plain? Are you on a slab foundation in a tornado zone? You may need to purchase special coverage. Any structure in a flood plain, damaged in excess of 50% of market value, must be replaced and rebuilt to modern flood plain building codes. A standard commercial property policy does not cover such compliance expenses. One resource to consider is FEMA.

Know your specific needs

Property coverage needs to be constantly reviewed to determine if sufficient coverage is in place. Business property insurance coverage should be able to rebuild the structure and replace fixtures at current replacement prices. Property tax or real estate valuation won’t give you the proper information on what you require. You need a full-scale valuation of the total cost of replacement. 

Annually review all upgrades, new fixtures, office furniture - any and all improvements which affect your overall valuation, and adjust accordingly. Insure fully. The premium saved is not worth the risk of not being able to rebuild. 

Lease or renter’s business property coverage

If you lease space, you should still purchase property insurance. Your landlord's building insurance will not cover your business possessions. If you run your business from your home, you should consider purchasing separate business property insurance. In most cases, your homeowner’s policy won’t cover the use of your home for business purposes.

Interested in learning more? At Core Benefits Group, we have answers. Contact us or give us a call at 1-877-214-2969.

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