If there is one thing you can be sure of in an uncertain world, it’s that accidents can and do happen. They happen frequently and can cause considerable damage that is expensive to pay for. This is the purpose of insurance.
People insure their homes, their cars, and their valuable items. If you own a commercial property, such as a business or rental unit, you are just as vulnerable and need insurance. You could easily end up out of business and deeply in debt without it.
Two Types of Commercial Property Insurance
Commercial property insurance pays for damages covered by your policy that are caused by a number of accidents or weather situations. There are generally two types.
- Named perils policy – This type of insurance only covers situations explicitly mentioned in the policy. These typically include theft, vandalism, fire, or severe weather damage, often called, “Act of God”.
- Open perils policy – This type of insurance provides a much broader area of coverage. It will cover any situation not listed as an exclusion (for example, a flood). An open perils policy is more expensive than its named counterpart because it provides greater coverage.
Which type of policy you choose depends on the needs and risks of your business as well as your budget.
Problems Covered by Commercial Property Insurance
There are certain situations that are typically covered by a commercial policy. These include:
- Theft
- Vandalism
- Fire
- Lightning damage
- Wind damage
- Hail damage
If you rent the building you operate your business in, your landlord’s insurance would generally cover these kinds of damage. Depending on your lease agreement, you may be required to cover some things yourself. For example, if you make any modifications to the building, those would normally be your responsibility to cover with insurance.
Physical Assets Covered by Commercial Property Insurance
Your policy will cover most of the physical assets owned by your business. These include:
- Computers, furniture, and equipment
- Inventory
- Supplies
- Tools
- All of your business records
- Personal property of you and your employees
- Outdoor structures such as signs, fences, or gates
- The building itself
If you have other property that needs to be covered, you can discuss it with your insurance company when you buy your policy.
Problems Not Covered by Commercial Property Insurance
There are problems that are not normally covered by a typical insurance policy. You should know what these are in case you need to buy additional coverage to protect your business fully.
- Damage due to flooding caused by severe weather. Commercial property insurance policies don’t cover floods and you must purchase separate flood insurance.
- A car accident caused by a company car would be covered by an auto insurance policy.
- Causing damage to a client’s property during a visit would be covered by a general liability policy.
To be fully covered, your business needs policies other than just commercial property.
A smart business person will have insurance. Commercial property insurance will cover many situations. It’s important to know which it does and which will require an additional policy.
