Goods, Gear, and Inventory: Basics of Property Insurance

There are many types of insurance that you need for your business. Some of them may be appropriate for only certain businesses, but commercial property coverage is something everyone needs. So even if you work out of your home from your couch, you can protect yourself and your business with coverage.

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Some people confuse property insurance with general liability insurance, but there’s a difference. Liability insurance for your business covers you in case someone sues you. Commercial property insurance provides compensation for damage or destruction of property that is owned by your business. If you learn about business property insurance, you can choose what coverages you need.

What is Covered by Commercial Property Insurance?

Commercial property insurance helps you replace or repair your business’ property and equipment if a covered incident has impacted it. A covered incident can be many things, including fire, water damage, or vandalism. Your policy will provide coverage up to a set amount for those covered incidents, and you will have to fund any remaining costs, if applicable. You can also add additional coverage to make sure that you have enough. Plus, you can add coverage for specific events that are not in your original policy.

There is a wide range of things that you can have covered by your commercial property policy. Before you get a quote from an insurance provider, you should do a detailed inventory of everything your business owns and its value. You will have a better idea of how much coverage you need when you have that amount. Types of property that can be covered include;

  • Any buildings in which you operate your business or store inventory
  • Your office equipment, such as phones, furniture, storage equipment, computers, and electronics
  • Documents and records that your business requires
  • Manufacturing equipment and gear
  • Fixtures, fencing, signage, and exterior property
  • Product inventory
  • Landscaping on your property

Make sure that you do not miss anything; otherwise, you will not be able to get compensation if it is damaged or destroyed. If you lease or rent property to conduct your business, you can still get property coverage specifically for them.

Property of Other Parties

Something that often gets forgotten about commercial property insurance is that it can also apply to the property of others. For example, if your business commonly rented or borrowed equipment, that would be covered. Also, if your business requires clients to leave their property with you while you fix it or upgrade it, that property can be covered. It’s important to note that most commercial property policies limit how far something can be from the building before it is ineligible. That limit is usually 100 feet from the insured building in these cases. Compensation in this type of coverage goes to the property owner and not to the policy-holding business.

What Type of Damage Is Covered?

Of course, not every instance of property damage is the same, and not everything is covered. You must know what you are protected against and what you aren’t. Otherwise, you will find out at the worst possible time. Every policy is different, so you need to read yours over closely to make sure that you understand everything.

Take a good look at the causes of loss form that comes with your policy. It will outline all of the events and perils that are covered. This will allow you to rest your head knowing that you have protection but also give you the chance to prepare for events that aren’t covered.

Who Should Have Commercial Property Coverage?

Many small businesses do not have commercial property coverage. They assume that there is no benefit to paying for the protection because they are so small. This thinking is misguided, as everything has value. Even if your company doesn’t own much, it still is worth something, and it will cost money to replace or repair it.

There are very few businesses that can easily replace or repair their commercial property. This is especially true for small businesses with tight margins and less room in their budget for emergencies. Theft, vandalism, fire, water damage, and any number of things can befall any business regardless of the precautions that you take, and there are better things to invest your money into than paying to replace your property.

In some cases, you may even be required to have commercial property insurance as a condition of rent or mortgage. The lender will ask you to ensure that your business assets are protected from being used as collateral against the financing. The fact is, even if you have the money to replace everything your business owns, why would you want to spend it on that?

Common Exclusions

There are several perils that are commonly excluded from commercial property policies. Unfortunately, there is often confusion, and policy-holders don’t realize that something isn’t covered until it is too late. Flood, for example, is usually not a covered peril in standard policies. Intentional damage is of course, not covered, nor is terrorism, nuclear accidents, earthquakes, and normal wear and tear. Some policy providers will allow you to add some of these perils for an extra premium, and it’s up to you whether you deem that extra cost to be worth it.

Running a business is complicated, and there are many things you need to think about on a regular basis. You need to protect your business with insurance and have the right protection in place to make sure that you are covered for anything that might happen. Commercial property insurance is one of the most important coverages you can have since it protects everything that your business owns that might be at risk. If you have damage to your property or it is destroyed, it can not just cause you to shut down your business operations while you rebuild and repair, but it will also cost you a lot at the same time.