There are a lot of risks associated with running your own business. The business building and its contents are the physical assets that can be damaged in one way or the other since unexpected events such as fires, vandalism, and natural disasters can happen anytime.
The outdoor fixtures such as fences and signs can also be damaged. Which is why it’s important that you protect them. And Commercial Property Insurance will be the best investment to make for the business.
Here’s all you need to know about commercial property insurance. Please read on.
1. Location of Your Business Affects Your Premium
The location of your business will impact the type of coverage that you will need and also the cost of premium you’ll pay for. For instance, if you’re working, or your business is located in an area with a high prevalence of forest fires, the commercial property insurance policy will have to reflect that.
2. The Recovery Process
Suffering a loss to your business can be very stressful. And the faster your business will pick up, the better. If there are damages done to your property and the peril is insured, you’ll need to file an insurance claim immediately.
The right policy will help prevent and correct the long-term effects of the loss. And your business will be up and running once again within the shortest time possible. But a lot of property insurance claims may not be awarded because of many reasons.
You may consider consulting an adjuster experienced with property insurance awareness and claims to help advise and guide you in filing your claim. The adjuster will also negotiate on your behalf after evaluating your policy and every scope of your loss.
3. What Property Can You Insure
Perhaps you could be thinking that this insurance protects your business building only. But you’ll be surprised. It can protect the furniture, equipment (office and processing or manufacturing), inventory kept in stock, supplies, company documents, furnishings, and electronics like computers among others whether you own, rent, or lease the commercial space.
The things outside your business building such as trees, gardens, landscaping, signs, and fence can also be protected by this insurance.
4. Plumbing and Electrical Works Can Affect Your Insurance
Among the leading causes of property insurance claims is water damage. When determining the cost of your premium and your coverage needs, the insurer will check the type of plumbing and electrical works in your building.
The premiums will be high if the plumbing types are not so safe. So, in order to avoid high premiums, ensure to check if the electrical work and plumbing in the building you’re intending to operate your business are okay whether you’ll be owning, renting or leasing.
5. Actual Cash Value (ACV) or Replacement Value (RV)?
When insuring your business property, you will have the option of insuring it at its actual cash value or replacement value.
What’s the difference between actual cash value and replacement value?
Simple, the replacement value coverage lets you replace the insured property at the current prices while the actual cash value coverage takes depreciation into account. Due to this, the actual cash value coverage is less expensive (and of course pays out less) than the replacement value coverage in the event of a claim.
6. Repair Costs
A commercial property insurance policy will help cater for repair costs if your business suffers a covered loss or damage. This includes the repairs of the damage on your commercial space and outdoor fixtures.
This will limit your business’ downtime hence giving you an opportunity to get back to business as soon as possible. Isn’t this what you’d want? Besides, you’ll be protecting your reputation with customers when you maintain continuity in your business.
7. Replacement Costs
The commercial property insurance can cater for replacement of your lost property if the covered loss is too extensive.
The cost of your premium will depend on how much it would cost to replace your commercial space and what’s in the space. This will also determine the amount of coverage you’ll need. Basically, this policy will help ensure the replacement costs are lower and that your bottom line is protected.
8. Construction Material Affects Your Premium
What type of material is used to construct your business building? If it’s more likely to catch and spread fire, then the cost of premium will be much higher than that whose construction material will hardly catch or spread fire.
The contents of your commercial space will also play a part in the amount of premium. The higher the likelihood to catch fire, the higher the premium.
9. Age of Property Can Affect Your Insurance
Buildings age. Same case to other assets like equipment, electronics, and outdoor fixtures. And the older the assets get, the greater the likelihood of suffering a loss. The age of your assets will affect your insurance coverage and premium.
If you’re operating your business out of an older building, you’ll have higher premiums than what you’d have if the buildings were newer. The same case applies to the other assets contained inside and outside your commercial space. Should you decide to renovate your property when operating out of an older building, ensure to inform your insurer.
10. Commercial Property Coverage
To protect your assets from potential disasters such as theft, fire, and vandalism among others, you’ll need to take a commercial property coverage. And, depending on the insurance policy you take, your business will be covered for the losses you’ll incur as a result of not being operational.
The policy will take care of your loss of income by helping you keep up with expenses like payroll and bills among other expenses. Isn’t this great?
11. Standard Exclusions of the Insurance
Every policy has exclusions regardless of how extensive your coverage may be. And commercial property insurance is not an exception.
There are events that this type of insurance cannot cover. And it is important that you learn what can be covered and what cannot be covered by this insurance.
Well, standard policies can cover the losses and damages caused by theft, fires, vandalism, and windstorms. But standard policies cannot cover losses and damages caused by earthquakes, flood, or hurricanes.
You’ll need to have a commercial property insurance for your small business regardless of whether you’re leasing, renting, or owning a commercial space. The good thing about this insurance is that it protects your commercial space and its contents, be it furniture, equipment, or electronics. The things outside your commercial space such as trees, shrubs, and fencing can also be protected. This gets you back to business quick. Look out for relevant themed blogs for more information about this type of insurance.