You need to have adequate knowledge about property insurance if you own a commercial building, especially if you’re looking to buy one. Commercial property insurance is a policy that offers coverage for either a limited amount or the full amount of renovating or restoring a commercial building or equipment destroyed by a fire, burglary, or any other disaster.
As a business person, you should ensure that you get the most comprehensive property insurance. To find the best rate and coverage, you can research and check out different agencies, such as alpineinsagency.com. This research can equip you with basic knowledge of the factors to consider when getting the best commercial property insurance. With that said, here are five things to know about commercial property insurance:
- Types Of Commercial Insurance
There are several types of commercial property insurance for you to choose from. Each type of commercial property insurance covers different risks in a business. Therefore, you should be aware of the perils your business is susceptible to when finding the right property insurance.
The following are the types of commercial property insurance:
- General Liability
Commercial general liability insurance offers coverage for bodily injury, personal injury, and damage to property for a business. The accidents covered by this insurance happen on the business’s property or while conducting business activities and are brought on by its products.
If a person suffers from any injury while working for your company, they can trigger a general liability claim. You can also claim compensation through general liability coverage if your business property is damaged.
- Direct Damage
It is the most common commercial property insurance. It offers coverage for compensation when repairing or replacing equipment, office furnishings, buildings, or any property belonging to the business that any catastrophe, such as fires and theft, has damaged.
The insurance policy can also cover lost income and business expenses incurred due to damage to the business premises. The insurance coverage is meant to cushion your business against loss from such perils.
- Professional Liability
This type of insurance is significantly different from general liability insurance because it covers damages resulting from work-related errors. For instance, if an employee makes a mistake when carrying out operations that result in injuries, this insurance can be claimed.
Additionally, the insurance can be applied to cases of injuries from negligence while working. Ideally, any damage that occurs because of an omission or error when performing professional duties can be covered using this insurance.
- Crime Insurance
You’ll also need to protect your business from criminal activities that might affect it, such as theft and burglary. Getting crime insurance will protect your commercial property from financial losses from other people’s criminal activities. For example, if burglars break into commercial property and damage the property and steal equipment, you can make a claim.
In addition, there are several crime insurance policies that you can get depending on your needs. For example, suppose you feel your employees are dishonest and some are stealing from the business. In that case, you can get an employee theft insurance policy. This policy can cover any valuables you lose because of an employee stealing from you.
You can also get a computer fraud and funds transfer fraud insurance policy which covers your business from loss incurred from a cyber-attack. For example, suppose an employee makes a transaction based on a fraudulent email they received. In that case, you can be compensated for the loss.
Thus, various crime insurance policies are available for different scenarios. As a commercial property owner, you can assess your risks and determine the most suitable insurance policy.
- Employment Practices Liability
Another type of insurance you can consider getting for your commercial property is employment practices liability insurance. This type of insurance can protect you from any wrongful acts that might happen during employment or recruitment. These wrongful acts can include claims of misconduct or unbecoming employment practices.
This type of insurance should give you coverage in case employees claim a violation of their legal rights while working for you. Some of the legal claims that the insurance can cover include discrimination, wrongful dismissal, and sexual harassment.
You can also ensure that the coverage includes claims of privacy invasion, defamation, forfeiture of career opportunities, and emotional distress while at work. The insurance can ensure that you’re compensated for any loss the business might incur because of legal claims made by workers.
- Workers Compensation Insurance
You can also get this type of insurance, which offers coverage for medical expenses and lost wages for injured workers. Ideally, this insurance should compensate the workers’ cost of rehabilitation and include death benefits.
Additionally, you can check your state laws on the requirement to have this insurance as a business. That’s because while it’s mandatory in some states, there are exemptions in others depending on the business you’re running.
- Inland Marine
The inland marine insurance coverage might be suitable if you have movable commercial property. Ideally, this policy covers commercial property that can be moved over land and includes equipment and cargo during transit. You can think of it as insurance for commercial goods transported on land.
You can also use this insurance policy for equipment such as construction machinery, cameras, and computer equipment that keeps moving around. The purpose of getting this insurance is because movable goods are mostly not covered by standard commercial property policies.
- Commercial Umbrella
An umbrella insurance provides more risk protection for your commercial property by increasing the liability limits. It can be a great option because it can protect your commercial property from being seized or used in a lawsuit.
- What Commercial Property Insurance Covers
Once you get a commercial property insurance policy, it should offer coverage in the following areas:
- The building: It includes any commercial structure you own or is responsible for through a lease. The insurance policy for the commercial building should offer coverage for any completed additions, fixtures, and permanently fixed machinery.
- Business personal property: You should also get an insurance policy that offers coverage for all personal property belonging to the business. Ideally, this coverage includes something other than the building but only the contents within the building, such as computers, machines, furniture, and stock.
- Personal property of others: If you have other people under your care or custody, you’re also responsible for ensuring the security of their belongings. For instance, the insurance should cover the loss of employees’ property.
Therefore, you need to have a list of everything that needs insurance coverage from the building, the business’ property, and property belonging to others, including leased items. You can consult a tax expert on the items you need to list for different commercial property insurance policies.
- Types Of Damage Covered
Another thing you should be aware of is the types of damage covered by commercial property insurance. Understanding the scope of an insurance policy is crucial to deciding on the best coverage for your commercial property. You can use the causes of loss form to see if an insurance policy covers it.
You can choose any of the following options for causes of loss in an insurance policy:
This option offers coverage for all direct physical damage to your property. However, you should check if exclusions exist because you can’t claim these. This option can be advantageous because you don’t have to get different insurance policies. After all, all direct damages are covered.
In addition, this type of policy shifts the burden of proof during a claim to the insurance company. The insurance company has to prove why a certain claim can’t be compensated. Where the insurance company has the burden of proving why a certain claim isn’t covered, the probability of your getting paid is high.
You can also opt for the basic cause of loss form if the special option isn’t available. Ideally, the basic option offers coverage for the following perils:
- Lightning strikes
- Civil commotion
- Damage from an aircraft or vehicle
You can also consult with the insurance agent on any other perils covered by the basic option.
It is a hybrid of the special and basic causes of loss form because it has additional perils covered to the ones covered under the basic option. For instance, all the perils in the basic causes of loss are covered under the broad causes of loss form with the addition of the following:
- Water damage
- Falling objects
- Collapse resulting from specific causes
- Weight of snow, ice, or sleet
Though this cause of loss form covers a large scope of damages, the burden of proof would be on you when making a claim. You’ll have to prove that your claim is included in the coverage.
- What Is Excluded From Commercial Property Insurance Coverage
When shopping for insurance coverage for your commercial property, you’ll also have to check the causes of damage that are excluded. Some policies have an exclusion list, while others state that anything not listed as included is excluded.
Some of the causes of damage that may be excluded from insurance coverage include the following:
- Acts of God such as earthquakes and flooding.
- Nuclear hazard
- Intentional damage
- Ordinary wear and tear
However, these causes of damage can be insured through separate policies you can get from your insurance agent.
- Cost Of Insurance
The cost of insurance for commercial property differs depending on the value and the scope of coverage. Some of the risk factors that an insurance company can consider when determining the cost of your policy premium include the following:
- Condition of the building and the materials used for construction.
- Where the commercial property is located.
- The occupancy of the business premises, including the number of employees.
- Security measures are in place to protect your commercial property.
The more risks your business has, the higher the premium rate for insurance. You can have the commercial property professionally audited before opting for insurance coverage.
There are many insurance options for a commercial property on the market. Still, you need to know how insurance works before you get one. Additionally, you should consult different insurance companies before settling on one to determine the most suitable coverage for your business needs. Nonetheless, commercial property insurance can give you peace of mind.