Whenever you purchase a new commercial property insurance policy for your business, you should carefully review all of its coverages with a knowledgeable insurance agent who can provide informed advice on how to best protect your business. Before getting the policy, no protection should be overlooked because you never know which protection your business might eventually need. There are, however, a few coverage items that you may want to pay particular attention to.
Coverages to Check For When Getting Commercial Property Insurance
The Perils Covered by the Commercial Property Insurance Policy
First, find out whether the commercial property insurance policy you’re considering is a closed-perils or open-perils policy. Perils are the risks that a policy might cover, and these two categories of policies typically offer protection against a different number of risks.
Closed-perils policies normally only offer coverage for the perils that are listed in their terms and conditions. The number of perils noted can vary from policy to policy, and your insurance agent can check what perils are covered if you’re looking at a closed-perils policy.
Open-perils policies usually cover any perils so long as they aren’t excluded in the terms and conditions. Rather than listing what is covered, these policies typically only list what isn’t covered. They don’t list what is covered because most of these policies cover a lot more potential risks that closed-perils policies do.
The Coverage Limits for Buildings
Second, check what coverage limits are in place for any buildings that your business is insuring. You’ll probably want limits that are at least equal to the fair-market value of your business’ buildings, and you might want to get limits that would cover rebuilding costs if the buildings were destroyed in a covered claim. Sometimes, rebuilding costs can be substantially more than the value of an existing building.
If a business property insurance policy doesn’t offer enough coverage to adequately protect your business’ buildings, it’s usually easy to increase the structural coverage limits in the policy. In a few cases, though, a business might have to find a different policy that offers higher limits.
The Type of Coverage for Inventory and Equipment
Most business property insurance policies offer one of two types of coverage for inventory, equipment and other items that are stored on an insured property. A policy may offer replacement value coverage or actual cash value coverage.
Replacement value coverage normally insures covered items up to however much it would cost to replace them. Actual cash value coverage typically only insures items for their fair-market value.
As is true with buildings, replacing items can cost more than the items are worth after depreciation is taken into account. Therefore, replacement value coverage tends to be the more robust protection.
Items That Have Specific Limits
Some specific items may have a lower limit than the other non-structure items covered by a business property insurance policy. For instance, a policy may reduce how much coverage it gives for valuable inventory or electronic gear.
To make sure all of your business’ equipment, inventory and supplies are covered, check whether the policy in question has any specific limits for certain items. If it does, you may need to do nothing, increase the limits, purchase an endorsement or find a different policy depending on the applicable limit and the value of the affected items.
Work with an Experienced Insurance Agent
For help finding all of the commercial property insurance coverages your business needs, contact the independent insurance agents at World Insurance Associates. Our agents have the expertise necessary to help you decipher commercial property policies’ protections, and we’re independent so they can help you compare any insurers’ policy offerings.