Why you need to get Commercial Property Insurance or CPI for your Business
Whether you’re a tenant or own the premises from which you operate, you do need to make sure that your insurance covers the main risks facing your business, including general public liability, damage or loss of vehicles and inventory, premises and more. If your business has 2 locations though, then you’ll require a separate policy for each of them. This is something that usually depends on the type of operations at each location which directly impact the premises’ risk profile.
Types of Policies
Most businesses have basic business insurance which covers replacement or repair of the buildings, including its contents that have been destroyed or damaged by civil unrest, vehicles, weather, and fire. The policy also covers stolen or lost assets. If you rent the space from which your business operates, then the policy will only cover the premises’ contents, including computer equipment and furniture. If you’re a business and operate out of your home office, you may also want to consider getting property insurance. That’s because homeowners insurance won’t cover any losses associated with your business.
There are also broad form policies which include a wide range of common risks, but also options like water damage or structural collapse caused by sprinkler leakage. A basic business insurance policy does omit many important risks and that is why you need to get a special business insurance policy in order to cover them. Some of these risks include general wear and tear, destruction caused by nuclear disasters, terrorism, war, but also flood damage. Depending on where you live, the policy may also cover damage from hurricanes, tornadoes, and windstorm.
Your commercial property insurance policy may have certain endorsements added to it. This is so that it can cover items that are usually not included, unless specifically mentioned in the business insurance policy. To offer some examples, they are:
- The personal effects of employees while they’re on the premises.
- Off-premises coverage for offsite business property, including laptops, tablets, etc.
- Business interruption coverage. This type of coverage will cover the business in the event the business suffers property damage that interferes with its ability to operate.
- Newly constructed space: If you decide to extend your premises, the new space should be added to your policy.
- Special Coverage
There are certain special types of business insurance that you can buy in order to protect your commercial property against losses resulting from:
Infrastructure damage caused by civil disturbance or strikes.
Loss of money due to the destruction of property (like strong rooms, money safes, and cash registers) or theft.
Criminal activities, including the replacement or repair of doors during a burglary, etc.
When it comes to the premiums associated with commercial property insurance, they’re based on underwriting. This is actually a way for the insurer to determine your company’s risk level and assess the risk of claims. If your premises are deemed high risk, then you’ll pay a higher premium and vice-versa. The main differentiator on premiums is the risk of fire, so if you want to keep your premiums low, then you may need to get a clean bill of health from a fire inspector.
It’s very important to bear in mind that like most other policies, commercial property insurance also contains exclusions. For instance, if your business premises are damaged by a flood or fire, debris removal and business interruption costs post disaster can be excluded. Therefore, it’s highly recommended that you take the required steps in order to reduce the risks associated with your property and qualify for a lower insurance premium.