As a small business owner, you face risks daily that can cause setbacks to your enterprise. Knowing how to handle these risks is essential to the success of your business. Through commercial insurance coverage, you can not only protect a new business but help it expand and grow. Here are just a few of the many ways commercial insurance from Commercial Property Shield in Califon, NJ can benefit your business:
General Liability Coverage
General liability insurance protects you against lawsuits in the event a customer suffers injury or property damage due to services or products your company provides. If a customer experiences accidental injury or property damage on your business property, liability coverage will foot the bill for expenses incurred and cover the legal expenses of a lawsuit if it should arise.
Business Property Coverage
If your property, equipment, or goods suffer damage or loss, business property coverage can help cover repair or replacement costs, protecting you from financial loss.
Business interruption coverage kicks in when you have to close down your business temporarily due to a disaster that causes severe damage to your property. This coverage can help cover lost income, employee wages, rent payments, and the expenses of relocating to a new location while your old one is being repaired. This financial compensation can help you move forward.
These are just a few ways commercial insurance can protect your business. You should also keep in mind that commercial property insurance policies are complex documents that carefully detail precisely what protections they offer. While business owners should review all of a policy’s paperwork when purchasing a policy, there are a few particular items to pay special attention to. If you’re in the process of getting business property insurance for your business, make sure you carefully review these five items before purchasing a policy.
Business Owners Should Check These 5 Items When Getting Commercial Property Insurance
1. Named Perils vs. Open Perils
Commercial property insurance policies (and several other insurance policies) are either named perils policies or open perils policies. Named perils policies typically only cover the risks that are specifically listed in them, while open perils policies generally cover any risks that aren’t explicitly excluded.
For the best coverage, look for an open perils business property insurance policy. Most open perils policies offer more comprehensive protection than named perils policies, for open perils policies don’t limit coverage to only the risks that are specifically mentioned in their paperwork.
2. The Amount of Coverage for Buildings
Business property insurance policies usually clearly state how much coverage they offer for any buildings that a business owns. You’ll want to make sure that any policy you select provides sufficient coverage for your business’ building(s). It’s often wise to get enough coverage to pay for reconstructing a building, which may cost more than the building is actually worth.
One way to determine that figure is to engage a local contractor and request an estimate for replacing the building. Another way is to contact a Commercial Property Shield insurance specialist who can provide a state-of-the-art estimating tool.
3. Replacement Value vs. Actual Cash Value
Most business insurance policies offer coverage for a business’ equipment, inventory, supplies, and similar items. This coverage may be replacement value coverage or actual cash value coverage.
To ensure that your business will be able to fully recover if its equipment or inventory is damaged, look for a policy that offers replacement value coverage. Actual cash value coverage will usually only cover items for their depreciated value, which may be much less than it’d cost to purchase new items. Replacement value coverage normally offers enough protection to replace items with new ones.
Further, while some insurers might allow you to insure for less than 100% of the replacement cost, that might not be the best idea. Depending on your business owners policy and insurance company, you might have a co-insurance penalty clause. If so, you’ll have to pay a penalty if you under-report your insurance valuation or insure for less than 100% of replacement value.
For example, if your building is valued at $500,000 and you have a co-insurance value of 90%, you’re insured for 90% of the building’s replacement value ($450,000). If your building is insured for half the co-insurance amount ($225,000), you’d be reimbursed for only half of the loss. So if you sustained a $100,000 loss, you’d receive only $50,000.
4. Limits for Specific Items
Some business property insurance policies place lower limits on certain items than they do on other ones. For instance, a policy might offer much less coverage for electronics or valuable inventory than it does for other equipment or supplies.
When purchasing a policy, make sure any limits on specific items that the policy contains are sufficient for your business’ needs. If you need more coverage for a specific item than a policy offers, select a higher limit for that item, purchase a rider for the particular item or look for a different policy.
5. Business Interruption Coverage
Business interruption coverage can often be purchased as a standalone policy, but it’s also available through many business property insurance policies. This coverage can help your business survive interruptions in operations that decrease how much revenue comes in.
Because business interruption coverage can often be purchased separately, it’s not necessary to limit your search for business property policies to only policies that offer this coverage. You should still check for this coverage, though. If two policies are otherwise similar, this coverage could help you choose between them. Also, you’ll want to know if your business property policy offers any business interruption coverage so that you don’t purchase duplicate coverage through another policy.
Compare Commercial Property Insurance Policies with a Commercial Property Shield Specialist
To make sure you fully understand what protections each commercial property insurance policy you consider offers, talk to an independent insurance agent. They’ll be happy to read through policies with you and check each of these items for you. With their assistance, you can be confident that the policy you select will provide the protection your business needs.