Running any business comes with risks; some come at a considerable financial cost. Thankfully, you may know most potential risks based on the nature of your business. For instance, say you own a construction, retail, distributor, or technology business. Such businesses own physical assets such as buildings, furniture, fixtures, inventory, and expensive tools.
Now, what if these assets get damaged or destroyed in a fire? Would your business be able to continue operations? Repairing and replacing property is expensive and can affect the smooth functioning of your company operations.
This is where business hazard insurance can help; the coverage supports the financial fallout when physical assets are destroyed. In this blog post, we'll look at the potential risks and benefits of choosing this coverage for your business.
Potential property risks
Many things can go wrong when operating your business. Here are some potential scenarios:
- A fire breaks out in your building, destroying furniture and inventory. Deliveries to customers are affected, and there are delays. You need to replace the destroyed property before you can restart operations, which can be expensive.
- Thieves break into your office building and vandalize the entire space. They steal expensive inventory and equipment. If you don't have property insurance, you must pay for these repairs and replacements from your bottom line.
- A windstorm hits your workplace, causing damage to the building, furniture, appliances, inventory, and tools. Work operations are completely disrupted until you can replace or repair the damaged items.
Disruptions of business operations can result in a loss of revenues and a drop in profitability. Having adequate insurance coverage can help you reduce the financial impact of such events.
What is business hazard insurance?
Also known as commercial property insurance, this coverage helps protect the physical assets used in your company's operations. These assets include buildings owned by the firm, inventory, equipment/machinery, electronic devices, furniture, and fixtures. .
The insurance helps cover the costs of repairing and replacing these items in the event of fires, thefts, vandalism, and windstorms. In certain cases, these assets may be covered under a business owner's policy, which includes general liability. However, companies that own property valued over a specific limit may need to get separate business hazard insurance coverage.
Business hazard insurance coverage limits
Here are some events that may be covered under this type of insurance:
- Digital equipment such as computers is lost due to burglary.
- A hurricane destroys your entire company building. In this case, you must ensure your property policy covers wind damage.
- Instances of vandalism, civil unrest, and riots where your offices are intentionally vandalized.
What is not covered under business hazard insurance?
Here is a snapshot of instances that this insurance may not cover:
- Flood (you will need to purchase this as a separate policy in most cases)
- Property damage due to war, nuclear events, and earthquakes (EQ can be purchased separately, like flood)
- Theft committed by employees
- Damage by animals
- General wear and tear, lack of maintenance, and deterioration
- Mobile assets, such as equipment and tools that are not at the business location
Benefits of commercial property insurance
The damage and destruction of property often interrupt the ability of a company to continue its day-to-day operations. For instance, when you cannot replace the damaged inventory quickly, it will affect your ability to continue selling products to your customers on time.
So, there is a domino effect of events that can bore a hole in your profits even if the company is doing well. Purchasing a commercial property policy helps avoid interruptions and increases the chances of your business thriving even in tough times.
Quick pointers to buying business property insurance
Here are some pointers to keep in mind when buying property insurance for your company:
- Certain types of insurance can be combined with other insurance types for convenience and flexibility. For instance, a business owner's policy includes general liability insurance and commercial property insurance. Review what coverage is most relevant to your company before making a purchase.
- Make sure you understand what is included and excluded in your policy. Not understanding the exclusions can come at a costly price. Your insurance advisor would be more than happy to explain everything in detail.
- Choose an insurance partner that has a well-designed digital process. This approach helps you enjoy convenience, 24/7 customer service, and secure digital transactions.
- The cost of property insurance will depend on the location, building construction, age, and the values of the physical assets you wish to insure. For instance, if you want replacement insurance for an entire building, the coverage costs will be higher than if you purchased with an actual cash value.
- Last, make sure you purchase business interruption coverage in your property policy to have a replacement revenue stream to meet ongoing expenses during recovery. Business income kicks in when a covered loss to the building forces your business to close temporarily.
Insure your company's assets today
Most companies own some physical assets. Hence, business hazard insurance is one of the most important and basic types of coverage required to protect a business's assets. It helps mitigate financial losses caused due to damaged property and the disruption of operations and services.
Getting the right type of insurance is essential in building a resilient, long-lasting business. To assess your firm's specific needs, you can partner with an experienced insurance advisor and request a comprehensive quote. Ensure that your chosen agent has a seamless digital process for customer service, payments, and renewals.
If you want commercial insurance, you can contact a seasoned insurance provider at Insurance Advisor for an affordable quote. They also provide useful tips and insights to help you choose a suitable policy and enjoy convenient payment options.