Various internal and external sources of risks can cause significant damage to business operations. One significant investment businesses incur is real estate. The office or other buildings that are key to business operations have a large share of sunk investments. In businesses like real estate or property development, the commercial building itself is the business! In either case, the size of the investment alone makes the risk on these elements higher. That‘s why commercial building insurance is necessary to remain protected.
Types of Commercial Building Insurance
The two most common types of commercial building insurance include commercial property insurance and general liability insurance. The former protects the building in the event of external damages, such as extreme weather conditions, fire, vandalism, and likewise. The latter covers circumstances if a third party suffers from an injury or property damage in the building. Of course, nuances and other special circumstances abound.
Commercial building owners must know about the categories of insurance policies provided by their insurance providers to be able to make the right choice of insurance provider and coverage.
Here’s what commercial building owners need to factor into their choice of insurance to ensure they stay protected.
Good Commercial Coverage
Various risks and hazards are possible to a commercial building and the owners need complete information on the policy coverage to recover from the damages in the case of any unfortunate event. For example, commercial buildings are exposed to financial losses due to crimes. Larceny theft is the most common property-related crime in the United States with more than 5.08 million cases reported in 2019. Many commercial insurance policies do not cover insurance against theft. Inventory and equipment in commercial buildings are also often not covered in the insurance policies.
Commercial building owners must make it a point to obtain utmost clarity on the insurance coverage and the related terms & conditions. Initially, the owners should seek details on property and liability insurance followed by the necessary add-ons, such as theft, damage, equipment safety, on-site accidents, etc. Reliable insurance policy providers sometimes conduct surveys of the potential risks in commercial buildings. After evaluation of the risks, customized insurance policies can be prepared and offered to the business owners. This mechanism ensures good commercial coverage customized as per the needs of the commercial building portfolio. Building owners would do well to look for such customizations so that enhanced coverage is obtained for improved safety.
Theft Coverage
Many commercial buildings carry out business activities that include the use of mobile tools and equipment. Employees carry these devices and equipment outside the commercial building to carry out business activities. Even when theft coverage is included in the commercial building’s insurance, there is a significant exception to this coverage. If the equipment or business content is taken out from the commercial building and the theft occurs outside the building premises then it no longer comes under the insurance coverage. It is then referred to as inland marine. It would be good to check if your insurance policy explicitly includes inland marine coverage.
A majority of commercial building owners, especially the new players are not aware of such clauses. These terms become apparent after the fact. Computing equipment, such as laptops, smartphones, tablets, etc. are used by employees outside of the property location. Other business equipment may be transported frequently. These tools and materials are exposed to theft. Now imagine the exposure if they aren’t covered. Look for an insurance provider who helps you understand such nuances.
Review and Feedback
The US Insurance Industry is massive with several small and large-scale entities providing varied insurance policies and services to the customers. How massive, you may ask? Well, net premiums hit $1.32 trillion in the United States in 2019.
This is why commercial building owners need to do a thorough analysis before selecting their insurance provider. With the increased use of social media platforms and web sources, it is easier to go through the reviews and comments posted by the other customers. Similar businesses may have opted for the same insurance provider and the comments may be accessible online. Apart from the insurance coverage, the building owners shall also look for feedback in areas as support, assistance, customer interaction, and flexibility. Look at the web presence of these insurance agencies. This is not about flashy websites with dazzling visuals. Look at how the agency tries to educate its potential customers. Do they care enough to create blogs and other content regularly that helps small businesses make the right choices about insurance? Are their social media channels focused on educating rather than selling? These are great signs of the intent and focus of the agency.
Cost of Insurance and Coverage
A major factor in commercial building insurance is the cost of insurance and the premiums calculated by the insurance providers. Of course, building owners need to conduct a comparative analysis of the choices available. The cost quoted by the insurance provider has to be mapped with the items covered. Get proper advice to ensure you’re getting everything necessary and none of the fancy frills. Pick the best combination of coverage and economy based on what’s uniquely right for you.
Pro tip
Look for an agency that has seen the world from your side of the table. If an agency has owned buildings, renovated them, and worked on them, they are far more likely to be aware of the unique issues that you may face. Bonus points if the agency has an understanding of the local rules and regulations, so they can craft the most appropriate coverage.
Final Thoughts
Commercial building insurance is essential for commercial building owners to protect their assets from any internal or external risk. Numerous insurance providers offer varied insurance policies. The factors, such as good coverage, type of insurance, reviews and market reputation, and cost of insurance shall be considered and explored before making the final choice.