Business Property Insurance: How to Reduce the Gaps in Coverage
Commercial property insurance is critical for your business, whether you own the space or are leasing it from another party. This coverage will protect you from financial losses if your building sustains damage. For example, an accident, natural disaster or an act of violence can cause your commercial building to be unusable. If you are not well covered, you could end up in debt due to the high costs of repair.
If you are planning on purchasing a business property policy for your commercial operation for the first time, you should make sure that there are no gaps in coverage. Overlooking some critical issues when purchasing insurance can leave you vulnerable after non-covered incidents. Here are some practical tips on minimising and avoiding these gaps in property insurance coverage.
Calculate the Optimal Coverage Amount
You should identify the correct coverage limits for your business property insurance. In simple terms, when you choose your cover, you should make sure that the insurance money will be enough to cover the cost of rebuilding the physical structure and replacing the interior elements after a disaster. You should not use the estimated figures presented by the real estate market or the tax valuation amounts. Instead, you should work with your experienced insurance agent or consultant to fully calculate the monetary value of the items that would need to be replaced in the event of a disaster.
Consider the Limitations of Standard Policies
Standard business insurance policies are limited in their level or scope of coverage. Typically, the policy will cover the losses caused by the specific types of perils listed in the insurance document at the time of purchase. If you rely on only this cover, you will have significant gaps in your coverage. Therefore, you should know what the policy covers and the aspects excluded. With this information, you can purchase additional protection which covers the limitations of the standard policy. For example, if your area is susceptible to inclement weather, you can add hurricane and flood insurance cover.
Understand Code Compliance Issues
Finally, you should inquire about the potential costs of upgrading a building to code specifications after a natural disaster. In general, business property insurance does not cover the costs of updating the building to the current codes and ordinances. If you have an old structure, the policy will only pay for the repair, not the improvement or compliance. If you are concerned about losses arising from this issue, you should look into getting ordinance or compliance coverage for your property.
Contact an insurance agency to learn more about business insurance.