As a business owner, you’re responsible for a lot. You need to make sure your customers are satisfied, your bills are paid, and your company property is kept in good repair. That includes ensuring your brick-and-mortar buildings can safely remain open for business.
But what if a natural disaster hits? Or a distracted driver turns your storefront into a drive-through the hard way? That can be a serious blow to your ability to keep your doors open. As a responsible business owner, it’s up to you to make sure you have the proper insurance to cover your claims so your business can remain operational.
Commercial property insurance is more complex than standard home insurance because of these demands. Below are the five most critical kinds of insurance coverage your business needs, what they cover, and why they matter.
1. Direct Damage Policies
Direct damage coverage is just what it sounds like. These policies cover the physical damage a commercial property suffers after an accident or disaster. They often cover damage to personal property and stock as well.
There are two primary ways a commercial direct damage policy may be structured:
- Named-peril policies only cover the perils listed in the contract. No other claims will be covered. For this reason, these policies are typically cheaper, but they’re also more likely to result in uncovered claims. For example, if you have a named-peril policy that doesn’t list storm damage, you won’t be able to get your property repaired after hail or windstorms.
- All-risk policies are significantly broader. They cover all forms of damage except what they specifically exclude. That makes them more comprehensive and, therefore, more expensive. For example, many all-risk policies exclude flood damage. Under this type of policy, if a storm damages your building, you’d be able to get damage from rain, hail, and wind covered, but not for standing water.
This is the most basic type of coverage you can get for a commercial structure. If you get no other property insurance, get direct damage coverage.
2. Business Income Coverage
Business owners face many other losses from property damage than just the cost of repairs. When you can’t use a commercial property, you’re losing income, which is why insurance coverages for these costs are called “time element” policies.
The first is known as business income or business interruption coverage. These policies specifically cover the income you lose and the bills you can’t pay when your business cannot operate for a period of time. They do not cover profit, but they do provide funds to cover expenses such as:
- Mortgage or rent payments, both for the damaged property and other business properties that rely on income from that location to cover the bills
- Utility bills for the damaged site or other buildings that depend on it
- Payroll to employees and contractors in some instances
These policies cover the “period of restoration,” or the entire time during which your company cannot operate. For instance, if your building burns down and it takes six months to rebuild, your insurance should cover your continuing expenses until it is rebuilt and open for business.
Some policies include a “waiting period,” though. These policies don’t begin to cover your expenses until you’ve had to close your doors for two to three days. If your policy has a waiting period, you won’t receive prorated costs for those days of lost income.
Furthermore, just like direct damage coverage, a business income policy will only cover your costs if the cause is covered by your policy. This is why it’s critical to understand what a policy covers and excludes before you purchase it.
3. Extra Expense Policies
Extra expenses are another form of time element coverage. While business interruption policies cover your regular costs when you need to close your doors, extra expenses policies cover costs incurred by your business above and beyond your normal bills if you remain open.
A basic example of this would be renting a temporary office to keep your business running after your headquarters burns down. The additional rent would be considered an extra expense. Other cases include:
- Contracting temporary workers to help you move stock out of the damaged location
- Hiring staff for a new temporary location
- Paying overtime wages to workers to handle tasks caused by the damage
- Modifying a temporary site to fit the needs of your business
4. Criminal Activity Coverage
You can’t predict whether your business will be harmed by theft, vandalism, or other crimes. It’s just as essential to ensure your buildings are protected against purposeful criminal acts as it is to protect them against fire, wind, and flood. However, most standard policies exclude damage caused by illegal activity.
If that’s the case, you can purchase an additional policy to cover losses you suffer from crimes. Your insurer may offer policies covering crimes such as:
- Employee theft
- Robbery
- Forgery
- Fraud
- Arson
- Vandalism
This type of coverage is particularly valuable for retail businesses or warehouses that house high-cost items.
File Claims Successfully With Expert Legal Help
If you have the above insurance on a commercial property, you’re ready for anything. You just need to prepare to file a claim the next time something happens to your property. That’s where The Professional Law Group can help.
At The Professional Law Group, our knowledgeable attorneys specialize in helping clients like you successfully file insurance claims and move on with their lives and businesses. Whether your company has suffered a fire, hurricane, or vandalism, we can handle the claims process and ensure you receive the compensation you need to rebuild and move on. Schedule your consultation by calling (800) 592-4141 or reaching out online to discover the benefits of working with expert insurance attorneys on your next claim today.
