Whether you own or rent your business location, business property insurance (also known as commercial property insurance) is a vital part of your operations. Commercial Property Insurance covers the physical assets owned by the business including inventory, tools, office equipment and furniture, and the building or condo itself. If your business does not own your physical location, but leases the space instead, business property insurance can cover the portion you are responsible for if it is stipulated in your lease. Your business' needs will determine whether your commercial property insurance policy needs to purchase a stand-alone commercial property insurance policy or if it can be part of a Business Owners Policy which provides additional coverages beyond the physical assets itself. In today's edition The Basics Of Business Insurance, let's take a look at how commercial property coverage works in the state of Texas.
What type of damage is covered?
A typical business property insurance policy covers against damage or destruction of a variety of perils. These perils can range from fire to theft and all points in between. While the most common causes for a claim in Texas are hail and water damage, you need to make sure that you account for many other types of potential claims. Your business likely owns business personal property that is required for your day to day operations and being able to replace it is damaged or lost due to a fire, storm, or theft will allow you to overcome the property loss without a financial loss. Expensive equipment that is vital to regular operations might even be impossible for you to replace on your own. Having the correct types of commercial property coverage in place can make the difference between long term success and failure when unexpected events happen to your business. One thing to bear in mind with property coverage is that there is no extension of liability coverage unless you see it included on either your Business Owners Policy or a separate policy specifically for General Liability Coverage.
Types of Property Covered
Now that we've established what types of property damages can potentially be covered by the insurance company, we should probably look at what types of property or physical assets can be covered on either Business Owners Policies or Commercial Property Policies. The obvious item covered by commercial property insurance coverage is a building that you own and run your business out of on a daily basis. But the reality is that commercial property policies can also cover your business personal property that you use to run your business day to day. Inventory that is needed to be stored and accessed for later can also be covered by both your property policy and Business Owners Policy. All of these items can also be covered even if the property is transported away from your commercial buildings or office space if the policy is constructed carefully to cover gaps in coverage.
Beyond that, businesses that occupy leased Commercial Spaces can also take advantage of Business Property Coverage. The obvious place where a tenet could see a property loss is on their business personal property or inventory. But the harsh reality for Texas businesses is that triple net leases are now putting in terms that require the tenet to provide coverage for the building itself or even the systems that you use even though you do not own them. That lease creates insurable interest and then the business owners is the one making sure that systems or building can be replace in the event of damage. If this is the case for you, make sure that your limits of insurance can cover the things stipulated in your lease agreement.
Business Interruption Insurance
If you have a Business Owners Policy, an aspect of business insurance coverage that is often included but overlooked is Business Interruption Insurance. Some covered losses will prevent your business from its usual operations for an extended period of time. The inability to be open can destroy your business' ability to succeed long term. And while replacing damaged equipment may be costly in and of itself, it can pale in comparison to the loss of income that your operation could make during that downtime. We have all heard countless stories in recent years of supply chain issues, shipping delays, and backordered parts. The companies who were fortunate enough to survive the pandemic have been subjected to these same severe obstacles. Business interruption coverage will go a long way to helping make up for that lost revenue, if and when this situation arises.
Business property insurance policies do different levels of coverage. This can be a problem depending upon your specific needs since some policies can come with limitations of coverage. For example, depending on the policy, your business equipment may be covered while onsite at your business location, but there could be no coverage for the equipment if it is off premises. This may be a non-factor for a business such as dentist's office, but could be a critical coverage gap for a service contractor. A service contractor like a mechanic may haul expensive tools, equipment, and materials from one place to another and left with a bill for thousands of dollars if their business operations weren't clearly explained and accounted for on a policy. This is just one of many specific scenarios where a one-size-fits-all approach falls short.
Identifying these hidden coverage gaps is where the true value of an insurance agent who is a business insurance specialist comes into play. Whether you are setting up a new business insurance policy or have been in business for many years, the independent insurance agents at Insurance For Texans can help ensure your business is protected when the unexpected happens. It's important for us to assess your level of risk and types of potential property damage so that appropriate levels of coverage and policy limits can be set for your specific business. Because we work with dozens of insurance carriers, our interests are aligned with yours, as we are able to prioritize the right coverage while finding you the best price available, rather than shoehorn your business into a single carrier's offerings. Let us help you find the right commercial Texas insurance so that you can run your business and not worry about the what ifs.