Business Property Insurance
Business Property Insurance will indemnify you when you suffer a financial loss because property has been damaged or destroyed. Property is considered to be any item that has value.
Do you need Business Property Insurance?
Does your business have real property or personal property?
- Real property is land and the attachments to the land, such as buildings.
- Personal property is all property that is not real property.
If you answered yes to the above then you would want to have Business Property insurance in place to protect your business property against the physical loss or loss of use of your company’s property.
The following is a brief outline of how property is defined within the Commercial Building And Personal Property coverage form.
- Building and structures
- Completed additions to covered buildings
- Outdoor fixtures
- Permanently installed fixtures, machinery, and equipment
- Building materials used to maintain and service your premises should also be included
- Furniture and fixtures
- Personal property of others while in the your care, custody, or control.
One of the most important components of the Commercial Building And Personal Property coverage form is loss of Business Income and Extra Expense.
Business Income insurance pays for the actual loss of business income that you sustain due to a suspension of your business operations as a result of damage or destruction to your property. This suspension must be due to a direct physical loss at the premises that’s described in the policy and result from a covered cause of loss (fire, vandalism, wind, etc). Business operations means your business activities and your ability to operate out of the premises.
Business Income means the Net Income and Continuing Normal Operating Expenses including payroll.
Extra Expense means the necessary expenses that you incur during the period of restoration that you would not have incurred if there had not been direct physical loss or damage to your property.
Extra Expense includes any amount paid to avoid or minimize the suspension of your business operations at your premises or at a temporary location. This includes any expenses to repair, replace any property or expenses involving research, replacement or restoring the lost information on damaged papers or records to the extent that it reduces the amount of loss paid under Business Income.
Business Income coverage begins after a 72 hour (3 days) waiting period or deductible. Extra Expense coverage begins immediately following damage/destruction to property.
In order to select an adequate limit of insurance for Business Income and Extra Expense coverage you need to answer the following:
- What’s your net income (profit) and total operating expenses for the last 12 months and the estimated next 12 months following the policies inception?
- In a worse case scenario, how long would you be out of business following a loss?
- Amount of Extra Expenses needed to maintain operations or to reduce the period of shut down.
- Consider availability of materials, labor, climate, weather conditions, etc.
Reach out to me if you’re considering Business Property insurance. I will discuss with you how it works and assess if it fits into your risk management needs. If you determine this coverage is needed I will then provide you with comparative Business Property insurance quotes from multiple insurance carriers so you can get the best possible rate.
As an insurance broker I help businesses throughout Oregon and the Pacific Northwest manage risk.