Do you know your liabilities and responsibilities?
Does your current agent take the time to explain them?
IBRG offers lines of property protection to help reduce risk.
Property insurance alone is seldom enough, however. It should be but one part of an overall risk management and disaster recovery plan. On average, businesses that devote resources to risk reduction and risk control have fewer insurance claims. Firms with a good record on claims generally have more insurers competing for their business, so that they are able to find coverage more easily and often at a lower price than companies that have more losses.
We cover here, in a general way, many of the more common types of property coverage. You can obtain full information about your particular policy by reading the policy itself and discussing your coverage needs with your agent or insurance company.
PROPERTY INSURANCE POLICIES
Insurers offer small business owners a huge variety of property insurance policies. There are policies that cover only a single peril, or cause of loss, such as a fire insurance policy, a crime policy or an electronic equipment policy. The particulars of the policies vary from insurer to insurer.
WHAT ABOUT A BUSINESS THAT LEASES OR RENTS?
If your business rents or leases its premises, your lease should describe your obligations with respect to insurance. If you are the sole tenant, you may be responsible for insuring the building. You may be responsible for continuing to pay rent even if the building is destroyed. Should a fire destroy the building, will the landlord or the tenant be responsible for debris removal? You may want to review your lease with us to discuss options and be covered properly.
COVERED CAUSES OF LOSS
Insurance contracts always describe in some way the perils being insured against.
CAUSES OF LOSS THAT AREN’T COVERED
A number of events that can cause property loss are not covered. Some, such as employee dishonesty or breakdown of a steam boiler, are excluded from your plan.
PROPERTY THAT ISN’T COVERED
Excluded property usually includes:
- Any vehicles subject to motor vehicle registration, including aircraft, autos and trucks
- Bullion, money or securities
- Land, water, growing crops, lawns, trees, shrubs or plants
- Outdoor fences and signs not attached to the building
You should discuss with your agent what property is and isn’t covered by your policy, as well as whether you may need to purchase additional coverage for some types of property.
IS THERE ANY COVERAGE FOR POLLUTION?
Coverage for pollution is limited to cleaning up pollution that was caused by a covered cause of loss occurring during the policy period.
BUSINESS INCOME AND EXTRA EXPENSE COVERAGE
If your main business premises are destroyed along with much of the property you used to operate, this loss, though devastating, may be only just one part of the total. You should consider purchasing Business Income and Extra Expense Insurance (also known as Business Interruption Insurance).
SEASONAL VARIATIONS IN VALUE
Your business may be one of the many that experience seasonal variations in the value of inventory, raw materials and other items. A complete loss at the height of the summer if you sell ice cream or during the winter holiday season if you have a retail operation may be several times larger than during the rest of the year. To protect against a loss in the busy season, certain protection provisions provide for an automatic 25 percent increase in your policy limit for business personal property. The seasonal escalator applies only if you have insured your business personal property to at least 100 percent of your average monthly values during either the 12 months preceding the loss or the period of time you have been in business as of the date of the loss, whichever is less.
OTHER LOSSES AND EXPENSE COVERAGES AVAILABLE:
- Actions of Civil Authorities
- Bogus Money Orders and Counterfeit Money
- Contingent Business Interruption
- Computer Operations Interruption
- Debris Removal
- Electronic Data Loss
- Expense to Preserve the Value of Property
- Fire Extinguisher Recharge
- Forgery or Alteration
- Fungi, Rot and Bacteria
- Window Glass Breakage Expenses
ADDITIONAL COVERAGES YOU MAY NEED:
- Accounts Receivable – As part of your risk management plan, to the extent feasible, you should keep backup copies of your accounts receivable in a separate location.
- Adding Additional Insureds – Such parties typically include managers or lessors of a rented or leased premises and mortgage holders
- Burglary and Robbery – If your business has high-value goods that are attractive to criminals, loss control will go a long way to reducing the threat of theft or burglary. Optional burglary and robbery coverage, however, may be a wise part of the risk management plan.
- Computer Fraud and Funds Transfer Fraud – Your business may run the risk that someone will cause an unauthorized transfer of funds from your bank account, whether through electronic or written instructions. The Endorsement for Computer Fraud and Funds Transfer Fraud covers this risk.
- Electronic Commerce – If your business relies on e-commerce—that is, business activity conducted over the Internet—you may want to add the Endorsement for Electronic Commerce to your BOP. The insurer covers your lost income and extra expenses in the event your ability to conduct e-commerce is slowed down or stopped due to the causes of loss covered by the BOP. The endorsement also provides coverage for the cost of reconstructing electronic data if it is lost due to a covered cause of loss or if it is stolen by someone other than an employee, volunteer worker or contractor.
- Employee Dishonesty – Burglary and robbery insurance does not cover losses caused by employees or authorized representatives who commit dishonest acts. Employee Dishonesty Insurance provides this coverage.
- Food Contamination – If you are involved in a food business, there is always some risk that food you sell could cause food poisoning or transmit a communicable disease from an employee of your business. This risk can, of course, be reduced and controlled by following a good risk management plan, but it can never be totally eliminated.
- Mechanical Breakdown – This option provides coverage for mechanical or electrical breakdown to your boilers, pressure vessels, refrigeration systems, piping, and mechanical and electrical machines or apparatus that generate, transmit or simply use mechanical or electrical power. For many businesses that depend on such equipment, a breakdown means the inability to operate and loss of income.
- Money and Securities – You have the option to add coverage for money and securities to your policy. The insurer covers the property on the business premises, while it is at a bank or savings institution, when it is in the custody of any employee or business owner in his or her living quarters or while it is in transit between any of these places.
- Newly Acquired or Constructed Property – If your policy covers buildings, you may extend the coverage to newly acquired buildings intended for similar use as the insured building or as a warehouse. This coverage also applies to new buildings while being constructed on the premises described in your policy. Any newly acquired business personal property is also covered. This is temporary coverage that provides time to report the new property to your insurer. The coverage expires 30 days after you acquire the property or begin construction.
- Outdoor Property and Outdoor Signs
- Personal Effects and Personal Property Off Premises
- Spoilage Coverage
- Utility Services—Direct Damage
- Valuable Papers and Records
- Water Back-up and Sump Overflow