Just like owning a home or a car, business owners must have the proper insurance policies in place to cover their commercial properties. Having the right insurance can help protect the business and its owners from liability in a worst-case scenario and cover any necessary repairs. Not all business insurance coverage is equal, as different policies cover different perils. Because of this, budding business owners must know what type of insurance covers property damage to a business.
Property Damage Insurance Coverage for Businesses
No matter where a business is located, it must have sufficient property damage coverage in place. Even if the location of the business isn’t prone to flooding, hurricanes, or earthquakes, businesses can still sustain property damage caused by vandalism or burglary. Not only that, but property damage can be incredibly costly to deal with, even if it doesn’t appear to be severe. Having the right property damage coverage in place can help to mitigate the cost of repairs and get a business back up and running. Having both a general liability policy and a commercial property policy in place can help business owners remain functional despite losses and/or work toward resuming operations more quickly.
General Liability Insurance
A general liability, commercial general liability, or business liability insurance policy protects business owners against claims of liability for bodily injury, property damage, and personal and advertising injury through slander or false advertising claims. Liability claims are incredibly common and can arise during the course of regular business operations. Claims can be incredibly expensive for business owners, which makes having a general liability policy very important to avoid having to pay out of pocket.
A general liability policy covers:
- Bodily injuries and property damage: It covers any damage a business may have indirectly or directly caused, including customer slip and falls or employee accidents that result in damage to the business or a client’s property.
- Advertising injury: This includes damage a business causes by defaming a person or another company.
- Copyright infringement: This covers the use of someone else’s work in business ads without permission.
- Reputational harm: This covers the business for anything it publicly stated about another business or business owner that negatively impacted another company.
In addition, a general liability policy can help business owners cover the costs associated with property damage claims, medical expenses if someone is injured on the property, associated administrative costs, and court costs. Even with a general liability policy in place, everything damage-related will not be covered. For business owners to have comprehensive coverage to protect against property damage, they must also have commercial property insurance.
Commercial Property Insurance
While slightly similar to general liability coverage, commercial property insurance helps protect both the business and its physical assets. It can offer compensation for repair or replacement costs if the business’s property is damaged or destroyed as the result of a covered loss. Commercial property insurance helps protect the following items:
- The physical location of the business
- Equipment within the business
- Product inventory
- Personal property
Commercial property insurance can help a business that has dealt with direct damage from a fire or storm or property damage incurred from vandalism or theft. However, commercial property insurance does not cover any intentional or unintentional damage caused by an employee or damage to commercial vehicles.
With this in mind, other perils can be covered under a commercial property policy through the purchase of policy endorsements. These endorsements in tandem with both a general liability policy and a commercial property policy can help protect business owners by ensuring they are covered against all potential threats to the property. Some of the most common and helpful policy endorsements include:
- Additional Insured: This endorsement extends general liability coverage to a third party affiliated with the business, like a subcontractor, protecting them against related lawsuits or damage to commercial property.
- Business Interruption: If a business is left inoperable due to a covered peril, business interruption coverage can help pay for ongoing expenses like payroll, taxes, loan payments, and even a temporary location when the primary property cannot be used.
- Contingent Business Interruption: If a business supplier or customer’s property is damaged and this damage causes a loss of business income for your company, this endorsement could help provide temporary support.
- Equipment Breakdown: This endorsement covers accidental malfunction or sudden breakdown of machinery or equipment used in the course of business.
- Extra Expense: If a business incurs additional expenses following a covered claim to get it back up and running, this endorsement could provide additional coverage.
- Service Interruption: In the event utilities or service lines are damaged or destroyed, this endorsement could cover the related losses.
- Windstorm and Flood: Though not technically a commercial property insurance endorsement, depending on the location of the business, additional windstorm, and flood policies will need to be purchased. This is because most standard property and liability policies do not cover hurricane, hail, tornado, or flood damage. A separate flood policy can be obtained through the National Flood Insurance Program (NFIP) or be purchased through the private market. Windstorm coverage can be purchased through the private market as well, and businesses located in Texas can obtain it through the Texas Windstorm Insurance Association (TWIA).
Commercial Property Coverage Attorneys
Even with all the necessary insurance coverage in place, insurance companies will still attempt to undermine the claims process by delaying, denying, and underpaying valid claims. At Raizner Law, our commercial insurance coverage attorneys are familiar with the various tactics insurers utilize to avoid paying out on claims. If you need assistance with a commercial property damage claim, we can help. Contact us today.
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