Fire damage to a property can be particularly devastating. Even if the fire doesn’t cause the structure to burn to the ground, it can leave behind long-lasting damage from smoke and soot. Not only that, but commercial property owners may also have to grapple with a loss of inventory or have to consider relocating permanently. With this in mind, it’s important to understand whether or not coverage is available for fire damage under a commercial property policy.

Commercial Fire Damage Coverage

Fires are one of the most common causes of damage to commercial property. According to the National Fire Protection Association (NFPA), in 2020 alone fire departments across the nation responded to an estimated 1.4 million fires that caused a total of $21.9 billion in property damage.

Fires can be extremely destructive due to the flames, smoke, and heat, any of which can damage buildings and their contents. Not only that, but firefighting materials like water, foams, and powders can also cause further property damage. This is particularly notable as fire damage can be incredibly costly to repair, leaving a business on the hook financially for damages to customer or client property as well as leaving the property completely inoperable. A business with no insurance coverage for a fire will have to cover the cost of repairs and fire department service fees out of pocket. If the business lacks the financial resources to pay these costs, it may be forced to cease operations.

When it comes to purchasing insurance to cover fire damage, potential policyholders should know whether or not the fire is friendly or hostile. Friendly fires, for instance, refer to a fire that is ignited on purpose and remains in the area it was intended to burn, like a fireplace or stovetop. Hostile fires, however, are events that are unintended or uncontrollable, like a wildfire. Commercial property insurance can help protect businesses from hostile fire damage.

While most commercial property insurance policies cover damage caused by fire, additional coverage should also be purchased to ensure the damaged items are repaired or replaced, and that the business can stay in operation. These include:

Commercial Fire Insurance 

Commercial fire insurance is utilized as a part of a commercial property policy. This allows property owners to have coverage for the building, the property within it, and the property of clients and/or customers.

Buildings included in commercial fire insurance include all of the commercial structures and/or offices the business owns. If a building is leased and the rental agreement requires fire coverage, protection can be obtained for the landlord’s property. Additionally, outdoor signage, fences, and landscaping would all be covered under this type of policy.

The contents of the property, including furniture, equipment, computers, tools, and inventory stored on or near the business, are protected under a commercial fire policy. If the business rents equipment, vendors will likely require it to be insured while it is in the business owner’s possession. Any valuable records and papers that may be destroyed in a fire are generally covered under a commercial fire policy; however, records of significant value may warrant a separate valuable papers and records policy.

General Liability Insurance 

General liability insurance covers common risks to businesses like third-party injuries that may occur on the property, certain property damage, and defamation lawsuits. Concerning commercial fire claims, liability coverage would cover the costs associated with any client or customer property that is damaged or destroyed. General liability policies can also cover the treatment costs for certain injuries sustained due to a fire at the business.

Commercial Auto Insurance

If a business has company-owned vehicles, by law they are required to carry commercial auto insurance. These policies cover the costs of any related injuries or property damage should an accident happen – including damage from fires.

Comprehensive commercial auto coverage also covers damage to company vehicles due to vandalism, burglary, or water damage. For example, if a fire broke out at a carpet cleaning business and the garage where the work vans are kept was compromised, comprehensive commercial auto coverage would cover the cost of the damaged vehicles.

Business Interruption Insurance 

Business interruption insurance can be purchased as a rider or endorsement to a commercial property policy. This coverage kicks in if a business must close temporarily due to an unexpected event, like a fire. Business interruption insurance covers the expenses associated with running the business and other operating expenses that still must be paid while the property is inoperable, including: 

  • Rent payments
  • Employee salaries
  • Relocation costs
  • Loss of business income
  • Debt payments

Insurance Coverage Attorneys 

Damage from a fire can lead to the total loss of a business. This can be incredibly emotional for business owners who have put valuable time and energy into their livelihoods. While having all the proper coverage in place can be incredibly helpful,  an insurance provider may still fail to treat business owners fairly or delays its response.

At Raizner Slania, our commercial property lawyers have a proven history of fighting insurance companies who utilize bad faith tactics to protect the rights of policyholders. If an insurance company attempts to delay, undervalue, or deny your valid commercial fire claim, we can fight for you to ensure the carrier honors its obligations. Contact our office today to see how we can help you and your business.

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