Many business owners believe their property insurance will cover damage from a disaster. That often is not the case. In general, your property insurance will cover you from a loss of a common risk like an accident, theft, or vandalism. Fire is normally covered under you property insurance but flooding may not be. Flood insurance is purchased as a separate form of insurance.
Earthquakes are another disaster which is often excluded in business property insurance. If your business is located in an earthquake-prone area, you will need a separate earthquake insurance policy or commercial property earthquake endorsement to adequately protect your business.
In this day and age, if your business were damaged from a terrorist attack, your business property insurance would not cover the damage. Under the Terrorism Risk Insurance Act of 2002, businesses must purchase additional terrorism coverage to protect against losses due to terrorist attacks. One exception to this exclusion is that worker’s compensation will still cover injured or killed employees as a result of a terrorist attack. Nuclear attack and damage from war is also not covered.
Normal wear and tear is not covered by business insurance. Normally, damage from a loss of power is not covered. However, many policies cover computer loss and data loss today.
In the world of insurance today, there are various packages available to cover a multitude of risks. The key is to maximize coverage without duplication. Work with your licensed insurance professional, your commercial insurance agent to figure out specifically what coverage(s) is needed to protect your business property.
Your agent or broker can determine what coverage and risk your particular business could face. You’ll need to compare policy coverage, premiums, risks, deductibles, and many factors in selecting your final property insurance coverage. Like many business people, after weighing the options, you’ll want to choose the most coverage you can afford.
Obviously, get the coverage(s) in place as most likely to least likely if affordability is an issue. Even with disaster insurance, look at the details of the policy and coverage options.