How do I insure the property outside my business?
When you open a business, you will need commercial insurance. You will expect the policy to cover the contents, inventory property, and possessions within your business. But, what about the items outside the business? Do you have coverage for other items on the property?
Owning a business doesn’t mean you only have responsibility for the items inside. You also have to take care of the rest of the property if it belongs to you. With commercial property insurance, you can go a long way towards succeeding.
Understanding Property Damage Risks Outside Your Business
Buying a space from which you operate the business means you must take responsibility for it. It will represent an investment that you want to maintain and improve over the life of the business. Likewise, if something comes along and damages that space, then you could stand to lose a lot of money.
Multiple types of hazards, from fires to severe weather, vandalism, and more could damage your business’s building. It might also damage the products or contents you keep inside. However, there is another part of the business that many people don’t think about when they think of property damage risks: the items outside the business. These might include things like:
- Your landscaping
- The business’s signage
Indeed, any item outside the business that belongs to you could easily sustain damage. Consider just a few of these scenarios:
- Severe weather and high winds could uproot trees or tear down signs or retaining walls.
- A fire might break out in the business and spread into the resulting landscaping. For example, if the building burns, winds might spread, and then ignite your fences.
- Local vandals could strike and, trying to cause trouble, damage the property.
In these cases, the damage could cause a significant cost loss to your business. If the items belong to you, then in most cases, you will have to pay to clean up the mess. With the right commercial property insurance, you can often afford to do so without putting a significant dent into your budget.
Understanding Commercial Property Coverage
Commercial property insurance applies to the physical assets the business owns. Generally, it can apply to items both inside and outside the business. Therefore, it can apply to the furniture or stock inside the operation and anything not covered by your policy can usually be covered by a commercial umbrella policy. Still, it can also apply to items outside the business. If you paid to erect the sign on the street, then your property insurance can likely apply to it. The landscaping, from fences to retaining walls and even shrubbery might also have coverage.
How a Claim Works
The way your property insurance applies to your outdoor property damage might vary.
- Some items will have coverage under the policy’s structure insurance. Structure protection generally applies to the business’s building. However, it can also apply to signage attached to the building.
- Structure coverage might also extend to other signs and structures that, while not attached to the building, still sit on your property.
- Other items might have coverage under the business’s contents, or possessions coverage. It is the same type of protection that might apply to furniture or computers within your business. Certain outdoor items might have coverage on this protection.
- Some property policies will not automatically cover signs, fences or landscaping. However, you might be able to get this coverage by adding a policy endorsement or rider to your coverage.
Still, even within these coverage options, a lot of variations might apply.
- Most structure policies will include deductibles. You must pay the deductible cost as a portion of the claim. For example, if you have a $1,000 deductible and a $10,000 claim, then you will pay that $1,000. The policy will pay the remaining $9,000 of the claim.
- Some policies pay the replacement cost value (RCV) for damaged property. Others pay only a damaged item’s actual cash value (ACV). The replacement cost value is the cost it will take to rebuild or replace an item so that it is like new, using similar materials. The cash value will only pay an item’s depreciated value, or how much it was worth at the time of the accident.
Note, however, that if a vehicle drives through your sign or landscaping, damaging it, then you might have no responsibility to pay for the damage. The damage might be the fault of the driver who hit the sign. Therefore, their auto liability insurance might pay for the damage.
To verify your coverage options for signs, fences or landscaping, talk to your commercial insurance agent. Tell them, specifically, what property around your business is your own. Tell them where you store these items, too. They can help you determine if you have the appropriate protection available. If necessary, they can help you augment or increase protection to ensure you receive it.