Where your business property is and isn’t covered, according to your insurance
Compared to all choices you had to make when starting your business, picking up commercial property insurance probably seemed like an easy one. The premium is worth the peace of mind that your business's property is protected.
But how closely did you look at your policy? Property coverage typically ends at your office doors, and that could be a problem if you:
- Drive to sales and client meetings
- Haul equipment to worksites
- Rent vehicles on business trips
- Use mobile equipment
Let’s review where your business property is and isn’t covered and how to fill the gaps in your coverage.
Commercial property insurance may not cover your costliest claims
Check out Insurance Journal's "Top 10 Small Business Property and Liability Claims" infographic. At a glance, you see that burglary and theft are at the top of the list in 2015, impacting 20% of business owners, followed by:
- Water and freezing damage (15%)
- Wind and hail damage (15%)
- Fire (10%)
The good news? All these are claims property insurance can address.
But check out the list of the most costly claims. Vehicle accidents reach the number two spot, costing claimants $45,000 on average. Unfortunately, property insurance can't cover your business's cars. What's even more surprising: they probably aren't covered by your personal auto insurance policy, either.
The takeaway: Your commercial property insurance may cover the most common risks to your business, but not one of the most expensive. For that, you may need commercial auto insurance.
How commercial auto insurance covers your business property
Commercial auto insurance works a lot like your personal auto insurance. It usually offers coverage for:
Your physical damage
Depending on the options you choose, your commercial auto insurance can cover damage to your car from collisions, vandalism, and weather.
If you're responsible for an accident, the liability coverage in your commercial auto can help pay for the other party's physical damage and bodily injuries. And if the accident turns into a lawsuit, your liability coverage may help pay for your attorney bills and court costs.
Even though the policies are similar, you usually can't add your commercial vehicles to your personal insurance. Most insurance providers see work-related driving as riskier, so they offer a different policy for it.
Pro tip: Hired and non-owned auto insurance offers liability protection for the cars you rent on business trips and your employees' cars that they drive on business errands.
How inland marine insurance covers your business property
Here's another issue: commercial property insurance is usually tied to your business address, meaning it covers property while it's at your primary location. Now consider that commercial auto policies usually don't cover items in the vehicle.
So what happens when:
- A construction worker hauls tools to a job?
- A salesperson brings samples to a client?
- A research lab ships scientific equipment?
- A photographer brings cameras and lights to a photo shoot?
In short, without inland marine insurance, these professionals would have a significant coverage gap that leaves valuable gear vulnerable.
You can add inland marine insurance to your commercial property policy to cover property in transit and:
- Mobile equipment, like forklifts and tractors
- Unique or valuable property, like a sculpture in a restaurant
- Business papers, like architectural drawings
For a deeper dive, read "What is inland marine insurance?"
The big takeaway: When it comes to insurance, the details matter. Look over your commercial property insurance policy and discuss your business practices with your agent.
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