Commercial property insurance policies are complex documents that carefully detail precisely what protections they offer. While Massachusetts business owners should review all of a policy’s paperwork when purchasing a policy, there are a few particular items to pay special attention to. If you’re in the process of getting business property insurance for your business, make sure you carefully review these five items before purchasing a policy.
Business Owners Should Check These 5 Items When Getting Commercial Property Insurance
1. Named Perils vs. Open Perils
Commercial property insurance policies (and several other insurance policies) are either named perils policies or open perils policies. Named perils policies typically only cover the risks that are specifically listed in them, while open perils policies generally cover any risks that aren’t explicitly excluded.
For the best coverage, look for an open perils business property insurance policy. Most open perils policies offer more comprehensive protection than named perils policies, for open perils policies don’t limit coverage to only the risks that are specifically mentioned in their paperwork.
2. The Amount of Coverage for Buildings
Business property insurance policies usually clearly state how much coverage they offer for any buildings that a business owns. You’ll want to make sure that any policy you select provides sufficient coverage for your Massachusetts business’ building(s). It’s often wise to get enough coverage to pay for reconstructing a building, which may cost more than the building is actually worth.
3. Replacement Value vs. Actual Cash Value
Most business insurance policies offer coverage for a business’ equipment, inventory, supplies, and similar items. This coverage may be replacement value coverage or actual cash value coverage.
To ensure that your business will be able to fully recover if its equipment or inventory is damaged, look for a policy that offers replacement value coverage. Actual cash value coverage will usually only cover items for their depreciated value, which may be much less than it’d cost to purchase new items. Replacement value coverage normally offers enough protection to replace items with new ones.
4. Limits for Specific Items
Some business property insurance policies place lower limits on certain items than they do on other ones. For instance, a policy might offer much less coverage for electronics or valuable inventory than it does for other equipment or supplies.
When purchasing a policy, make sure any limits on specific items that the policy contains are sufficient for your business’ needs. If you need more coverage for a specific item than a policy offers, select a higher limit for that item, purchase a rider for the particular item or look for a different policy.
5. Business Interruption Coverage
Business interruption coverage can often be purchased as a standalone policy, but it’s also available through many business property insurance policies. This coverage can help your business survive interruptions in operations that decrease how much revenue comes in.
Because business interruption coverage can often be purchased separately, it’s not necessary to limit your search for business property policies to only policies that offer this coverage. You should still check for this coverage, though. If two policies are otherwise similar, this coverage could help you choose between them. Also, you’ll want to know if your business property policy offers any business interruption coverage so that you don’t purchase duplicate coverage through another policy.
Compare Commercial Property Insurance Policies with a Massachusetts Agent
To make sure you fully understand what protections each commercial property insurance policy you consider offers, talk to an independent insurance agent licensed in Massachusetts. They’ll be happy to read through policies with you and check each of these items for you. With their assistance, you can be confident that the policy you select will provide the protections your business needs.
