A commercial building is one where your business is located. Whatever the type of your business, be it manufacturing, sales, retail or any service, there is a certain amount of risk for which insurance is essential to protect your commercial building against various risks.
This is where commercial building insurance comes into the picture. This insurance is required by those who have put their money in the building intended solely for commercial purposes (business). Protects companies against risks such as fires, natural disasters, vandalism, etc. that may destroy or damage the commercial building.
Things to consider
When purchasing commercial building insurance (CBI) coverage, you must follow certain criteria. Based on these criteria, you can have a plan regarding how much insurance you need, the length of time, and what the policy should cover, etc. Below are some essential aspects that need to be considered when opting for a CBI policy.
• Property covered by the policy
This insurance policy covers the risk of commercial building ownership. It includes the building as a whole, the facilities, the car park and the telephone and electrical installations. You should know that it does not cover workers’ compensation, health, life and any accidents that occur to employees while they are on the premises of the building.
• Use and occupation of the building
A building sanctioned for use and occupancy demonstrates that it is safe for human habitation as per the prescribed standard law of the land and insurance coverage is provided for these buildings only.
Few things like the type of business you establish in the building, the size of the building, and the business affect commercial building insurance coverage. So restaurants, hospitals, malls, services, each of these require different amounts of insurance coverage, depending on the size. The exact amount of insurance coverage is determined by taking into account the use and occupancy value associated with the commercial building.
Also, if the commercial building remains vacant and unoccupied, the loss of rental income is covered by this insurance. Said loss is estimated by the insurance company taking into account rental income in a historical perspective. Therefore, insurance is important even if the building is not occupied by businesses.
• Associated risks
All businesses carry some inherent risks with them. The amount of risk depends on the type, size, location, danger to the workforce and the general population, proximity to human habitation, business interruption. Therefore, if a commercial building houses a hospital, the risk involved and the amount of coverage would be different than for a retail business. Therefore, you must estimate the measure of risk and purchase an appropriate amount of insurance coverage to protect you.
• Form for special causes of accident
Commercial buildings insurance is based on two types of risks: specific and special risks. Specified risks include fire, vandalism, earthquake, wind storm, which are mentioned in the policy. These risks are covered at low cost because they are given limited coverage.
The special causes of the risks that give rise to loss include those that are not mentioned in the policy. That is, these risks include those that the policy categorically rules out from covering.
Choose a reputable brokerage to get better deals
Approaching a reputable insurance broker to estimate the coverage of the possible risks of your business is a wise decision. These brokers find the optimal cost of insurance coverage for your business based on the required data you provided. A reputable brokerage firm quickly compares quotes from different companies and advises you on the best ones. Brokers get rebates from companies and are therefore able to serve you better. This helps you save on your premium.
To conclude, buying CBI involves so many factors to consider. However, because you have business acumen, a knack for looking at the risks in your business, you can pretty much approximate the risk and amount of insurance you need to cover. If you are a business novice, make careful decisions when buying CBI after consulting your financial adviser and reputable insurance brokers.