Every year, disasters such as floods, earthquakes, and fires occur in the U.S., causing massive property damage and huge losses. For instance, in 2018 alone, fires caused about $25.6 billion worth of property losses in the U.S., as reported by Statista. This shows just how significant a risk your business property faces and why you should purchase the right commercial property insurance. Since at least 40% of small businesses in the U.S. close permanently after a disaster, according to the Federal Emergency Management Agency (FEMA), you should ensure your business bounces back from such disasters by buying adequate coverage.Here are the 4 reasons why you must get commercial property insurance for your business.
As per the Insurance Information Institute (III), commercial property insurance is the policy that covers property damage in your business premises. This also includes the buildings and their contents as well as third-party's property that is under your custody. In case of theft or property damage from vandalism, fire, and natural calamities, this insurance coverage pays for repairs or replacement costs, depending on the severity of the damage. Note that commercial property insurance may not cover damages on the buildings if you are renting the premises. In other words, the landlord is supposed to pay for any damages to the buildings and any other possessions within the premises. Even so, this also depends on the cause of damage, as you may still have to tend to the repairs if you caused the damage intentionally.
If you own any expensive equipment in your business, you should consider purchasing property insurance. This is because such machines are also expensive to maintain, repair, and replace. In case of damage or theft, you may have to either repair it or purchase a piece of new equipment, which may most likely strain your finances. It can be worse if you have an outstanding mortgage loan on the equipment, which means you will have to pay double the price. The good news is that property insurance will replace any losses and pay for repairs, relieving you of the burden that may send your business into financial turmoil.
The main goal of any business activity is to minimize costs and maximize profits while maintaining quality, says the Small Business Administration (SBA). Generally, a typical business incurs operational costs, including sales and marketing, administrative costs, logistics, and maintenance. Depending on what equipment you own, you may have recurrent costs in maintenance and repairs, which may increase in the case of significant damage. Without commercial property insurance, you will have to pay for repairs out-of-pocket, resulting in increased operational costs for your business. In the case you have an unstable cash flow, your business may end up collapsing, says the National Federation of Independent Business (NFIB).
Apart from protecting your business property, commercial property insurance also covers damage to other people's property in case you are involved. Nevertheless, this may vary from one policy or insurance provider to another. For instance, if a tree within your business premises falls on a client's parked car and damages it, your commercial property insurance may pay for the repair or replacement of the car. This will help protect your business assets from claims and auctions in case the victim files a lawsuit.These are the four main reasons to get commercial property insurance for your business. For a policy to suit your business at the right price, contact the team at Humble & Davenport Insurance today.