You Can't Claim That: Limits to Property Insurance

This winter might bring snow and ice storms to our area. When spring arrives, threats like severe thunderstorms, hail and even tornadoes might beckon. Seasonal threats create a significant risk of property damage. If this happens to your business, the repair costs might mount. You might want to see if your commercial insurance will cover these losses. What are its limitations?

Most commercial insurance policies will address property damage. However, how they do so will vary. Limits to what scenarios and costs these policies will cover exist. So, before you make a claim, ensure that you can do so successfully.

How Property Insurance Works

Let’s say that a sudden snow storm blows into the area. The high winds and ice accumulation cause various structural damage to your property. Windows might break, foundations crumble and roofs collapse. When it comes to reopening and operating the business, the damage might pose a challenge. Repair costs might rise and decreased revenue might only deepen this burden.

It is for scenarios like these that commercial property insurance exists. Coverage can help you pay for many weather damage repairs. Thus, you’ll be able to have a cushion under you when repairing the damage. That can help the business fix the damage and return to operations without losing income.

Yet, Limits Exist

Even if your business policy includes property coverage, it won’t cover every type of damage. All insurance policies have limits and exclusions. Some of these items might include:

• The policy’s financial limit. All policies will pay a maximum amount for certain damage. Your limit needs to reflect the full value of your building in case of a total loss.
• Possessions inside the business. Most property insurance will cover damage to the contents of your business. Yet, some restrictions on what possessions have coverage will exist. Also, some policies will play the replacement costs of these items. Others will only pay the item’s cash value at the time of loss.
• Your policy deductible. Nearly all policies will contain a deductible. You agree to pay the deductible before the insurer pays rest of the claim. For example, if you have a $10,000 claim and a $2,000 deductible, you will pay the $2,000. Your insurer will pay the remaining $9,000.
• Policy exclusions. No insurance policy will cover every type of damage to your business. For example, it will almost never cover damage caused by normal wear and tear, or neglect. It might not also cover damage from certain weather, like floods or quakes.

So, when enrolling in a commercial property policy, pay attention to the parameters of your coverage. Your insurance agent can guide you in setting up the appropriate coverage.