From general liability insurance to workers’ compensation coverage, business owners have a lot to manage to insure their business against wide-ranging liabilities. Especially for new business owners, shopping for numerous policies can be challenging, as each insurance form works differently and uses terminology.
To get organized, it may help to conceptualize your business insurance needs in separate categories. For example, you can categorize policy types by who they primarily protect: consumers and clients, employees, those in company leadership positions, or the company itself. Or, you could categorize policies using a different set of criteria, like what type of liabilities the plan protects you from.
If you use the latter method of categorization, one area of operation you’ll have to focus on is property damage. Do you have an insurance plan that will pay for storm damage to your building? What about intentional damage caused by a break-in? What if an employee accidentally damages a client’s property while performing a service at their home? Who would pay the legal defenses if they took you to court?
To protect your business from property-damage related liabilities, you’ll need the following forms of coverage:
Commercial Property Insurance
A commercial property insurance policy covers and protects business property from “peris” like fire, theft, and certain natural disasters. It can cover the physical build (rented or owned) and commercial property housed within the building, including but not limited to furniture, tech equipment, machinery, and inventory.
It’s important to note that commercial property damage does not cover all types of natural disasters. Companies often have to buy separate coverage for earthquakes, floods, and high winds.
To determine policies rates, insurance providers take the following factors into account:
- Location– Because local crime rates, commonly occurring natural disasters, and level of fire protection all vary based on location, insurers can use it to calculate premiums.
- Construction– A building’s construction and the materials used affect its fire rating, which can help predict the likelihood of fire-related property damage claims.
- Occupancy– Risks of physical property damage vary based on the covered business’s line of work.
Commercial property insurance is paramount for businesses that may have and use valuable equipment. Without this insurance, business owners run the risk of losing their most valuable assets should an unexpected peril affect the property.
Property Damage Liability Insurance
If your business causes damage to someone else’s property, the property damage liability included in general liability insurance policies can cover the associated costs.
A general liability insurance plan covers property damage liability, bodily injury liability, and advertising injury liability. Should a customer, client, competitor, or any other outside party file a claim in these areas, general liability insurance will help pay for:
- Your legal defense and settlement expenses
- The costs associated with damage to the claimant’s property
- The expenses incurred from the claimant’s bodily injury, such as medical bills and lost wages
Not every business needs this form of insurance. When it comes to the property damage portion of the policy, companies that provide a service on someone else’s property are at the highest risk of claims.
The Other Type of Property Damage Liability Insurance
If the term “property damage liability” sounds familiar, it’s likely because you already have this form of insurance for your personal vehicle. Property damage liability is a coverage form typically included in a commercial auto insurance policy. Many states legally require a minimum coverage amount for all vehicles, personal and commercial.
This part of your auto commercial insurance policy helps pay for any damages that drivers covered on your policy cause to another person’s property, typically their vehicle. It does not cover expenses damage sustained by your business’s vehicles; typically, collision coverage pays for those expenses.
Proper Protection Against All Forms of Property Damage
Property damage—whether sustained by your business property or caused to another person’s property—can have serious financial implications. Whether your physical building needs repairs after a fire, a client sues you for damage to their plumbing system, or one of your employees causes a car accident while running a delivery, there’s an insurance policy that can cover the damages. Before your business any further with operations, make sure you have the coverage to protect your business from any type of property damage.