Your physical assets are your business. Everything from your retail storefront to manufacturing equipment represents a significant part of the net worth of your brand. So if something should happen to those assets, what would you do?
The fact is that natural disasters will cost the U.S. economy $121 billion in 2021, making it the third costliest year since records began. Unfortunately, commercial property insurance cannot stop disasters, but it can support you in starting over.
Here are the main reasons all businesses should invest in a commercial property insurance policy.
What Does Commercial Property Insurance Cover?
There are a lot of misconceptions regarding what a commercial property insurance policy covers and what it will not cover.
Firstly, this policy will allow you to make a claim for the damage or destruction of your building, furniture, fixtures and fittings, inventory, and manufacturing equipment. It covers everything you need to keep your business moving.
Note that it will not provide protection for goods or inventory in transit or your employees. There are separate insurance policies needed for these scenarios.
Commercial property insurance may feel like a hassle when starting a business for the first time, but it could save your organization if disaster strikes. So make sure you shop around and check the costs to understand what you should expect to pay for these protections.
Why Your Business Needs Commercial Property Insurance
Every new entrepreneur knows how complicated it can be to determine which insurance policies provide them with the most value.
If you’re considering taking out a commercial property insurance policy, here are the top reasons it’s a policy with such a high ROI.
1. Cover Your Financial Losses
Most small and medium-sized businesses have a single facility making up their respective business empires. It is the sole reason why these business owners invest in commercial property insurance.
One natural disaster or act of vandalism could see a business on its back for weeks. Commercial property insurance saves you from covering the repair or replacement costs out of your pocket. Without insurance, you would be on the hook for every dollar.
Remember that most commercial property insurance policies will not include earthquake or flood protection as standard. You will need to purchase this coverage as an add-on or purchase separate earthquake/flood insurance policies.
Obviously, the type of protection you need against natural disasters largely depends on which state your business is located. For example, it makes little sense to take out earthquake insurance if you don’t live in a state that experiences earthquakes.
2. Up Your Credibility
Credibility is integral to a business’s reputation. Which one looks more credible if two firms are evenly matched, and only one is insured?
Your customers care about professionalism. Business insurance of any kind reassures suppliers and customers that you can recover quickly should anything happen.
Think competitive advantage. Anyone looking to do business with you wants to see that you have the power of recovery. While a disaster will certainly disrupt business, it will not necessarily mean months on the shelf because you did not have an up-to-date insurance policy.
It may not sound like much, but even the slightest advantage can help.
3. Replenish Lost Revenues
Business interruptions could be as irritating as a minor power cut or as devastating as a tornado ripping up Main Street. Either way, you may find yourself in a situation where it is impossible to continue doing business for the next few weeks or months.
A commercial property insurance policy can replenish your lost revenues and allow you to survive. Note that most insurers consider lost income replacement a supplementary product, meaning you’ll need to pay for it as an extra.
Conventional commercial property insurance will only pay for the damages to a property and what’s inside. Purchasing this add-on is an excellent idea if your business happens to be located in a high-risk area.
4. Secure Business Contracts
In the battle for those high-value contracts, you need to leverage every advantage if you’re going to secure your future.
Many clients will ask to see a copy of your business insurance plan before committing their futures to you. But unfortunately, if a manufacturer is uninsured and something happens, the contract may remain in limbo for years to come, with no guarantees of ever restarting operations.
Industry rockstars are increasingly taking the position that anyone they deal with should have appropriate insurance coverage.
You wouldn’t opt against taking out home insurance, so why wouldn’t you extend this same protection to the business you built?
5. Get Peace of Mind
The life of an entrepreneur is an arduous one. However, the last thing you must worry about is seeing all your hard work obliterated because a hurricane or a vandalism spree swept through your neighborhood.
An effective insurance policy is supposed to do much more than provide coverage if your business falls victim to a natural disaster or a criminal act. Instead, it provides you with peace of mind.
In an ideal world, you will never need to claim your commercial property insurance policy, but if you do, you know the help is there when you need it.
Commercial property insurance remains integral to any responsible business’s insurance package. Understanding what it covers and will not cover can help you plan your coverage to ensure there are no unexpected gaps in your protections.
Make sure you take the time to do your research and select an insurer that has your best interests at heart. Then, read the fine print and ensure that you know exactly where you stand.
Have you taken out a commercial property insurance policy yet?