Commercial property insurance is taken to cover property and its assets from risks of disasters. It is an important financial tool for retailers, real estate developers, manufacturers and other businesses that own or lease property. Even small and medium-sized shop & facilities owners avail this insurance to prevent losses and damages. A commercial property loan can protect you from perils like natural disasters, theft, explosions and fire outbreaks.
Apart from damages to the property, commercial property insurance can also cover business losses due to machinery breakdown, employee accidents, public liability, electronic devices failure, loss of cash, employee dishonesty, breakage of fixed glass and neon signs. Many financial institutions provide add-on coverage for earthquakes and terrorism. There are some standard exclusions in the commercial property insurance including normal wear and tear, incidents caused by negligence, contractual liabilities, imposed fines, nuclear perils, pre-existing defects and wilful non-maintenance of equipment.
The amount of premium and insurance coverage is determined by the bank or the financial institution depending on the liabilities of your business. To determine this, an assessment is carried out for location, fire safety, nature of the business, construction type and occupancy of the real estate property. Heavy and expensive equipment or machinery used in business need higher coverage and lead to a higher premium. If your business is assessed to be at high risk, an institution may charge a higher premium or decline to give insurance. High risk may include poor security systems, fragile construction work, fire safety non-compliance or excessive occupancy. A business which involves explosives, flammable liquids, hazardous goods, casinos, cold storages, pawnshops, movie theatres is considered of higher risk by insurance companies.
While considering a commercial property loan be sure to read the fine lines for inclusions, exclusions, clauses, claim settlement ratio and claim settlement process. Also remember to include your inventory, company documents, equipment, furniture, signage and electronic devices and other assets within the buildings/premises of business for coverage in the insurance. This can be a great addition to your safety net against unexpected losses and business interruption.