Commercial property insurance provides coverage for business property from dangers, such as fire, wind, hail, theft and vandalism. As with most policies, however, commercial property insurance has its limits. There are some incidents and items that are not covered—including a building’s foundation.
Common signs that the business’ building has foundation issues are gaps in window frames or doors, uneven floors, sticking doors, and sinking foundation. Foundation issues often arise due to moist soil expanding beneath the foundation, plumbing leaks, low moisture or pre-construction issues.
Losing the foundation of a building can be a devastating loss. Replacing the foundation is expensive and putting operations on hold in order to fix the damage can lose the business a lot of money. This cost is, in part, why commercial property policies typically exclude foundation damage. Commercial property insurance also doesn’t cover normal wear and tear, which often occurs to property foundations after time.
Commercial Property Endorsements
Thankfully, there are ways to get around commercial property exclusions. Most insurance agencies offer endorsements, which is extra coverage business owners can purchase to fill in the gaps left by basic commercial property insurance.
There are two main endorsements you can add to your policy.
• Additional Covered Property: Additional covered property adds coverage to the property already included on the policy. This can provide coverage for otherwise excluded aspects of the property, such as the foundation.
• Additional Building Property: Additional building property allows the policyholder to add buildings to the policy that could possibly be considered personal property.
Besides foundation, common exclusions for commercial property insurance include:
• Flood damage
• Earthquake damage
• Sewage damage
• Electronically stored data
• Vehicles, including aircrafts and watercrafts
To cover these items or risks, you will have to purchase a separate policy. Floods and earthquakes are typically excluded from all basic property coverages but extremely important for businesses in high-risk areas for these dangers.
Common policies business owners add to their coverage are:
• Cyber Insurance: Cyber insurance compensates for data kept electronically that is damaged or lost. It can also cover liability related to leaked or stolen information after a cyberattack.
• Commercial Auto Insurance: Commercial auto insurance covers vehicles used or owned by the business. It can cover fire, wind, hail, theft, falling items, collisions and more.
• Equipment Breakdown Coverage: Equipment breakdown coverage compensates the business if an important piece of equipment suddenly breaks down. For example, if a restaurant’s freezer suddenly has an electric shortage, repairing or replacing it without insurance could be expensive. Restaurants and other businesses that serve produce can also purchase spoilage coverage for food that is damaged or lost due to an equipment breakdown.
• Inland Marine Insurance: Inland marine insurance provides compensation for items and equipment that are in transport.
• Builder’s Risk Insurance: Builder’s risk insurance covers buildings and projects that are being built.
• Crime Insurance: Crime insurance steps in if an employee steals money or property from the business.
Obviously, carrying these coverages can be complicated if purchased all as separate policies. Thankfully, insurance agencies often offer bundles for business owners. There are two main commercial policy bundles: business owners policies and commercial package policies.
A business owners policy (BOP) combines property coverage and general liability insurance for small businesses. Commercial package policies combine the same coverage for larger businesses in high-risk industries. Both policies allow the policyholder to combine commercial coverages into one comprehensive policy that is often more affordable than purchasing coverage separately.