A commercial building is one where your business is housed. Whatever is the type of your business, be it manufacturing, sales, retail, or any service, there is certain quantum of risk for which insurance is essential to protect your commercial building against diverse risks.
This is where commercial building insurance comes into picture. This insurance is required by those who have put their money in the building meant only for commercial (business) purposes. It protects the businesses against the risks such as fire, natural hazards, vandalism, etc. that can destroy or damage the commercial building.
Things to consider
While purchasing a commercial building insurance (CBI) cover, you need to follow certain criteria. Based on these criteria you can have a plan regarding how much insurance you need, the time span and what should be covered under the policy, and so on. Below are few essential aspects that are to be considered while opting for a CBI policy.
• Properties covered under the policy
This insurance policy covers risk for commercial building property. It includes the building as a whole, the fixtures, automobile parking place, and telephone and power installations. You need to know that it does not cover the workers' compensation, health, life and any casualty occurred to employees while they are in the premises of the building.
• Use and occupancy of the building
A building sanctioned for use and occupancy shows that it is safe for human dwelling under the prescribed standard law of the land and the insurance cover is provided for these buildings only.
Few aspects like, the sort of business you establish in the building, the size of the building and the business affect the coverage of commercial building insurance. Thus, restaurants, hospitals, shopping malls, services - each of these require different amounts of insurance cover, depending upon the size. The exact amount of insurance cover is found out taking into account the use and occupancy value associated with the commercial building.
Further, if the commercial building stays vacant and unoccupied, the loss of rental income is covered by this insurance. Such loss is estimated by the insurance company by taking the rental income into account on a historical perspective. The insurance is thus significant even if the building is not occupied by businesses.
• Risks associated
All businesses carry some risks inherent in them. The quantum of risk depends on the type, size, location, hazard to workforce as well as general population, proximity to human dwelling, interruption to business. Thus, if a commercial building houses a hospital, the risk involved and the coverage amount would differ from that of a retail business. Thus, you have to estimate the measure of risk and buy an appropriate amount of insurance cover to protect the same.
• Special causes of loss form
Commercial building insurance is based on two types of risks - specified and special risks. Specified risks include fire, vandalism, earthquake, windstorm - that are mentioned in the policy. These risks are covered at low cost because they are given a limited coverage.
The special causes of risks leading to loss include those that are not mentioned in the policy. In other words, these risks include those things that the policy categorically rules out to cover.
Choose a reputed brokerage to get better deals
Approaching a reputed insurance broker to estimate the coverage for the possible risks of your business is a wise decision. These brokers find the optimum cost of the insurance cover for your business based on the required data provided by you. A reputed brokerage firm quickly compares the quotes from different companies and advises you the best ones. Brokers get rebates from the companies and thus they can give you better service. This helps you save on your premium.
To conclude, buying CBI thus involves so many factors to take into account. However, given that you have business acumen, a knack at looking at the risks to your business, you can fairly approximate the risk and the amount of insurance you need to cover. If you are a novice at business, make scrupulous decisions while buying CBI after consulting your financial adviser and reputed insurance brokers.