What business property insurance protects
Insurance of corporate property covers the tangible assets on which a business depends: buildings and premises, interior finishes, utility systems, production and office equipment, stock, raw materials, finished goods, furniture and IT equipment. The policy reimburses damage from sudden and unforeseen events after which the company needs to restore or replace damaged items. The program is needed by owners and tenants of commercial real estate, manufacturing and trading enterprises, warehouse complexes, and companies that pledge property to a bank or lessor and are required to insure it under the terms of the contract.
Main risks and coverage options
The contract is built on one of two principles. In a named-perils program, specific events are listed, and a payment is possible only if they occur. In an "all risks" program any sudden damage is covered except what is expressly excluded: this format is broader but requires careful reading of the exclusions section.
- fire, lightning, explosion of gas and other substances;
- water damage from utility systems, ingress of water from neighbouring premises;
- natural disasters: storm, hail, flood, earthquake, landslide — the set depends on the region;
- burglary, robbery, deliberate damage to property by third parties;
- vehicle impact, falling trees and aircraft;
- breakage of glass, shop windows and signs;
- breakdown of machinery and equipment, short circuit and power surges — usually as a separate section.
An important addition is business interruption insurance. It compensates for lost gross profit and ongoing expenses (rent, salaries, utilities) that the company continues to bear while the site is being restored after covered property damage.
What is usually not covered
- normal wear and tear, corrosion, gradual deterioration, and defects the policyholder knew about;
- intent of the policyholder or its employees, and gross violation of fire safety and operating rules;
- war, riots, terrorism, unless included separately;
- confiscation, seizure and requisition of property by decision of government bodies;
- shortage found during stocktaking without signs of theft;
- cash, securities, documents and electronic data — unless specifically named in the contract.
What determines the price
The insurer assesses the likelihood and possible scale of loss. The price is affected by the type of activity and fire load, the construction and age of the buildings, the condition of utility networks, the presence of fire and security alarms, fire-extinguishing systems, physical guarding and video surveillance. Also taken into account are the location of the site and its exposure to natural hazards, the loss history, the scope of cover chosen, and the size of the sum insured and the deductible. For large and complex sites the insurer will, as a rule, carry out an inspection before concluding the contract.
How to choose a program and what to check in the contract
- Sum insured. Determine on what value the property is insured — replacement value (the cost of repairing or buying similar new property) or book value. If the sum is understated, the payment may be reduced proportionally.
- List of items and addresses. Cover applies only in the insured territory, so all sites and warehouses must be in the contract.
- Limits. Check the sublimits for individual risks — theft, natural disasters, breakage of glass, and site clearance costs.
- Deductible. Conditional or unconditional, overall or separate by risk; it reduces the premium, but part of the loss remains with the company.
- Policyholder's obligations. Requirements for security, storage, maintenance of systems and notification deadlines: breaching them gives the insurer grounds to reduce the payment or refuse it.
- Payment procedure. The method of determining the loss, treatment of depreciation, and the time for reviewing the claim.
What to do if an insured event occurs
- Take reasonable steps to reduce the damage: contain the fire, shut off the water, arrange security.
- Call the competent services — the fire brigade, police, emergency services — and obtain documents on the incident.
- Notify the insurer within the period set by the contract.
- Preserve the scene and the damaged property until the inspection, and take photos and videos.
- Prepare documents on title to the property, its value and the amount of the loss.
How Polis Re helps
The broker collects information on the sites, helps determine the correct sum insured and set of risks, requests offers from several insurers and compares them not only on price but also on exclusions, limits and deductible. In the event of a loss, the broker supports the company in negotiations with the insurer. You can get a preliminary guide in the business property calculator, and for warehouses and stock in the warehouse and goods calculator. If the property is connected with a construction project, see construction insurance. To get a calculation for your sites, send a request to the broker.
