9 Optional Commercial Insurance Coverages Your Business Should Consider

Unfortunately, commercial policies don’t automatically cover everything. In many cases, your business needs to buy additional coverage or insurance extensions – otherwise you’re underinsured.

Today, we’re highlighting some of the most important commercial insurance coverage options your business should consider.

Flood Insurance

A standard commercial policy does not include flood insurance. If your business floods, then insurance could deny your claim, forcing you to pay for any repairs out of pocket.

FEMA offers commercial and residential flood insurance through the National Flood Insurance Program (NFIP). This flood insurance covers damage to the insured building and its foundation, electrical and plumbing systems, certain permanently installed fixtures, and other business items.

If you don’t have flood insurance and your business is in an area capable of flooding, then you may want to seriously consider obtaining flood insurance coverage. It is best to get the maximum policy limit so that you have replacement cost coverage. This is usually a nominal fee if you are not in a flood zone.

Business Interruption Insurance

Also known as business income insurance, business interruption insurance compensates your business for loss of revenue after a covered loss.

Business interruption insurance is a standard part of most business owner’s policies (BOPs). However, some insurers require you to pay extra to add this coverage.

• Business interruption insurance covers things like:
• The loss of revenue for your business after a covered loss
• The cost of training or hiring new staff as a result of the loss
• Any costs associated with operating your business from a different location while repairs are being completed
• The cost of marketing to regain your market share of your business

Without business interruption coverage, your business could be unable to generate revenue until repairs are complete.

Equipment Breakdown Coverage

Many commercial insurance claims get messy because of confusion over damaged equipment.

Here’s where confusion occurs:

• A standard commercial policy covers physical damage to machinery and equipment. If a fire damages your business’s computers, for example, then insurance covers this loss.
• A standard commercial policy does not, however, protect against perils specific to office equipment. If your air conditioner, fridge, electrical system, CNC machine, or elevator is damaged by an explosion or electrical surge, for example, then insurance may not cover it.

Fortunately, many insurers offer equipment breakdown coverage at a small additional cost. It could be the difference between receiving full compensation for your damaged items – or paying for damaged equipment out of pocket.

Workers’ Compensation Coverage

Generally, businesses that employ three or more people are required to carry workers’ compensation coverage (laws vary from state to state).

Even if your business doesn’t meet these requirements, however, you may want to carry workers’ compensation insurance. A standard commercial policy does not typically include workers’ compensation by default.

Commercial Auto Insurance Coverage

Many businesses are surprised to discover they need separate commercial auto insurance coverage – even if they don’t own a fleet of vehicles.

A standard commercial policy or BOP does not cover commercial auto insurance. Instead, you need to buy a separate policy.

Commercial auto insurance covers:

• Employees’ vehicles when driven for work-related purposes (excluding a normal commute).
• Vehicles owned or used by the business

If your business doesn’t have commercial auto insurance coverage, then you may be underinsured. If an employee is driving for work purposes and causes an accident, then their personal insurance may deny the claim, causing liability to fall onto the business.

Commercial Ordinance or Law Coverage

Commercial ordinance or law coverage is an additional coverage that could significantly impact the outcome of your claim. This is very important if your business building was built years ago. Building codes change based on things that have happened, meaning that a building in 2000 doesn’t meet the same standards as a building in 2020.

If your business’s building is destroyed in a covered loss – like a fire – then the building needs to be rebuilt.

However, if the building was 50 years old, then it’s likely building codes have changed over time, which means you can’t simply rebuild it to the exact same standards. Insurance covers the cost of repairing your building to pre-loss condition, but it doesn’t cover the cost of upgrading your building to modern building codes.

That’s where commercial ordinance or law coverage comes in. This coverage covers the cost of upgrading your property to meet any new requirements. Without this coverage, you may need to cover significant repairs out of pocket. The older the property, the more coverage you should consider.

Newly Acquired or Constructed Property Coverage

If your business is building or acquiring new property, then you may need newly constructed or acquired property coverage. Otherwise, the new constructions and acquisitions may not be covered.

With newly acquired or constructed property coverage, insurers extend coverage for a specified number of days up to a specific amount of value. If damage occurs to a newly acquired or constructed property during this time, then you may receive compensation.

Personal Effects & Property of Others Coverage

A standard commercial policy does not cover your own possessions or employees’ possessions. It covers items owned by the business. During an insurance claim, this distinction can get messy.

Let’s say your business burns down, destroying the employee locker room where employees stored laptops, jewelry, and other personal effects between shifts. Personal effects and property of others coverage would compensate employees for this loss.

If your business regularly has significant amounts of personal effects on-site, then it may be worth adding personal effects and property of others coverage.

Valuable Papers & Records Coverage

It’s difficult to quantify the value of paperwork, data, and records for a business.

If your business’s records are damaged or destroyed in a covered event, then your business may receive some compensation. However, this compensation is unlikely to cover the true value of the records or the cost of reproducing that data.

Some businesses buy valuable papers and record coverage to cover this loss.

If your business stores significant amounts of physical records, data, or evidence on-site, then it may be worth adding valuable papers and records coverage.

Review Your Business’s Insurance Needs today

Your business could experience a catastrophic loss tomorrow. It’s never a bad idea to review your business’s insurance needs to confirm you have adequate coverage.

Many businesses don’t realize they’re underinsured until it’s too late. Others don’t realize they lack crucial coverages – like flood insurance – until after a loss.

For a no-cost consultation with a public adjuster, contact ClaimsMate today.

Our commercial claim experts have a proven track record of managing complex commercial claims – and achieving higher payouts – for businesses across the United States.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.