If you own the building your business is located in, or if you are a landlord, you need to do more than just ensure the business can continue, you need to ensure that the investment you have made into the structure is protected.

Property Insurance

  • If you own both the business and the building, your property insurance policy will probably cover both the structure and your equipment and inventory. If you own just the building, make sure your tenant understands what your policy covers and what they should insure for themselves.

  • Find out whether your policy covers the actual cash value or the replacement value of the property. If you have a mortgage on the building, your mortgage lender may require you to insure for replacement value.

  • What a tenant uses the premises for, or what nearby businesses are doing, can affect your insurance rates, as well as theirs. Insurance may be more expensive for some types of businesses, and you may be required to carry more insurance.

  • Make sure your policy adequately covers things outside the building, such as: fences, outdoor signs and landscaping.

Ordinance or Law Coverage

  • If you have an older building that is grandfathered under your local building code, ordinance insurance will cover the cost of bringing it up to current codes after it is damaged. Flood insurance policies through the National Flood Insurance Program contain a rider that will cover these costs (up to $30,000). It is called the Increased Cost of Compliance rider.

Investigate before you buy:

  • Look for exclusions

  • Compare coverage and cost

Reassess your building insurance needs annually. Did you expand, or replace any building systems? Do you have a new tenant? Remember that your building insurance needs may change if uses of the building change.

Factors that affect the coverage and premiums offered by insurers include:

  • The type of construction of the business’ premises (fire rating)

  • Protection class—based on fire department ratings and the distance to the nearest fire hydrant

  • The risks of the type of business and those in the same development

  • Any built-in hazard protection such as a reliable sprinkler system, fire alarm or burglary system

  • Location of the business in relation to known hazards, like rivers, levees, or fault lines