Fire Insurance for Business

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How Do I Protect My Business Against Fires?

Fires have been ravaging California over the past two months.  Whether you are living in Los Angeles or the San Francisco Bay Area, you have seen small and large areas go up in smoke.  While we mostly hear about the devastating impact this has had on people’s homes, numerous businesses have also lost their livelihoods.  What can a business do to protect itself against fires?

This is a very broad question.  Decades ago, there were specific business fire insurance policies.  However, fire coverage has now fallen within the general liability coverage for most businesses and/or property insurance if the business owns their own building.

The factors to look out for are:

 1. Property Coverage Limits: This is an extremely critical item to consider.  Insurance coverage limits should be covering 100% of the value of any equipment, inventory, tools, and materials you may maintain at your site.  Businesses often run into dangers with this as they’ll either not account for the vast fluctuation in this area (i.e. changes in inventory amounts) or they will intentionally try to save monies by not fully covering the value of items.  The latter can often cause bigger problems as many policies will have penalties for not fully covering the value of property.  Thus, make sure you are accounting for all your property and consult your insurance agent to ensure proper coverage.

 2. Loss of Use: This can be huge.  If you suffer significant fire damage, a business could be shut down for months.  It is important to account for possible loss of use, especially for a period of up to 12 months.  This requires good coverage and accurate maintenance of books that are kept off-site so you can provide documentation to your insurance.  This is another sector where you should consult your insurance broker to get proper coverage.

 3. Documents: Beyond your financials, it is imperative that you photograph and/or video your business property.  This documentation should be redone annually to account for growth and changes in the business.  Keep this at a different location and preferable in the Cloud.  Should questions arise about the validity of your claim, this can be critical in making the claim process go smoothly.

Businesses are constantly changing and growing.  While you can sometimes go long periods without altering your home insurance, it is critical to regularly review your business insurance.  As you gain more property, income, etc, your insurance needs will change.  Make it a habit to consult with your agent at least annually to ensure you have the proper coverage for your business.  Whether you are in San Ramon, Danville, Walnut Creek, San Francisco, or anywhere in California, you are welcome to contact Joyce Feldman to answer your business insurance questions.