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Providing the Right Property Insurance Fit

Commercial Property insurance covers businesses for losses due to certain covered events, such as fire, theft, vandalism, or natural disaster. This coverage helps protect your valuable business assets, such as an owned or leased building, tools, equipment, machinery, or inventory. If your business involves servicing other people’s property, you will also need protection while it’s in your possession. Additionally, beyond physical damage to property, you can protect your business from lost income resulting from a covered loss. 

How much Property insurance and the extent of coverage you’ll need depends on your specific operation. This has never been more evident than in the wake of recent wildfires in Northern and Southern California and the devastating losses businesses have incurred. Without the right property valuation, coverage limits and features, the out-of-pocket expenses could shutter a business permanently. 

Arroyo specializes in providing diverse businesses – from start-ups, to established and growing companies, to firms with multiple locations – with Property coverage that addresses your unique risk exposures. Our agency has the size and horsepower to handle large “Master” property schedules, locations in all 50 states and even international placements.

What to Look for in Property Insurance

Some of the important considerations the Arroyo staff will discuss with you to secure the appropriate Commercial Property coverage for your operation include:

  • How a policy is written. Commercial Property insurance policies can provide coverage on named-peril policies or an open-peril (or all-risk) basis. Named-peril policies typically only cover the risks specifically listed in them, while open-peril policies generally cover any risks that aren’t explicitly excluded. For more solid protection we recommend an open-peril policy, as it typically offers more comprehensive protection and doesn’t limit coverage to only the risks that are specifically mentioned in the policy.
  • The amount of coverage on the building(s). We want to make sure your policy provides sufficient coverage for your buildings, including enough to pay for reconstructing a building, which may cost more than the building is actually worth. Many people forget to insure for Replacement Cost, as opposed to perceived market value.
  • Replacement Cost vs. Actual Cash Value. Coverage for your business’ equipment, inventory, supplies, and similar items is available with replacement value coverage or actual cash value coverage. To ensure that your business will be able to fully recover if its equipment or inventory is damaged we recommend securing replacement value coverage. Actual cash value coverage typically covers items for their depreciated value, which may be much less than it cost to purchase new items.
  • The need for Ordinance or Law coverage. If your building were to have a loss, let’s say as a result of a fire, and new regulations require system upgrades to the plumbing, electrical, HVAC, or other major building system, you need Ordinance or Law coverage to pay for the extra expenses this involves. If a code enforcement officer inspects the property and orders the part of the building that was not damaged to be demolished, you will also need Ordinance or Law insurance to pay for those additional costs.
  • The importance of insuring for business interruption. To ensure the survival of a company, Business Interruption insurance is a critical tool, and can be the difference between recovering from a detrimental event and closing your doors forever. The estimated earned revenue is based on average calculations that use the past year’s financial records. It also covers expenses (utilities, payroll, etc.) that still exist without operations continuing. You can also purchase Extra Expense coverage to pay for things like a temporary location for your business operations and advertising costs to get the word out that your business has a new home for the time being.

We will also discuss the need for Crime insurance as well as for Earthquake and Flood insurance, which are not included with a Commercial Property policy.

Differences in Conditions policies can provide Property coverage for challenging perils; e.g. Earthquake coverage in California; Wind coverage in the Gulf Coast and Florida; and/or Flood coverage in designated flood zones throughout the United States.