After the fact is never a good time to learn that what you assumed simply isn’t so. That’s especially true when the topic is business insurance. As a small business owner, you’ve got enough on your plate keeping your company afloat in today’s tough economy. You don’t need added expenses or liabilities because of inadequate business owners policy insurance coverage. It’s always sound practice to review your existing insurance policies at least annually, or whenever your business experiences a significant change. You may be surprised to learn that what you thought was under control isn’t. Here are some things to look out for.
Covered Cause of Losses
Named peril or single peril policies, such as flood, fire or earthquake insurance, only cover losses incurred by those named events. The broader all risk (aka open peril) policies typically cover everything except what is specifically excluded. Read that part carefully to see what your risk exposure is, and then determine if you need a rider or supplement single peril policies to fill in any gaps.
Typically Not Covered by Standard BOP Property and GLI
Just because something isn’t excluded, don’t assume you’re home free. There are still plenty of events that can cause property loss that aren’t part of the standard issue BOP property coverage. If a light-fingered employee decides to pilfer your inventory, the losses typically aren’t recoverable. Neither is normal wear and tear; insurance companies expect you to be responsible for keeping your property in good repair. Damages caused by acts of war are rarely covered, but if your place of business has the misfortune to be hit by a meteor, the losses may be covered as a falling object. Losses caused by changes in temperature or humidity are excluded. So are losses resulting from power failures, although some BOPs will cover loss or damage to electronic data and computer equipment caused by a power failure. Forget about filing a claim for losses from robbery or burglary. Pollution coverage is usually limited to the cost to clean up the mess if it was caused by a qualifying event while your policy was in effect.
Other property exclusion typically include crops, landscaping, the actual land your property is built on and any bodies of water on it. Signs and fences that aren’t physically attached to your building aren’t covered, although damage caused by an unattached sign hurled through your window by a vandal might be. Precious metal bullion, stocks and securities and good old cash are not covered by your standard BOP if they’re stolen, but most insurers will cover losses up to $1,000 incurred by accepting fake money orders and counterfeit bills.
By the way, should you manage to survive a nuclear event, don’t count on getting any compensation from your business owners policy insurance. Nobody underwrites that.