Optional Coverages to Add
Insurance companies have designed package policies for businesses so that all the major property and liability exposures are covered in a single policy. You can add a variety of coverages to the basic package for an additional premium through an endorsement, which amends or alters coverages to the insurance contract. Some common optional coverages for business property include some of the coverages discussed below. This list is by no means all-inclusive. If you have a specific coverage in mind that is not listed below, contact your insurance agent for more information.
- Builders Risk Coverage. This covers buildings in the course of construction. Depending on the policy, this coverage can be for either the building's value at the time of loss or its full value at the time of completion.
- Building Ordinance Coverage. The building ordinance coverage provides coverage when a community has a building ordinance stating that when a building is damaged to a specified extent (usually 50 percent), it must be completely demolished and rebuilt in accordance with current building codes rather than repaired. Special attention is required when establishing the amount of insurance.
- Errors and Omissions. Errors and omissions coverage (also known as E&O Coverage) protects your business against loss from a claim of alleged negligent acts, errors or omissions in the performance of your professional services. This coverage protects your business from potentially catastrophic claims.
- Commercial Crime Coverage. This provides coverage for money and securities, stock and fixtures against theft, burglary and robbery both on and off the insured premises and from both employees and outsiders.
- Outdoor signs. The BOP covers only signs attached to the building itself. The optional coverage applies to signs located on other parts of the building.
- Exterior grade floor glass. The coverage for exterior grade floor glass refers to glass at ground or basement level with an exterior or outside exposure.
- Money and securities. The money and securities option provides all-risk coverage for valuables wherever they are, at the bank, at the business owner's or another person's home, on the business premises, or in transit between these places. You choose the coverage limits that you need.
- Employee dishonesty. The employee dishonesty option provides coverage for loss of business property, including money and securities, due to employee theft, embezzlement, fraud or any other criminal act on the part of an employee. You choose the coverage limits that you need.
- Mechanical breakdown. The mechanical breakdown option provides the same kind of protection available under a separate boiler and machinery policy. A boiler and machinery policy provides specialized coverage for machinery and power-producing equipment. Coverage is provided for losses resulting from the breakdown of mechanical, electrical and pressure equipment ranging from boilers to refrigeration systems, engines, compressors, pumps, motors, transformers and other machinery.
- Boiler and machinery. These policies cover both property and liability losses as well as the reasonable cost of making temporary repairs and expediting repair work. Property coverage is provided not only for the equipment, but also for other property of the policyholder that is directly damaged as a result of an accident.
A boiler and machinery policy also may be endorsed to cover losses resulting from an interruption of business following an insured accident and losses due to spoilage of specified property, such as food and other perishables, from lack of power, heat, steam, light, or refrigeration resulting from an insured accident.
- Contingent Liability, Demolition Costs, and Increased Cost of Construction. Coverage for demolition costs and increased costs of construction to comply with building codes protects the business owner from expenses to reconstruct property to comply with building ordinances.
- Peak season. The peak season option provides coverage for businesses that are dependent on peak seasons. If the majority of your business is done in June, July and August, the policy can have one limit of inventory coverage for the whole year and a peak season endorsement that puts a higher limit of coverage into effect just during the peak season. For example, your inventory coverage throughout most of the year might be $150,000, but the peak season endorsement would raise the limit to $300,000 from June 1st to August 31st.
- Extra expense insurance. This optional coverage pays the additional expenses incurred in getting open for business again as soon as possible after a loss. Leasing another space, advertising, getting the phone installed and extra costs for rush shipments of new merchandise are examples of the kinds of extra expenses that are often involved.
An important consideration when selecting these coverages is how much of any damage you can afford to pay yourself without crippling your business's operations. The value of an outdoor sign, for example, may be so low and the likelihood of damage so minimal that it is not worth taking out insurance to cover it. In the same way, you can save money by taking higher deductibles on the coverages you do decide to purchase.