Fire damage is one of the most common and expensive commercial insurance claims for small businesses. Taking the proper preventive measures can help protect your business against devastating losses from a fire.
In 2022, there were an estimated 129,500 nonresidential building fires, resulting in 140 deaths and $3.7 billion in financial losses, according to the U.S. Fire Administration.
Taking steps to reduce your risks and having the right insurance in place can help you minimize the chances of a fire and help you recover if a fire happens.
A fire doesn’t just destroy your property. It can leave you liable for damage to property that belongs to customers or other third parties, and force your business to close for an extended period of time.
That’s why you should consider the following types of coverage to guard against the risk of fires. Together, these insurance policies can help you replace or repair your damaged property and keep your business up and running.
Also known as business hazard insurance, commercial property insurance covers physical assets such as business-owned equipment, furnishings, and inventories.
This type of business insurance typically includes commercial fire insurance, which covers fire and smoke damage to your business property. It can also pay for damage caused by firefighters.
This policy can be affordable for small business owners, as you can manage your insurance costs by choosing one of two coverage options on how you’ll be reimbursed for a loss. You have the option of receiving either the replacement value for all brand-new items, or their actual cash value.
For example, if a restaurant has a kitchen fire, the owner might want their property coverage to pay for all brand-new equipment. Opting for the replacement cost would require a higher premium, but would also increase the amount you receive on your claim after a fire.
In contrast to this, insuring for the actual cash value of your property would help save you money on premiums, but would also reduce the amount you receive on a claim. Your insurance company would reduce its payment by the valued amount of depreciation for your equipment from the time of purchase.
Of course, you can also adjust your premium through the amount of your insurance deductible. However, don't set it so high that it might be difficult to pay, as your insurance won't activate until the deductible is paid.
