Choose the Right Insurance Coverage to Protect Your Business’s Property

In general, business property coverage includes buildings, office content, equipment on premises for professional use, merchandise and tenants’ improvements subject to some exclusions and conditions.

You can broaden your coverage by adding specific endorsements to cover specific business property needs. What is important is to identify your risks and its financial impact on your company.

Following are some property categories that could be important to your business:

Any property on your insured premises

  • Movable equipment, such as tools and materials

  • Files and important documents

  • Cash and stocks

  • Exterior signs and windows

  • Computer and information support equipment

  • Work in progress

  • Customer accounts

  • Merchandise

  • Pressurized, electric, mechanical and electronic equipment

  • Damage to the premises due to theft, attempted theft or vandalism

Any property away from your premises

  • Installation work in progress

  • Property on a construction site

  • Property in storage

  • Movable equipment such as tools and materials

  • Property in transit

  • Contractor tools and materials

Property that you do not own but for which you are legally responsible

  • Property entrusted to you in the context of your operations

  • Property that you have rented to others or rented from others

    Some property require specific insurance policies

    • Marine equipment—boat, pontoon, hovercraft, ferry, ferryboat, their equipment and accessories

    • Aircrafts, their equipment and accessories

    • Drones, automobiles, cranes, etc.

    Are You Aware of your coinsurance provision in your contract?

    Most insurance contracts have this very important provision and we refer to it as the coinsurance clause. It is represented as a percentage that corresponds to 50%, 80%, 90% or 100%, depending on the insurance policy coverage to which it is attached.

    How does it work?

    How does it work?

    The insured is required to carry an amount of insurance equal or greater than the stated coinsurance percentage of the insurable value of the covered property. Failing to do so, the insured agrees to retain part of the risk rather than transfer it to the insurance company. In the event of a partial loss, the insured becomes a co-insurer and will share the loss with the insurance company in proportion to the risk insured.

    Can this clause be removed

    Can this clause be removed from an insurance contract?

    For some coverage, such as building value, you may ask your insurance company to remove this clause. In the event of a partial incident, the clause will not be applied, which may work to the insured’s advantage, in some circumstances. However, you must maintain an appropriate amount of coverage that corresponds to the full value of the compensation provided by the contract, whether on a depreciation or replacement value.

    What should be done

    What should be done before removing the clause?

    Before removing the clause, an insurer will have to determine whether your coverage amounts are adequate. You could be asked to present a building appraisal valuation and to sign a declaration form. When signing the ‘amount stipulated’ form, you attest that insurance coverage amounts correspond to the full value of the property insured. With this statement signed, the insurance company agrees to remove the coinsurance provision in the contract.

    Always ask if your insurance contract includes such a provision and take the necessary steps to avoid financial losses in the event of a claim.

    Reduce your Potential Risk Index (PRI)

    Charlebois Trépanier has an extensive risk control program that allows our commercial clients to be pro-active in their risk management. As commercial property insurers we offer many different coverage options, limits and warranties for the coverage to apply. 

    We recommend that you choose your broker carefully and that you take the time to meet with your broker at least once or twice a year. Your broker will help you better manage your risks through a good understanding of the coverage offered and will give you cost effective options and valuable recommendations.

    You will then be actively managing your risks and thus be able to determine more efficiently what risks are covered and which ones are not, in order to avoid unforeseen financial losses.

    Did You Know?

    Every insurance contract has a section which outlines the perils excluded. For example, in most insurance contracts, the perils by earthquake, flood, sewer backup, equipment breakdown etc. are excluded. Some of these perils may be included for an additional premium. Taking the time to review your contract’s excluded perils with your broker is a first step in risk management.

    For an example, a typical property policy does not cover loss or damage caused by electrical arcing, mechanical breakdown and explosion of boilers and pressure vessels. Equipment breakdown insurance covers the sudden and accidental, physical damage to equipment that requires its repair or replacement. It applies to equipment in the following categories: electrical, air conditioning and refrigeration, boiler and pressure vessel, computer and communications, mechanical, renewable and alternative energy, production systems.

    For manufacturers and printers, this coverage could be vital for production machines.

    And what about the risk of crime, fraud, defect, pollution or contamination? Call us, we can help you!