Does Business Insurance Protect Against Fire Damage?

One of the most prevalent sources of damage to business property is fire. According to the National Fire Protection Association or NFPA, fire departments across the nation will react to an anticipated 1.4 million fires causing $21.9 billion in property damage in 2020 alone.

Because of the flames, smoke, and heat, fires may be exceedingly damaging to structures and their contents. In addition, firefighting supplies such as water, foams, and powders can cause additional property damage. This is especially significant because fire damage can be extremely expensive to restore, leaving a firm financially responsible for damages to customer or client property and rendering the premises completely inoperable. A business without fire insurance will be responsible for paying for repairs and fire department service fees out of pocket. If the company lacks the funds to cover these expenses, it may be compelled to suspend operations.

When acquiring insurance to cover fire damage, prospective policyholders should be aware of whether the fire is friendly or hostile. Friendly fires, for example, refer to a fire that is intentionally started and remains in the area where it was intended to burn, such as a fireplace or stovetop. However, hostile fires are unwanted or uncontrollable phenomena, such as a wildfire. A commercial property insurance policy can safeguard firms against fire-related losses.

While the majority of commercial property insurance policies cover fire damage, additional coverage should be bought to ensure that the damaged products are fixed or replaced and that the firm can continue to operate. These consist of the following:

Commercial Fire Insurance

Commercial fire insurance is a component of a commercial property insurance policy. This enables property owners to obtain coverage for the building, its contents, and the property of their clients and/or customers.

Included under commercial fire insurance are all commercial structures and/or offices owned by the business. If a building is rented and the rental agreement specifies fire coverage, the landlord's property can be insured. In addition, outside signage, fencing, and landscaping would be protected by this regulation.

A commercial fire policy protects the contents of the property, including furniture, equipment, computers, tools, and goods held on or near the business. If a firm rents equipment, the equipment will likely need to be insured while in the owner's control. Any important records and papers that could be destroyed in a fire are often covered by a commercial fire insurance policy; however, records of sufficient value may require separate valuable papers and records coverage.

Commercial Interruption Insurance

As a rider or endorsement, adding business interruption insurance to a commercial property insurance policy is suggested. This coverage kicks in if an unexpected occurrence, such as a fire, forces a business to close temporarily. Business interruption insurance protects against the following costs:

Rent payments
Employee salaries
Relocation expenses
Reduced business income
Debt payments

General Liability Protection

Common risks covered by general liability insurance include third-party injuries that may occur on the premises, certain property damage, and defamation actions. Regarding commercial fire claims, liability coverage would cover the costs connected with the damaged or destroyed client or customer property. Additionally, general liability coverage can cover the price of treating certain injuries caused by a business fire.