In today's unpredictable world, businesses face a variety of risks that can threaten their operations, assets and financial stability. Whether it's a fire, thunderstorm or tornado, disasters can strike without warning, leaving businesses vulnerable to significant losses. This is where commercial insurance plays a critical role.
Commercial insurance is designed to protect businesses from these unforeseen events, providing the financial support needed to recover and continue operations. For companies of all sizes, having the right insurance coverage in place is not just a safety net—it's a lifeline that ensures business continuity in the face of adversity.
In this guide, we'll explore the different types of commercial insurance and how disaster restoration services work hand-in-hand with insurance providers to get businesses back to business. Whether you're a seasoned business owner or just starting out, understanding your insurance options is key to safeguarding your investment and securing peace of mind.
Types of Commercial Insurance Policies
While there are a wide range of insurance policies a business needs, from liability to worker’s compensation plans, only a few apply to disaster response, so we will focus on these for the purpose of this guide:
Property Insurance: This policy can cover both your facility and the assets within your facility that are essential to your business. You may need additional coverage for specialized equipment or exceptionally high-value items.
Business Interruption Insurance: When a disaster prevents your business from operating, the impacts of lost profits can further hurt your bottom line. This insurance can help replace the profits you would have received based on past accounting records.
Extra Expense Coverage: This coverage helps businesses access funds to further recover after a storm or disaster. It covers less common needs, like temporary facilities or wages for temporary employees.
Valuable Papers Insurance: This kind of policy can help businesses cover the costs of recreating important paperwork, files and other documents if they are damaged or destroyed in a disaster.
Common Risks Not Covered by Commercial Insurance
There are several things a standard commercial property insurance policy will provide coverage for. However, most plans also have exclusions for events they do not cover, so it’s important to review your policy and determine if there are any gaps. If there are, contact your broker to see if you can add an endorsement or supplement with specialty insurance. Some common exclusions are:
Wars
Insect damage
General wear and tear
It’s essential to know what your policy does and does not cover so you can make appropriate plans. For example, during the COVID-19 pandemic, many companies tried to make claims under their insurance policies for cleanings and lost business, but disease was excluded, so they could not recoup any money.
If you’re unsure of what your policy does and does not cover, talk to your insurance agent and broker. They can help demystify the insurance process for you. If you prefer impartial help, you can also hire insurance interpretation counsel, but this will incur additional costs.
How To File a Commercial Insurance Claim
Your first course of action after a disaster is to reach out to a remediation company to help prevent further damage to your property. For example, damage to your roof can lead to additional water damage if you do not have a professional tarp it immediately. Ideally, you should already have your remediation partner included in your insurance policy so they can begin the work as soon as possible. Before a disaster occurs, set up a Master Service Agreement with a trusted restoration partner and inform your insurance provider to ensure this initial post-disaster task goes as smoothly as possible.
Once complete, it is imperative to call your insurance carrier and collect as much information as you can through reports, photos, videos and, if possible, drone footage of the damage. Your remediation partner can also help you collect this data for your property.
How To Pay Your Commercial Insurance Deductible
When it comes to getting your repairs and replacements after a disaster, you first have to pay a deductible, which will vary based on your unique commercial insurance policy. There are two ways you can approach this, and each has its own pros and cons:
Savings: Some businesses opt to take the proactive route and put aside the cost of their deductible so they have the money in the case of an emergency. However, they cannot use this money for day-to-day needs.
Operating Expenses: Other businesses prefer to pay the deductible from their day-to-day operating expenses. However, this may mean having to cut back on other expenses as they recover to make up for this unexpected cost.
How To Handle Disputes With Your Insurance Carrier
According to Cotton’s Vice President of Enterprise Risk Management, Lance Ewing, “The claims process is a symbiotic dance. At some point, you’ll step on each others’ toes, and sometimes the insurer leads and sometimes the insuree leads.” Essentially, it’s best to work together during the claims process. After all, you’re both trying to achieve the same thing: getting your business back to business.
But if things go a little awry, here are some tips to keep in mind:
Review your insurance policy. A lot of businesses don’t actually know what their insurance policy does and does not cover, so be sure to fully review your plan before disputing anything.
Consider your professional relationship. If you’ve been a client of your insurance carrier for a considerable amount of time, consider leveraging your loyalty to earn some goodwill.
Think about the bigger picture. If your dispute is something of relatively low value compared to the overall insurance payout (say, $2,000), consider whether it is worth your time and energy to dispute it. This isn’t to say that you shouldn’t fight for what you are owed. However, the restoration process can take a long time, and so sometimes you need to save your energy for bigger concerns down the line.
Commercial insurance is more than just a policy—it's a crucial element in protecting your company from unexpected disasters and ensuring long-term business survival. Whether you're dealing with property damage, business interruptions or both, the right coverage can make all the difference when it comes to recovering quickly and minimizing financial losses.
By understanding the types of commercial insurance available and how they relate to disaster restoration, you can make informed decisions that safeguard your business. Regularly reviewing your policies, working with a trusted insurance broker and partnering with an experienced restoration company can help you navigate the complexities of the claims process and restore your operations with confidence.
In the face of disaster, preparation is key. Take the time now to ensure your business is properly insured, so when the unexpected happens, you can focus on rebuilding rather than worrying about coverage. If you have questions or need support in your recovery, don’t hesitate to reach out to our disaster restoration experts with our online form or by calling 877.511.2962—we’re here to help.