Business Insurance Warranties to Consider

locking vehicle from app on phone

This mildly confusing terminology may not seem that important, but if you are a business owner, it is quite critical that you fully understand which business (commercial) insurance warranties you have and how they can affect potential payouts.

What is a Business Insurance Warranty?

When you think of warranties, you probably think of the ‘safety net’ package that you purchase when you buy a new car or major home electronic. In fact, many people often think of warranties and insurance as just two sides of the same coin. But, in terms of insurance, the word “warranty” has a very different meaning.

Insurance warranties are guarantees that the insured party makes to the insurer. These guarantees are designed to protect the company providing the insurance, rather than the customer that purchased the insurance.

What You Need to Know About Insurance Warranties

As the owner of a business insurance policy, the most important thing to realize is that your insurance policy almost certainly has warranties, which may not have been well explained to you. You need to examine your policy, identify all warranties, and fully understand them.

Effectively, the warranties in your policy are contracts that declare that you will follow certain protocols or rules in regard to the insured property. If you don’t follow the agreed to protocols, you are considered to be in breach of the warranty and the provider will not pay if you experience a loss that would normally be covered.

Warranties Most Likely to Affect Your Business

There are two common insurance warranties, both related to theft, which are most likely to affect your business:

  1. Burglary Alarm Warranty: This states that your business must maintain a certified, operational, and fully connected alarm system during all off-hours. Some warranties may even require that your alarm system be actively monitored during off-hours. So in order to effectively protect your business from theft, you need to invest in an alarm system that meets the standards of your insurance company.
  2. Locked Vehicle Warranty: This warranty dictates that all insured property must be transported and stored in locked vehicles. If there are no signs of forced entry on a vehicle that property was stolen from, your claim will be denied. The best way to ensure you are in compliance is to provide recurring training for your employees that stresses the importance of locking company vehicles or vehicles transporting company property.

By paying attention to the requirements of warranties, you can implement policies that will ensure your business is always protected in case of loss.


If you have any questions about warranties or business insurance in general, feel free to reach out to one of our business insurance specialists. Call Mitch at 1-800-731-2228 or send us an email at Whatever type of commercial insurance you may need, we’ve got you covered.

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