Business contents coverage
Big or small, every business has assets it needs to protect. Most companies have a good idea of how much inventory they have on hand. But after a fire or another type of major loss, replacing furniture, laptops, desks, and even brochures and staplers, can be a huge expense that you didn’t consider. That’s why business contents coverage is an important part of a comprehensive commercial insurance policy.
What is business contents coverage?
There are several components of commercial insurance (or business insurance) policies. Commercial general liability protects your company from third-party claims due to bodily injuries or property damage caused by your business operations. Commercial auto essentially provides the same coverage for your company vehicles as your personal auto policy does.
Commercial property is another category, and that’s where business contents coverage falls under. If you have an office, shop, warehouse or other business premises, your property policy protects the physical building, and the contents coverage protects everything in it. That means all of your company assets located inside your place of business, whether your organization rents or owns the property, or even if you operate from a home office.
The types of property or contents usually protected against damage, theft or loss include:
- Office furniture
- Computers, printers and scanners
- Business equipment and supplies like staplers, printer paper, brochures, pens and pencils
- Machinery like balers, presses, and conveyor belts
- Inventory and stock on hand
The amount of contents coverage is up to you
When you buy home insurance, the insurance company typically sets your contents coverage limit at 70% of the rebuild value of the home. For business insurance, because every company is different, the amount of coverage is totally up to you. At Mitch, we want you to be fully protected, and one of our commercial insurance experts would be happy to do a walkthrough of your company premises with you to help you decide on your contents limit.
Options for business contents coverage
Depending on the type of business you run, there are many options that can be added to enhance this coverage to better meet your specific needs. Common examples are:
- Replacement cost reimbursement: Normally after a total loss you’re reimbursed for the cost of replacing your damaged items at their depreciated value. If you opt for this coverage, you’ll receive the full replacement cost of your items at today’s prices. So your two-year-old laptops would be replaced with brand new ones. Be sure to ask us about certain exclusions.
- Enhanced water protection: Your business premises and contents are typically covered for water damage only if a pipe bursts or a storm causes damage to your roof and rain gets in. We strongly recommend that you opt for enhanced coverage for sewer backup, overland flooding and groundwater (where available). This will better protect your company from the growing risk of water and flood damage.
- Equipment breakdown coverage: Sometimes called boiler and machinery insurance, this protects you against sudden, accidental damage to your electrical, mechanical and other equipment. You can learn more about equipment breakdown coverage here. Note that it isn’t a substitute for regular maintenance of your business equipment, and doesn’t cover failures due to regular wear and tear.
- Installation floater (for contractors): Business contents insurance only covers contents while it’s at your business premises. If your company has materials like flooring, lumber, shingles, drywall or paint that come and go to worksites, then you may need an installation floater to make sure they are protected while awaiting installation.
- Tools and equipment coverage (for contractors): If your business requires you to bring tools and equipment with you outside your office or shop, you need to have tools and equipment coverage. Standard business contents insurance only covers contents while it’s physically on your business premises.
Good to know: Common questions about business contents insurance
How much is business contents insurance?
Business contents insurance is one of the components of a comprehensive commercial insurance policy – it’s not available as a standalone coverage. We’d be happy to get you a quote on a commercial insurance package for your company that includes contents coverage. Give us a call at 1-800-731-2228.
How much contents coverage should I get for my business?
Because every business is different, the amount of coverage needed will vary from company to company. For example, a jewelry business would have much more contents coverage than an accounting firm. When you call for an insurance quote, we can help you determine how much contents coverage is right for your company’s unique needs.
How important is it to get the right amount of contents coverage?
It’s very important. You don’t need to get it down to the dollar, but you should try to make sure your contents limit is within 10% of the actual contents value. If you get a contents limit that is much lower than the actual value of your contents, the co-insurance clause in your policy could lead to a claim not being fully paid. For example, if you have $1 million in actual contents but only get $500,000 in contents coverage, even if you make a claim for $50,000, you might only get half of it paid. But don’t worry, our business insurance experts will help you get the right coverage limit.
Is business contents covered when it’s not at the office?
No, it’s usually not. Unlike home insurance, which covers contents while it’s away from home, business contents coverage is for what is inside your office, shop or warehouse. Tools, equipment and stock that leaves your business premises may require additional coverage.