What property Insurance should SMEs buy?
Property Insurance is an essential tool that helps in smooth functioning of business even after a mishap. Every SME owner remains sceptical to buy property insurance but it should be the first priority for small businesses.
There are some unfortunate events such as fire, theft, earthquake etc which could hamper the working of a business, and sometimes business is not in a position to recover from such losses. Your business property brings its own share of risks. Commercial property insurance manages that risk, making the loss as less as possible.
There are a series of property insurance every small business should opt in order to safeguard the company’s property and assets:
1. Standard Fire Insurance:
A standard fire insurance protects your property and its content from fire and special perils such as lightning or any other natural catastrophe. If you have an insurable interest in the property and its content, buying fire insurance is worth giving a thought.
Every small business, shop, office, educational institution, hotels, industrial and manufacturing units, hospitals, banks etc should buy standard fire insurance. It is an essential protection plan for commercial assets and building which otherwise if faced with a mishap, would not be able to recover.
You can raise a special request to the insurer in order to cover the valuable articles in standard fire insurance policy. Various add-on covers can also be included in the policy by paying an additional amount.
2. Burglary Insurance:
If your building is in a crime-prone location, there are high chances of shoplifting and burglary. One should buy burglary insurance to protect the valuable articles, furniture and fixtures, cash and securities kept in a locked safe etc. Burglary insurance provides financial compensation against damages and losses faced by the insured in case of burglary.
3. Portable All-Risk Insurance:
Portable all-risk is a comprehensive property insurance which provides total cover for portable equipment like laptops, mobiles. It is also known as an open-perils policy. This policy provides coverage against every potential risk exposure except few specifically mentioned exclusions under the terms of policy. It also covers accidental damages to portable equipment which are not covered under general fire insurance.
4. Construction All Risk Insurance:
When the building is under construction, contractors also face the risk of losses due to fire, storm, lightning, theft or burglary etc. In order to protect the insurance interest of contractors, contractors all risk insurance is the ultimate solution.
In order to mitigate the risk of loss or damages to raw material, buying construction all risk insurance is necessary. For civil engineering projects contractors, construction all risk insurance is unavoidable since projects like building flyovers, dams or buildings posses very high risk.
5. Factory and Warehouse Insurance:
Manufacturing units and storage of goods inhabit series of risk exposures. Plant and machinery, raw material, inventory, stock, tools can damage due to any unforeseen event. Factory and warehouse insurance is a type of property insurance which provides coverage against any loss or damage to the machinery, stock and other contents present within the factory or warehouse. Insured will get the cost of replacement and reinstatement of the assets covered under the policy.
Extensions such as machinery breakdown, electrical equipment insurance cover can be included in factory and warehouse insurance or in standard fire insurance in order to gain additional insurance protection. By paying an additional premium amount, one can easily protect their commercial assets from every potential risk exposure.
L.T. Private Limited has bought standard fire insurance cover. They have also included various add-on covers such as burglary, machinery breakdown under the terms of policy. The policy was having plate glass under the exclusion. Later, in the year, plate glass of worth Rs. 40,000 got damaged due to an accident. The organization was in the mindset that property insurance would cover plate glass damage. But the insurer rejected the claim. Therefore, before buying the insurance policy, it is important to read the terms of the policy carefully.
One can also opt for office insurance package policy. It provides wider coverage and ensures your building and assets from every possible threat. It is a single policy which covers all your commercial assets. You can also cover third party liability cover in your office package policy as well along with covering other assets and risks for your office. You have the flexibility to customize office insurance package policy as per your business requirement.