Commercial Property Coverage Is More Than Just About Loan Requirements!
When the massive storm hit Central Texas last spring, the tornado that hit Temple made it easy to remember. But that supercell storms that spun up that tornado left a much bigger problem than just the destruction in Temple. The widespread hail outbreak that came with it; shattered windows, ripped up roofs, and left business owners scrambling to recover. The effects were profound, deep, and left a lot of work to be done in Central Texas.
One small manufacturing company was hit particularly hard by the hail. The damage to their building, equipment, and inventory totaled over $250,000. They didn’t have the right commercial property insurance policy, and the costs to repair and rebuild nearly forced them to close their doors. As insurance costs continue to soar, these lessons hit home as the number of storms continues to climb and the wide range of damage continues to wreak havoc on business operations across our state.
If you own a business in Texas, this story might feel all too familiar. Hail, wind, fires, and theft can strike any time. But you don’t have to leave your business vulnerable to the resulting financial losses that come with these threats. Commercial property coverage is here to help protect what you’ve worked hard to build, and it doesn't have to be overly confusing to understand either.
What Does Commercial Property Insurance Cover?
Business property insurance helps protect your business’s physical location and assets. This can include your building, equipment, inventory, and even outdoor items like signs or fences. Not all commercial property policies are created equal, so it is important to understand what physical assets are covered and the types of coverage that they offer for those assets.
The first list of items to consider on commercial property insurance is what business property is covered. Your business location should be listed and assigned a property value that it is covered for in the event of a covered claim. Along with that, you can see business personal property listed which will provide coverage for your contents inside that location. A typical business owners policy that includes property insurance coverage will allow you to cover business owned equipment and even inventory. But remember that expensive equipment may require a special type of business insurance called inland marine. Your experienced commercial insurance agent should easily be able to show you what is and is not covered!
There are different ways for policies to cover property damage whether it is for your commercial buildings or equipment. The kinds of claims covered will be determined by the policy language. At its most basic level, covered property damage will include the following perils.
- Fire and smoke.
- Convective Storms, like hail, wind, and tornadoes.
- Vandalism or theft.
But it is important to remember that additional coverage beyond those basic items can be secured if you have coverage gaps specific to your business that need to be closed. It is important that you work closely with your independent insurance agent who specializes and lives in the Texas commercial property insurance coverage marketplace. They will help you find the right balance between coverage and the potential cost of the policy.
In Texas, businesses face a variety of risks. Having the right policy can make all the difference when something unexpected happens. That means who you choose to work with to find your business insurance policy matters greatly.
Hailstorms: A Costly Reality for Texas Businesses
If you’ve lived in Texas long, you know how damaging hail can be. And you did not have to be in that Temple tornado to understand the veracity of our severe weather events in this state. It only takes a few minutes of pounding ice to leave your business with broken windows, totaled roofs, or damaged equipment. Hurricanes occasionally happen. But hailstorms are frequent here. What some do not realize is that they happen in both the spring and summer!
The damage they cause can be expensive. Many insurance policies in Texas have hail-specific deductibles that may catch you by surprise. In some parts of the state, the minimum hail or wind damage deductible can be three to five percent of your property value. This means you may have to pay more out of pocket when hail damages your property. Understanding how these deductibles work is important when choosing a policy.
Another key feature of hail coverage for building is business interruption insurance. If you purchase this coverage option and your business can’t operate after a disaster, this coverage helps replace lost income while you are putting things back together. It allows you to keep paying bills and taking care of employees while repairs are made.
There are ways to secure additional protection for your business from hail damage. Upgrading to impact-resistant roofing or installing window coverings can reduce the risk, and some insurance companies may even offer discounts for these upgrades. It is important to speak with experts in specialized coverage for hail storms in Texas. Working with an experienced agent who is on the ground here allows them to find you the best solution for your commercial insurance policies.
Valuation Methods: Why They Matter for Your Insurance
When it comes time to file a commercial claim on your property, how much your insurance company pays depends on the valuation method. This is one of the insurance providers can attempt to save money on the claim settlements. As insurance premiums have skyrocketed over the last couple of years, many have worked actual cash value options into their offerings for limited coverage. Here is a quick summary of the two main options available to business owners today.
- Replacement Cost Coverage (RCV): This pays to repair or replace your property without deducting for depreciation. For example, if your 5-year-old roof is damaged, RCV covers the cost of a brand-new roof less the deductible amount. It is usually a more expensive option.
- Actual Cash Value Insurance (ACV): This pays what your property is worth today, factoring in depreciation. Using the same roof example, ACV would pay the value of a 5-year-old roof, not a new one. This option is usually cheaper since it will pay less and less as your property ages.
While ACV policies may cost less upfront, they often leave businesses paying more out of pocket costs after a loss. Most businesses in Texas prefer RCV because it allows them to fully recover without major financial strain. However, as monthly premiums have continued to climb, some business property owners have elected to risk the reduced payouts on claims. They have concluded that the savings are worth it for them.
Choosing the right valuation method can be a game changer. It’s worth discussing these options with an experienced insurance agent to find what works best for your needs. And remember that having some coverage with an actual cash value policy is better than having no coverage at all!
Protect Your Texas Business Today
Texas businesses face risks every day, from hailstorms to fires to theft. True Texas Commercial Insurance is here to help you find a customized policy that meets your needs. Commercial property insurance is more than just a policy—it’s a way to protect your building, your equipment, and your income when the unexpected happens. Our experienced independent insurance agency is here to help you find the customized plan that your business and it's property deserves.
Don’t wait until the next storm or disaster to wonder if you’re covered. Click the button below to get a customized proposal for your business. At Insurance For Texans, we’ll help you find coverage that fits your needs and your budget.