Protect your business with commercial fire insurance.
Have you ever wondered: Why do I need fire insurance for my business?
When budgets are tight, we understand that business owners may want to save money where they can. However, saving money by not insuring your business against fire damage is a mistake you cannot afford.
This article explores the benefit of having a comprehensive commercial fire insurance policy, important terms you should be aware of, and the real cost of not having insurance in place.
The importance of fire insurance for your business
No one expects a fire to break out in their business, and in most cases, it’s the last thing on your mind.
We understand how involved running a business is. You’re busy dealing with day to day matters, juggling clients, staff and products while always intently focused on that all-important bottom line.
Matters such as fire insurance can get overlooked – until it’s too late.
As a business owner, you’ll know all about the importance of making provision for fire safety, and you’ll have all the correct fire safety measures put in place to keep your staff, customers, clients and property protected.
However, fires do happen, even to those of us who are well-prepared, so it makes sense to protect your business from financial loss, should a fire occur.
What does a commercial fire insurance policy do?
A fire insurance policy insures your business against financial loss should you experience a fire. Not all policies are the same, so let’s get to grips with a few basic elements you need to be aware of.
Identifying Specified Perils
This term may sound a bit like the title of a James Bond film, but what it refers to are different causes of fire. It’s important to familiarise yourself with Specified Perils, as you need to choose a fire insurance policy that covers you for Specified Perils which are relevant to the type of business you run and the location of your business.
The most common Specified Perils in businesses are:
- Faulty electrical equipment
- Human error
- Combustible substances
The type of business you run may have obvious Specified Perils such as flammable chemicals or materials. In that case, the Specified Perils are quite clear.
Other causes of fire, such as vandalism for example, may not be immediately obvious. However, if your business is situated in an area prone to vandalism, then this is a Specified Peril you may want to consider on your policy.
Fireco top tip: tag and test workplace appliances
Up to 80% of fires in the workplace are caused by faulty appliances, so we recommend that you tag and test all your workplace appliances. This will greatly reduce the risk of a faulty appliance causing a costly fire.
Earthquakes and commercial fire insurance – are you covered?
It is important to note that fires caused by any type of earth movement, such as an earthquake or landslide, are not covered in commercial fire insurance policy. You will need to purchase Natural Disaster Cover which is classed as an Optional Extension. The premiums for these differ throughout the regions of New Zealand, depending on areas prone to earthquakes.
Even a small fire can cause financial damage to your business
How a fire can affect your business: types of fire damage
It’s important to understand that there are different types of damage a fire can cause to your business when choosing the right fire insurance policy, to ensure that you are covered.
It isn’t just large-scale fires that can prove costly to business owners. Any fire can cause you to suffer financial loss.
When we think of a fire breaking out in our business, the damage which comes to mind for most of us is structural damage. Indeed, the most extreme type of fire damage is when the structural damage to a building is so severe that it results in the demolishing of the building.
But there are other ways a fire can cause expensive damage which can cause financial loss to your business.
It’s not just the flames and the heat that wreak havoc, damage is also caused by smoke, water, foam, fire extinguishers and other products used by firefighters. These products need to be cleaned up after the fire, which can be a costly process.
Comprehensive commercial fire insurance makes provision for different types of fire damage and covers the cost of post-fire clean up. A commercial fire insurance policy which is tailored to your business will protect you from financial damage caused by a fire.
Different types of fire insurance policy – one size does not fit all!
With different Specified Perils and the effect each of those have on a business, there are a range of fire insurance policies, each with varying levels of cover.
As a rule of thumb, the most comprehensive policy option is a broad one which only lists the exclusions, making it more straightforward to understand what you are and aren’t covered for.
This type of policy often comes with an expensive premium, which can put it out of reach for many business owners, particularly start-ups. Don’t panic! You can work with your insurance agent to put together a fire insurance package that includes Optional Extensions. In effect, you will have a fire insurance policy that is tailor-made, just for your business.
Did you know? Fire extinguishers are not only a handy safety measure – many insurance companies require you to have them as part of your fire insurance policy. Fireco not only have a great range of hand held fire fighting equipment, we’ll also install them, maintain them and replace them when required.