Role of Commercial Property Insurance in Protecting Your Inventory

Posted on November 07, 2024 | by | Posted in Insurance

Being a business owner comes with many responsibilities, and you’ll no doubt worry about the impact of events beyond your control, from fires to theft or a weather disaster. That’s why it’s so important to be prepared for all eventualities, and getting the right commercial property insurance is a great start. One thing that is especially important to cover is your inventory. Without it, it’s impossible to get your business back on track after a disaster. Find out more about how commercial property insurance can help protect your inventory should the worst happen. 

Understanding Commercial Property Insurance

Commercial property insurance covers your commercial premises, and it can also provide coverage for equipment and your business inventory. If your business falls victim to an unfortunate event such as a fire or damage from a storm, you may find that inventory is one of the most expensive and complex things to replace. That’s why covering inventory is crucial and why you need to ensure your commercial property insurance offers the right level of coverage. 

Components of Commercial Property Insurance Coverage

Commercial property insurance coverage is made up of several parts:

• Building coverage – This covers your physical building, including the structure, walls, and roof. If you suffer damage due to an event such as a fire or natural disaster, it should cover repairs or rebuilding.
• Business property coverage – this covers the contents of your building, such as equipment, computers, furniture, and your business inventory.
• Business interruption coverage – This provides financial compensation for times that you’re unable to operate as a business.
• Liability coverage – This is protection from liabilities caused by injuries. For example, if a customer is injured on your premises and takes you to court to claim compensation.

Some commercial policies only cover some of the above, so it’s important to speak to an insurance advisor to ensure you have the right level of coverage. Matrix Insurance specialises in business insurance solutions, so you can be sure you’re getting the best policy to provide the coverage you need. 

Factors Affecting Commercial Property Insurance Rates

Many factors determine your rates for commercial property insurance.

Location is a big one, and if you live in an area of Australia that’s more prone to natural disasters, you may pay higher premiums to account for this. Areas with higher crime rates may also have higher rates due to the risk of theft of equipment and inventory.

The construction materials used in your building can also affect premiums. Older buildings with combustible materials can be more expensive to insure than newer ones built with modern fire regulations in mind. Ensuring you have protection, such as sprinklers and hydrants, can help. 

Also, the type of business you own will make a difference, as this will affect the kind of potential accidents or thefts that could happen on your property. Being able to mitigate the risk by fitting alarms and taking other precautions can help bring rates down, as well as give you peace of mind. 

Steps to Determine the Right Coverage for Your Inventory

Determining the right level of coverage for your inventory is important. You need to ensure you have enough coverage to pay in the event of a disaster, but you don’t want to overpay for coverage you don’t need.

Before you meet with an insurance agent, you should do a thorough inventory of your physical assets. Think about if a major disaster were to hit your business; what would you need to replace? Include things like IT equipment, manufacturing equipment, and inventory. Does your inventory change a lot? You may need to work out an average value that you hold in stock at peak times. 

It’s worth taking the above steps before you meet with an insurance agent, as it’ll help them ensure you get the right level of coverage at the best price. 

When Might You Need to Claim for Inventory?

There are many different scenarios where you might need to claim your commercial property insurance for inventory costs. Natural disasters are a big worry for business owners at the moment. Most recently, Hurricane Milton in Florida led a path of destruction, damaging buildings and the contents inside, which will no doubt lead to a large number of insurance claims.  

Fires are another worry for business owners, especially in areas prone to wildfires. For example, the Black Saturday bushfires in 2009 were Australia’s worst bushfires of all time, and smaller events have happened in recent years too. You need to ensure your commercial property is protected from fires, as well as your inventory, which can be left smoke-damaged and unusable. 

Theft is also a potential threat to business owners. Whatever inventory you hold, make sure it’s covered in the event of theft, as well as the potential damage a break-in can cause to your property.

Commercial property insurance is vital to safeguard your business inventory. No matter what your type of business or what you sell, you need to evaluate your risk and ensure you have the right level of coverage. Speak to Matrix Insurance today, either via phone or live chat, and we can discuss your insurance needs, ensuring you get the right cover at the best price.