Brentwood, Nashville, Franklin & the surrounding Middle TN area
At Johnston & Associates, we specialize in providing comprehensive insurance solutions for Tennessee commercial real estate and commerical investment property owners, managers, and associations
We offer complete coverage for commercial buildings and business property insurance in Tennessee including:
- Investment properties
- Rental Homes
- Office Buildings
- Retail Shopping Centers
- Mixed Use
- Apartment & Condominium Buildings
- Hotels, Motels & Resorts
- Commercial Warehouses
- Industrial & Manufacturing
The role of property insurance for the Tennessee small business is to provide critical financial assistance in the event of a loss, so that the enterprise can continue to operate with as little disruption as possible.
Property insurance alone is seldom enough, however. It should be but one part of an overall risk management and disaster recovery plan. On average, businesses that devote resources to risk reduction and risk control have fewer insurance claims. Firms with a good record on claims generally have more insurers competing for their business, so that they are able to find coverage more easily and often at a lower price than companies that have more losses.
Property Insurance Policies
Johnston & Associates offers Tennessee small businessowners a huge variety of property insurance policies. There are policies that cover only a single peril, or cause of loss, such as a fire insurance policy, a crime policy or an electronic equipment policy. The particulars of the policies vary from insurer to insurer.
And there are policies that include several different coverages in a single “package.” The majority of Nashville small businessowners find it more convenient and economical to purchase a package policy, which provides protection against many types of loss in a single policy. Insurers may create their own insurance policies. Many rely in part on a package policy format from ISO. This policy is generally referred to in the insurance industry as the Businessowners Policy (BOP).
Property Coverage in the BOP
The BOP covers any buildings the business owns and much of the property needed to run the business.
Specifically, the policy covers:
Buildings as named in the policy “Declarations,” generally the first pages of the policy. Structures are covered as well as permanently installed fixtures, machinery and equipment; outdoor fixtures; items you use to maintain or service the building, such as appliances; and additions under construction. You can choose to insure your buildings at their “actualy cash value”—what they are worth—or their “replacement cost”—what it would cost to replace them with new construction. To keep up with the increasing cost of rebuilding, the policy’s limit of insurance for covered buildings will automatically rise by a set percentage each year. Be sure to discuss with your agent whether you should purchase the standard building coverage or replacement cost coverage.
Building contents, although there are a few exceptions. The policy covers most property on or near the business premises that is used in the business. This would include such things as machinery, computers, raw materials or inventory. You also have coverage for any leased property, which you are contractually obligated to insure.
Property of others that is in your care, custody and control to the extent you are legally liable for that property. This coverage is particularly important to a business, such as a computer repair shop, that earns revenue from servicing the property of others.
What about a business that leases or rents its premises?
If your business rents or leases its premises, your lease should describe your obligations with respect to insurance. If you are the sole tenant, you may be responsible for insuring the building. You may be responsible for continuing to pay rent even if the building is destroyed. Should a fire destroy the building, will the landlord or the tenant be responsible for debris removal? You may want to review your lease with your insurance agent to be sure your property insurance covers your obligations.
For those who rent, the BOP provides coverage for tenants’ improvements and betterments. These are fixtures, alterations, installations or additions that you have put into the space.
Covered Causes Of Loss
In the BOP format that names covered causes of loss, those included are fire, lightning, most explosions, windstorm or hail, smoke from accidental fire, aircraft or vehicles (not including those owned or operated by the business itself), riot or civil commotion, vandalism, automatic sprinkler leakage, sinkhole collapse, building collapse, volcanic action and certain types of damage from water or other liquids.
Causes Of Loss That Aren’t Covered
A number of events that can cause property loss are not covered by the basic BOP. Some, such as employee dishonesty or breakdown of a steam boiler, are excluded from the basic BOP, but you can add coverage to it by payment of an additional premium. Some events, such as wear and tear, aren’t covered because they don’t meet the basic criteria for insurance of being accidental and unpredictable. (Regular maintenance of property is your responsibility.) Coverage for other events, such as flood and earthquake, aren’t needed by all businesses. Separate policies are available.
Property That Isn’t Covered
The basic BOP excludes some types of property from its coverage. For many of these items, such as money and securities or outdoor signs, insurance is available as an addition to the BOP for an additional premium. For items such as motor vehicles or boats, however, you will need to purchase a separate policy. Excluded property usually includes:
- Any vehicles subject to motor vehicle registration, including aircraft, autos and trucks
- Bullion, money or securities
- Land, water, growing crops, lawns, trees, shrubs or plants
- Outdoor fences and signs not attached to the building
You should discuss with your agent what property is and isn’t covered by your policy, as well as whether you may need to purchase additional coverage for some types of property excluded from the basic BOP coverage. Since most businesses, for example, own or use vehicles, they should consider business automobile insurance.
IS THERE ANY COVERAGE FOR POLLUTION?
Coverage for pollution is limited to cleaning up pollution that was caused by a covered cause of loss occurring during the policy period.
BUSINESS INCOME AND EXTRA EXPENSE COVERAGE
If your main business premises are destroyed along with much of the property you used to operate, this loss, though devastating, may be only just one part of the total. You should consider purchasing Business Income and Extra Expense Insurance (also known as Business Interruption Insurance).
Because coverage for lost income and extra expenses is so important to continued business survival, it is part of the standard BOP. The policy covers actual loss of net business income that would have been earned had it not been necessary to suspend operations due to a covered cause of loss. The policy also covers continuing normal operating expenses such as utility payments and payroll.
The insurer will pay, as well, extra expenses that you incur to avoid or minimize the suspension of operations. Such extra expenses often include costs to relocate, and to equip and to operate replacement premises, as well as expenses to repair or to replace property and to restore lost information on damaged valuable papers and records.
Generally, these coverages are triggered only when you have a direct loss from a covered cause of loss. If the cause of loss is an earthquake, there will be no coverage under the BOP. If your business must be closed due to someone else’s loss, there is no coverage.
SEASONAL VARIATIONS IN VALUE
Your business may be one of the many that experience seasonal variations in the value of inventory, raw materials and other items. To protect against a loss in the busy season, the BOP provides for an automatic 25 percent increase in your policy limit for business personal property. The seasonal escalator applies only if you have insured your business personal property to at least 100 percent of your average monthly values during either the 12 months preceding the loss or the period of time you have been in business as of the date of the loss, whichever is less.
OTHER LOSSES AND EXPENSES COVERED BY THE BOP
The BOP includes numerous other coverages to protect your business from a variety of accidental events that could wreck havoc on your financial well being. These include:
- Actions of Civil Authorities
- Bogus Money Orders and Counterfeit Money
- Contingent Business Interruption
- Computer Operations Interruption
- Debris Removal
- Electronic Data Loss
- Expense to Preserve the Value of Property
- Fire Extinguisher Recharge
- Forgery or Alteration
- Fungi, Rot and Bacteria
- Window Glass Breakage Expenses
ADDITIONAL COVERAGES YOU MAY NEED
The standard Tennessee Businessowners Policy (BOP) recognizes that some types of coverage are important for some customers but not for others. It makes provision for adding coverage through what insurers may refer to as “optional coverages,” coverage extensions and endorsements. These are among the coverages you may choose to add to your BOP with the payment of an additional premium:
- Accounts Receivable
- Adding Additional Insureds
- Burglary and Robbery
- Computer Fraud and Funds Transfer Fraud
- Earthquake and Volcano Coverage
- Employee Dishonesty
- Food Contamination
- Mechanical Breakdown
- Money and Securities
- More Coverage for Valuable Papers, Records and Electronic Media
- Newly Acquired or Constructed Property
- Outdoor Property
- Outdoor Signs
- Personal Effects
- Personal Property Off Premises
- Spoilage Coverage
- Utility Services-Direct Damage
- Water Back-up and Sump Overflow
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