Named Perils Coverage

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What are Named Perils?

Your office or building is more than just a place for your business. It’s where you build relationships with your clients and prove your credibility. In many cases, it is a business’s biggest investment. Savvy business owners know one of the best ways to protect your office or building is with property insurance, even if you don’t own your building. Commercial property insurance pays to replace or fix damage to buildings, signs, machines, inventory, and office equipment. The biggest question is, what does your property insurance protect you from and when does it pay these costs?

Named Perils & Types of Commercial Property Insurance

One type of property insurance policy is referred to as named perils coverage. Named perils are the types of losses or events your insurance covers and are listed on your policy.

Not every commercial property policy covers the same named perils. There are three levels of coverage, basic, broad, and special form. Which type of commercial property policy you choose depends on your specifics needs. Here is a breakdown of the named perils commonly included within each type:

Basic

  • Fire
  • Lightning
  • Explosion
  • Smoke
  • Aircraft, watercraft, or land vehicle collision
  • Riot
  • Vandalism
  • Wind damage
  • Hail damage
  • Sinkhole collapse
  • Volcanic activity

Broad

  • Falling objects that impact the exterior of the building
  • Theft
  • Weight of ice and snow
  • Frozen pipes
  • Accidental water damage
  • ...plus perils within Basic coverage

Special

Special form is different from basic and broad coverage because it covers all perils UNLESS they are specifically excluded.

How do Named Perils Impact Small Businesses?

If you have a named perils insurance policy that doesn’t list theft as a covered loss and someone breaks in to your building, stealing your computers, there is no coverage. Meaning you have to pay to replace your computers out of pocket.

Depending on where you business is located, you may have a need for earthquake or flood coverage. These two perils are generally not included in a named perils policy, but they can be added via a rider or endorsement.

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How to Pick the Right Commercial Property Insurance Coverage

Hopefully now that you have a better understanding of named perils, picking the right property insurance is an easier task. If not, use these two vital steps to make the best choice for your business:

  • Check with your lender or property manager. Sometimes they require a certain type (or amount) of coverage to maintain your loan or lease. Keep in mind, this will still be a minimum and may not be as broad of coverage as you'd like for your business.

  • Request quotes for all types. Request a quote for basic, broad, and special form property coverage. Compare the cost and coverage differences to determine which protects you the most.

  • Get advice. Use CoverWallet's Advice tool to better understand what similar businesses are buying, or speak with one of our experts to get tailored recommendations for your situation.