Rented premises

If your business uses rented premises there are some insurance traps you should be aware of.

Glass:  Most commercial leases will require the tenant to insure any glass windows. The reason for this is different business activities pose different degrees of risk of glass to being smashed. For instance, a tobacconist or a wine and spirit merchant is more likely to be a target of burglars than (say) a secondhand clothing shop. Insurers will price the cost of glass cover on the perceived risk based on the nature of the business. This saves the landlord from having to adjust the glass cover and the resulting rental difference from tenant to tenant. Read your lease carefully and if you are required to ensure your plate glass windows, make sure you have sufficient cover. Even a modest window can cost between $4,000 and $8,000 to replace.

Damage by burglars:  You should also check your lease to see if you are required to repair damaged caused by burglars. You may overlook this on the basis that if you have to replace a damaged lock or repair a door then this is quite within your financial capability forgetting perhaps that in the process of breaking into your premises the intruder could have first disabled your burglar alarm in a rather costly manner and gained entry to your premises by cutting a hole in a wall or in the roof leaving you with a repair bill of several thousand dollars.

If you are an owner of a business that is unlikely to be a burglary target – such as a secondhand clothing shop mentioned above – you may consider you can risk not having burglary cover. Be sure to check your lease however to ensure you are not responsible for damage to rented premises by burglars. Even though you may be able to tolerate the loss of some stock, you may not have the resources to pay for an expensive building repair.

Reinstatement:  Another business risk you should be aware of is reinstatement of insurance cover following an event. This subject has been dealt with here