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IPS / Lighthouse Insurance Group Blog: property insurance

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commercial property insuranceYour commercial property insurance policy will cover most of the hazards likely to befall your place of business, but it won't cover everything. There are some common exclusions that you will find in more policies than not. These are as follows:
  • Flooding. Just as with home insurance, your basic policy isn't going to cover floods. You can invest in a commercial flood insurance policy to help cover the gap, of course.
  • Earthquakes. This is similar to the scenario with flooding. Most home policies do not cover earthquakes. The same goes for most commercial property policies. Again, you can invest in an additional policy to bridge the gap.
  • Commercial auto accidents. Your commercial property insurance policy may cover the store, the warehouse and the office. But it's not going to cover your autos. Insuring vehicles and insuring buildings are two completely different things. Sometimes, a company outfitted to do one might not even be equipped for the other. You might be able to buy commercial auto and property insurance as part of the same package, but they're going to be two separate policies.
  • Equipment breakdown. Insurance is intended to cover things that might happen. Equipment breakdown is something that certainly will happen. So, you may find that while your insurer is more than willing to buy you a new pizza oven when yours is damaged in a fire, they're not going to pay for a new one just because the old one is getting on in years. Equipment breakdown is not a risk to be managed. Instead, it’s something that is just about guaranteed to take place over time.
There may be other exclusions that apply based on your industry, where you live, and who you're buying insurance from. Take the time to read through your policy, ask your insurer any questions you might have, and don't make the mistake of simply assuming something is covered.
Posted 11:48 AM


You strive to keep your business property durable, clean and secure. However, at times, you cannot keep out every pest. Termites might be small, but they can wreak major damage on your business if you don’t control them. If termites create damage, you might wonder if your insurance will pay for theirtermites removal and structural repairs? Here are a few more details.

Property Insurance Limitations for Termites

Unfortunately, property insurance and termites have a complicated relationship. Therefore, your best bet is to try to prevent termites from taking hold.

Most termite infestations happen slowly. They might invade your business over time, and it might take years for noticeable damage to occur. Ordinary operations might continue with no inkling that pests have entered the building.

Once you notice termite problems, it might be too late to avoid severe damage. Therefore, you might face countless dollars in repair bills. You might even face a total loss of your structure should the damage prove too severe. Should structural integrity become compromised, it might prove unsafe to even enter the property. Therefore, operations could grind to a halt.

If a termite problem arises, you might wonder if your insurance will cover repairs. Unfortunately, you will likely find that property insurance won’t offer any recourse.

Property insurance generally only covers unavoidable, unpreventable damage to your property. In most cases, you can prevent termites with vigilance and maintenance. These tasks usually prove relatively inexpensive. Such care therefore usually falls under regular maintenance. Insurance almost never covers standard costs that are your responsibility.

Preventing Termites

Responsible business owners should always undertake regular preventive actions to keep termites out. Doing so can reduce the chances of ever having to file a property insurance claim.

One of the simplest ways to prevent termites is to engage in simple pest prevention measures. Have a pest service professional visit your property at regular intervals. They can spray a repellent in and around the space to prevent termites from getting inside. Most services will spray every few months at regular intervals. The ongoing prevention can almost certainly cut termite risks.

Furthermore, certain pest services also offer regular termite inspections. Professionals will inspect the structure for signs that termites have slipped past any chemical agents. Your pest inspector can likely catch small infestations before they get worse.

Don’t hesitate to call a registered pest elimination service today. It might help you prevent significant termite damage down the road.

Also Read: Will Commercial Property Damage Cover All Roof Repairs?

Posted 12:06 PM


Commercial property damage may cover some roof repairs. This insurance protects instances of damage due to storms or other unavoidable instances. There are limits to coverage, however. Those related to wear and maintenance have no coverage. What should you know about your policy?image of commercial building

Does Commercial Property Damage Cover Your Roof?

In most situations, commercial property insurance provides compensation to you when the structural components of the building suffer during an accident or unavoidable situation. For example, hail damages the roof. This creates areas where the shingles have damage. This could expose the building to mold and mildew problems. The insurance provider often pays for the damage as a result. After all, you likely could do little to protect the roof from a hailstorm.

A tree strikes the roof. The commercial building's flat roof suffers damage from the tree. The business insurance policy may cover the damage to the structure.

When Does Commercial Property Insurance Not Cover Your Roof?

Commercial roofs typically have a lifespan of 10 to 30 years. The type of roof and the overall material used plays a role in this length. Your policy does not cover all repairs. It does not replace the roof when it is too old.

For example, a leak develops as a result of the HVAC system on the roof. The underlying cause is poor maintenance. The policy does not cover it. Or, the roof is 25 years old. The material shows normal wear and tear, but shingles are missing. The roof is no longer watertight. These are simply maintenance issues. The policy is not likely to provide coverage here, either. In these cases, you could have prevented the damage.

What Should You Do If You Need Roof Repair?

Commercial property damage coverage may be able to help with repairs. To find out, call your business insurance agent. The agent will have a roofing inspector come to the location. This individual will look at the roof thoroughly. He or she will pinpoint areas of damage caused by storms, hail or other mishaps.

He or she will then determine if this damage was due to wear and tear or maintenance concerns. If not, the agent will approve the repairs.

It is best to have any commercial building’s roof inspected at least one time a year. Because many roofs are flat, it can be hard to notice damage right away. However, if a storm occurs, leaks inside the property occur, or any type of structural damage happens, call your agent.

The goal of any commercial property insurance is to cut financial loss in unavoidable situations. It can be hard to estimate when this occurs, though. To protect your roof and building, an annual roof inspection is necessary. Make updates or repairs when needed and without delay. This ensures if you need to make a claim later, you get the help necessary.

Also Read: 13 Types of Insurance a Small Business Owner Should Have

Posted 2:31 PM


When a building is insured, a policy written for “replacement cost” provides for the repair or replacement of the damaged portion of the building with like kind and quality of materials.  That’s the good news!

The bad news can be that, when a building suffers damage, there may be one or more local building code ordinances that come into play.  The building ordinance in many cities may say that, if a certain percentage of a building is damaged, the undamaged portion of the building must be demolished and thereby requiring the entire structure to be rebuilt.  For example, if the city’s threshold is 50% and 60% of the building is damaged the city can require the undamaged 40% to be demolished so that the entire building needs to be replaced.  Even if the limit of insurance was adequate to replace the entire building, the standard replacement cost insurance will not pay to tear down and replace the undamaged portion.

Another example is that, maybe an undamaged portion of the building doesn't need to be demolished, but in order to rebuild even the damaged portion, an elevator, or handicapped accessible entryways and rest rooms, or fire suppression sprinklers may need to be added to bring the building up to code.  

These additional costs are not covered by the standard Building and Personal Property Coverage form found within most commercial policies.  However, they can be covered with the addition of Ordinance or Law Coverage.

Ordinance or Law Coverage has 3 components:

·         Coverage A – applies to the loss of value to the undamaged portion of the building

·         Coverage B – applies to the cost of demolition to the undamaged portion of the building

·         Coverage C – applies to increase expenses to

o   Replace the property to comply with current building, zoning, or land use ordinances

o   Repair the undamaged property to comply with current building, zoning or land use ordinances

o   Or to reconstruct or remodel the undamaged portion so that it complies with current building, zoning or land use ordinances

Properly structuring Ordinance or Law Coverage within your commercial policy can make the difference between being forced out of business due to the inability to pay for these additional costs that result from a covered loss, or enabling your business to spring back after a loss. 

Ordinance or Law Coverage is available in most homeowner’s policies as well.  If there was a covered loss to your home, would your city require you to upgrade the plumbing or electrical?  Things like this can be very expensive and the upgrade can only be covered by Ordinance or Law Coverage.

Review your policy to make certain that your insurance is properly protecting you.  If you have questions, call us at 800-220-5582 or contact us on the web.


What happens to your insurance coverage when your building becomes vacant or unoccupied (idle)?

Most insureds are not aware of the restrictions in their property insurance when a building is unoccupied or vacant.

One of the more common coverage forms includes this provision:

"Vacancy"

When this policy is issued to the owner or general lessee of a building, building means the entire building. Such building is vacant unless at least 31% of its total square footage is:

  • Rented to a lessee or sub-lessee and used by the lessee or sub-lessee to conduct its customary operations: and/or
  • Used by the building owner to conduct customary operations

When a building has been vacant for more than 60 consecutive days before a loss or damage occurs, there is NO COVERAGE for vandalism, sprinkler leakage (unless you've protected the system against freezing), building glass breakage, water damage, theft, or attempted theft. For other types of covered claims, such as fire or wind, the amount payable would be reduced by 15%.

The logic is that buildings that are vacant for extended periods are vulnerable to vandalism and arson, partly as the result of only occasional maintenance and security oversight.

The Solution to waive these restrictions:

Tell your insurance agent if 70% of your building is vacant or unoccupied, that is, it's not being used by the owner, lessee, or sub-lessee to conduct their customary operations. Your agent will work with the insurance company to provide the proper coverage.

There is an endorsement available - Vacancy Permit - which reinstates coverage for the types of losses mentioned above. The Vacancy Permit endorsement is designed for use when the hazards that are normally associated with vacancy do exist, but the insurer has elected to underwrite the exposure. A premium is charged for this endorsement.

Premium or coverage considerations (by the policyholder or the insurance company) may affect whether vandalism or sprinkler leakage claims would continue to be covered.

AGAIN, we stress that building owners keep their insurance agents informed of the occupancy conditions in their property so proper coverage can be continued under the policy.

Call Insurance Planning Service at 800-220-5582 or contact us online today.  We can help with questions you may have about your building insurance.

Source:  West Bend Mutual Insurance Co.

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Lighthouse Group Main Office in Grand Rapids, MI
Mailing Address | P.O. Box 530009, Livonia, MI 48153

Phone: 734.421.9900 | Toll Free: 800.220.5582 | Fax: 734.421.9911

Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake