How Does Fire Insurance Work? Fire Insurance Benefits & Claims
As a business owner, most of your day consists of overseeing operations, reviewing financial data and looking for innovative ways to grow your company. It can be difficult to think about and identify every possible risk that threatens your company's future. Fires are common culprits of business property damage. According to data from the U.S. Fire Administration, there were more than 96,000 nonresidential fires in 2016. Cooking was the leading cause, followed by carelessness, arson, electrical malfunctions and various other causes. All small business owners should take precautions to minimize their fire risk.
Identify Your Fire Risks
A business owner's policy combines general liability insurance coverage with some property coverage. Take some time to assess your company's specific fire risks. As you evaluate them, consider these potential fire hazards that may be a risk to your business.
Ovens and Stoves
Open flames on gas stoves are especially dangerous in workplaces, and ovens present fire risks as well. These appliances should be closely monitored, and protocols should be put in place to ensure their proper use at all times.
If your business has a decorative fireplace in a common area, be sure to have it inspected and maintained regularly. Also, maintain gas lines for a gas fireplace. One person should be in charge of operating the fireplace properly and monitoring it throughout the day.
Keep all flammable materials away from heat sources or open flames. Even something as simple as a can of nonstick cooking spray sitting next to a stove can be a fire hazard. Also, be sure that any curtains in the workplace are not too close to electrical outlets. If you use any aerosol cans or flammable items, be sure that workers know how to store them properly.
Make a list of the outlets in the workplace. It helps to draw a floor layout map with every outlet location. Monitor the outlets frequently to look for overloading. Employees often use power strips and extension cords to maximize the use of each outlet. If this is the case in your workplace, consider rearranging work spaces to reduce outlet overloading. Also consider installing arc fault circuit interrupters (AFCIs) to automatically shut off electricity if a fire is imminent due to electrical overload.
Employees should only smoke in designated areas of the workplace. It is better to establish a smoking area outdoors to protect the health of other workers. There should be plenty of cigarette butt trays with sand or gravel in the designated smoking area.
Special Tools and Appliances
Some tools and appliances require more electrical power to operate properly. These types of devices should not be plugged into overloaded outlets or into power strips. Be sure that employees know how to properly use these items and how to check for UL stickers. Fires can still happen even if you follow the best practices associated with these list items. They are good reminders of how important it is for every business owner to have a BOP.
How Does Fire Insurance Work?
With office insurance on a BOP, you have the following coverage:
- Physical losses or damages to business personal property
- Office fixtures, improvements, and betterments
- Lost business income
- New property
When your business is damaged by a fire, you file a standard fire insurance claim after the incident. The insurance company verifies standard fire insurance claims before issuing compensation. To ensure that you follow all steps in the process correctly, contact your agent immediately if there is a fire in your small business.
Are There Other Types of Fire Insurance?
Although you won't find multiple forms of coverage that are specifically designed for commercial fires, some provisions are helpful. For example, if you notice that overloaded outlets may cause a fire that could damage your company's computers or network servers, you can benefit from adding electronic data loss coverage. It is an upgrade option for a BOP that covers the following:
- Lost data
- E-commerce operations
- Interruption of computer operations
Since a fire from any source can destroy computer hardware, this upgrade is useful for business owners.
What Do BOP Upgrades Not Cover?
When it comes to what is not covered, the main concerns are electronic data and computers. With the upgrades, your BOP does not cover the following: • Liability due to data loss • Employee actions • Utilities • Installation, repair and testing of computers
Benefits of Fire Insurance
Having a BOP gives you peace of mind, protects your physical property and safeguards your company's future. For example, imagine that there is an electrical fire that destroys your computers and inventory. If you are unable to continue business operations because of the losses, your BOP can cover a temporary business interruption. Your physical property is also covered, and your business is more likely to recover financially. Uninsured businesses risk the possibility of being unable to reopen.
How Much Fire Insurance Do I Need?
Your business property is covered up to the limits that are specified in your BOP. A BOP covers your business whether you operate it in a commercial facility or out of your home. According to recent research, about 30 percent of small business owners run their companies from home. However, about 40 percent of home business owners do not have business insurance. One of the main reasons for this deficit is that people usually think that their home insurance policy will cover any losses. If you run a business from your home, you need a separate BOP. To learn which coverage options are right for your needs, contact a Hiscox representative for more information.