Fire Casualty Insurance: Coverage for the Ultimate Loss

No one wants to think about what might happen to your livelihood should your business be lost to fire, but one way to ensure peace of mind is to have fire casualty insurance so you can survive the loss without losing everything you have worked so hard to achieve.

Fire Casualty Coverage

When you obtain your commercial property and casualty policy to cover your business, you need to ensure that there is a provision within the policy that covers damages from fire. There are two different kinds of damages you need to consider.

  1. Damage to the physical structure of your business. When a fire damages your business building or destroys your equipment, you need insurance that will help you replace or repair the damaged equipment. This is normally a part of your commercial property insurance policy, but be sure you read carefully and understand what exactly would be covered in the event of a fire.
  2. Loss of income resulting from the inability to do business after the fire. During the time that your building is not usable or your equipment has not been replaced, you stand to lose a great deal of income, potentially threatening the viability of your business. A provision in your casualty insurance policy can protect you from loss of income resulting from fire. Be sure you speak with your agent and understand the restrictions and exclusions to this coverage.
Reducing Insurance Costs

There are many ways you can reduce the cost of your fire casualty insurance premium:
  • Installing a sprinkler alarm system. While the cost of a sprinkler alarm system might seem higher than just paying a higher insurance premium, the ability to save valuable equipment from the immediate response of the system is as valuable as the insurance savings. You may be able to save on liability insurance premiums as well, since the people inside your building will also be safer.
  • Conducting fire drills. If you have a large building, having a well posted fire escape plan and monthly or quarterly fire drills will demonstrate your willingness as a business to mitigate risk and may help to reduce your premiums.
  • Accessible fire extinguishers. Depending on the type of industry your business is in, you might consider installing easily accessible fire extinguishers (this can be particularly important if your business works with flammable substances or has a higher than average risk of fire).

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