Contractors and building companies face the same property damage risks as other businesses, but they also have a few unique hazards that could lead to a large loss. Attorney Bill Voss explores commercial property insurance options for construction companies and explains how to get maximum payment for your losses after a fire.
Ways Contractors Can Maximize a Fire Damage Claim
The best way to protect yourself from a large loss fire is to opt for higher policy limits (even if it means paying a higher premium) and selecting the right policy endorsements for the type and scope of services you perform. For example, you may collect significantly more after a fire if your construction business is covered by:
- Heavy equipment insurance. Every policy has a limit on the amount that can be collected for property damage—and if your losses are over the limit, you’ll have to pay out-of-pocket for the rest. A special equipment endorsement can pay for the expensive tools that are vital to your business, such as table and circular saws, ladders and scaffolding, hydraulic lifts, or handheld power tools. Make sure the limit on this endorsement will be enough to pay for the full replacement cost of each item.
- Inland marine insurance. If a fire occurred at a supplier’s warehouse or on one of your job sites, your own property damage policy may not cover building materials lost outside of your primary location. Inland marine coverage pays for any tools, lumber, insulation, shingles, or other construction materials that have been damaged in transit.
- A rental equipment policy. If you rent backhoes, forklifts, trailers, or other equipment from a third party, your own property damage coverage isn’t going to pay to replace it. A rental extension pays for damage to someone else’s property, such as machinery and tools under a long-term or short-term lease.
- Seasonal coverage. Contractors often have a busy season during the warm weather months, and a fire in summer would cause greater loss than the same fire would in the winter. A seasonal income protection endorsement can pay for the extra profits lost due to a fire in the busy season, such as the inability to take on the usual amount of jobs.
- A commercial auto policy. Depending on the extent of the coverage, a commercial auto policy may cover trucks used for call-outs or business purposes, vans or tractor-trailers carrying building materials, or road-legal heavy machinery. In order to claim for fire damage due to a non-collision event, you must have comprehensive coverage on any vehicle, transportation equipment, or operator-driven machinery.
- Business interruption insurance. Income loss is often the most costly part of any commercial insurance claim. If you are unable to conduct daily business while your offices are under repair, business interruption insurance can replace lost profits for up to six months after a covered loss. This can help cover the costs of employee payroll, regular stock orders, rent temporary machinery, or lease a temporary office space while you recover from a fire.
- Extra expense. Extra expense coverage is an additional form of business income coverage, and pays for extra expenditures and out-of-pocket costs during rebuilding. It may pay for marketing or advertising to reassure the public, the costs of setting up a website to provide updates to clients, or pay for security measures (such as new locks or security teams around damaged structures) that can help reduce the amount of loss.
- Umbrella insurance. Umbrella insurance is an extension that can be added to any type of policy. It only applies when the policy limits on a single claim (or for a single covered event) have been reached. Umbrella policies can provide anywhere from an extra ten thousand to several million dollars above the policy limit, and can be invaluable after a large-loss incident.
Let Us Help You With Your Fire Insurance Claim
If you’re fighting to get the coverage you need after faithfully paying your premiums for years, the Voss Law Firm can help. Fill out our contact form today to get answers to your questions, or start reading your copy of our free book, The Basics of Commercial Insurance Claims.