Whether you own a small family grocery store or an entire supermarket chain, it is vital that you protect your business with an adequate commercial insurance policy. Your entire investment is at risk of numerous perils, and is overwhelmingly likely to be affected by a fire at least once in your lifetime. Attorney Bill Voss examines fire risks in grocery stores and examines key coverage options that will allow your business to survive.
Grocery Stores at Highest Risk of Commercial Fire Damage
It may surprise you to know that fire is the biggest threat to commercial properties, causing an average of $604 million worth of losses annually. A recent report from the National Fire Protection Association (NFPA) found that 3% of all structure fires between 2009 to 2013 occurred in stores and other mercantile properties, causing hundreds of injuries to employees and civilians. fire injuries.
The report also discovered some disturbing facts for grocery store owners, including:
- Over a quarter (28%) of all fires in the study occurred in grocery stores, supermarkets, convenience stores, or other stores selling food and beverages. This group also had the third-highest direct property damages due to fires.
- Cooking equipment was the leading ignition cause of fires in grocery stores, with electrical distribution and lighting equipment coming in second and heating equipment third.
- Although ignition caused by flammable items placed too close to heat sources were a factor in 9% of fires studied, these kinds of fires accounted for 40% of deaths.
- About one-third of structure fires in stores were identified as contained incidents, with 72% of the fires confined to the room where the fire began.
- Although fires are more likely to happen during the day, property damage caused by fire is three times more likely to occur during off-hours when the business is closed.
What Will My Commercial Fire Damage Insurance Cover?
There are many different types of commercial fire damage coverage, and the amount you receive for your losses will depend on the options you have chosen. Many owners opt to lower their premiums by choosing actual cash value (ACV) policies, which only pays for the depreciated value of covered items. On the other hand, a replacement cost policy will pay the full price of what it takes to replace a lost item, which is more generous to a policyholder after a loss.
After a fire, owners must carefully examine their policies to see if they may be owed payment for:
- Structures. Insurance issues may arise if you own the business but do not own the building that was damaged. A commercial renter must look to his or her rental policy to see which insurer pays for what. For example, the building owner’s policy may cover the roof, walls, and HVAC system, but the business’ policy may cover specialized structures (such as displays and cart corrals).
- Contents. Insurers typically pay for damage to the contents of the building, including furniture, cash registers, office equipment, and lost inventory. The more a policy covers, the more expensive the monthly premiums will be. It will take a careful examination of the policy to determine what is covered—and what is not.
- Completed products. Insurers may only compensate policyholders for operations and products that were completed at the time of the fire, such as completed deliveries.
- Lost business income. Grocery stores—or the section of the store where the fire occurred—may need to close during repairs, depriving workers of their wages and owners of much-needed income. Your commercial fire policy could provide payment for any revenue lost as a result of damage to your establishment.
If you and your insurer have different views on what should be covered under your fire damage policy, we can help. Simply fill out the form on this page today to contact the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.