…and why is it in a holiday blog post?
Two great questions! As we approach the holiday season, closing out year-end projects and dreaming about dancing sugar plum fairies and swelling Amazon carts, it’s important that we focus on what’s important to us.
We at Founder Shield know that while most people say the important things are “family, friends and loved ones,” what they really mean is “commercial property insurance terms and conditions.” Don’t worry, we hear you.
Why does this matter?
It’s recognized that the holiday season gives us some unique motivations for committing property crime. Vice covered this while also highlighting the increased risk of cyber crime (covered by either cyber insurance or crime insurance).
Most companies have property insurance (and those that don’t probably should), but how do these policies respond to theft or burglary? The disappointing answer is “it depends,” but we can absolutely shed some light here.
What is property insurance?
First off, property insurance is designed to reimburse the company if their property suffers a “covered loss.” This almost always includes a loss like an office fire, but what else is covered?
A good commercial property policy will include coverage for theft in the main policy form, but may then go on to exclude the coverage by adding a “theft exclusion endorsement” to the policy. This may still be a good policy, we just need to get the endorsement removed if possible.
What is a theft exclusion and how do I get it removed?
Many underwriters are comfortable offering theft coverage as long as you have a central station burglar alarm. This will provide enough assurance for many (but not all) underwriters to extend the coverage without any additional premium or underwriting. This will also depend on the amount and type of property being insured, but in most cases this process isn’t complicated.
Even if you can’t get a commercial property insurance policy with the theft coverage included, there are versions of the “theft exclusion” that are better for you than others.
You don’t want an exclusion that says “we will not pay any loss caused by theft.” Much more palitable is an exclusion that starts with “we will not pay any loss caused by theft” BUT then goes on to say that it will cover things like
“Loss or damage that occurs due to looting during a riot or civil commotion or building damage caused by the break-in and entry/exit of burglars.”
This, at least, provides coverage for ancillary damage that is caused in the process of the theft, if not for the value of the stolen property itself.
Want to know more?
Make sure you’re working with a qualified broker who can spot these differences, tell you what you need and find the right underwriter who can offer a policy tailored to your needs.
Want to read more on the subject? Check out our other blog posts on property insurance.