Business Insurance Considerations: All-Risk Policy or Peril-Specific Policy?

When purchasing commercial property insurance as a component of your business insurance, you'll need to take into consideration the many details of such a policy. This type of coverage helps protect your business from loss and damage related to the property itself. This may come from incidents such as hail storms, wind damage or fire. It will often include your lost income, your equipment, inventory, company documents, money and the building structure itself. As you consider this protection, you'll need to consider the two main types of coverage.

All-Risk Policies: This type of business insurance provides coverage for all risks, including many types of incidents and perils. The only limitations of these policies are in the specifically mentioned exclusions. For example, your policy may cover most types of incidents impacting your business operations, but may specifically exclude flood and earthquake damage.

Peril-Specific Policies: A second option is a more specific type of coverage. This policy provides protection only for the specific types of perils or risks listed, while excluding all others. Some policies will provide for very specific types of coverage only. This may mean covering just crime or fire.

Which is Right for You?

There are various reasons to choose one of these types of coverage. If your business is an average company with average risks, an all-risk policy is often the best option. It remains affordable, but also provides you with ample protection against common risks. Conversely, if your business operates in a high crime area, for example, you may need a peril-specific policy that minimizes those specific risks. These tend to be more expensive, but they can provide you with more coverage for the risks you are most likely to face.

When it comes to finding the best type of coverage for your business, talk to your agent about your risks and concerns. Business insurance customized to meet your needs can give you the protection you need, while also helping to minimize the risk that your company will face significant loss if a fire occurs or if your business is interrupted due to a hailstorm. It’s most important to focus on a policy that provides as much protection as possible to safeguard your company.