Many businesses work from certain premises and require specific assets to perform their duty. The business property can be any location or asset owned or rented by a company. Business locations include offices, shops, factories, hotels and many more. On the other hand, business assets could be any company asset, from a laptop to a manufacturing machine.
As soon as premises and property are owned or rented by a company, they are liable for any damage or loss. Some unforeseen situations can cause severe damage and loss to business properties.
The damage and loss can result in expensive repairs or replacements that can disturb the business’s future and financial situation. Hence, every business that works on location and owns various expensive assets needs property all risk insurance.
What Is Property All Risk Insurance?
Property all risk insurance protects business property when damaged or lost due to specific unpredictable reasons. The property can include the premises and assets. Insurers can customise the policy to cover a range of properties, regardless of company size.
Property all risk insurance will cover damage or loss due to natural disasters, fires, floods or vandalism. The insurance will cover the cost of repair or replacement. However, the insurance will only cover damage or loss due to sudden disasters or accidents (uncontrollable situations).
Property all risk insurance is highly recommended for some high-risk businesses such as restaurants, factories and retail shops.
Reasons To Purchase Property All-Risk Insurance
Natural Disasters Are Increasing
In the last decade, there has been a drastic increase in natural disasters worldwide. Natural disasters include storms, typhoons, earthquakes, tsunamis and more. Every country and city can be affected by different natural disasters that can lead to damage to property.
Natural disasters are unpredictable and, in many cases, unavoidable. No matter a business’s safety measures, an aggressive storm can find its way into the property and damage everything.
The damage can be to the structure, products and fixtures, which the business will be liable to repair and replace. Post-natural disaster repair can cost a huge amount without insurance. Property all risk insurance will cover the business’s repair and replacement expenses – as long as the damage was unavoidable. The cover can save a business thousands to millions of dollars.
Fires Can Occur at Any Property
Fire damage should always be a concern when working in a premises with expensive property. Many businesses believe a fire could only occur in a kitchen or factory; however, this is wrong. A fire could suddenly arise in any property.
Fires could break out due to electrical equipment, faulty wiring, cooking equipment or various appliances. Companies must educate employees about fire safety and practice fire drills. One of the steps of the fire drill is to leave all assets behind when leaving the location.
Property fire can damage everything and constantly keep growing till the fire brigade arrives. The fire can damage the structure, fixtures and products beyond repair at points. The affected company will have to replace everything and repair the structures. Fortunately, property all risk insurance will cover the cost of replacement and repair of damaged property. Insurance allows a business to return to normal with minimum financial impact.
Floods Can Be as Bad as A Fire
Bad weather can destroy property and can also cause floods. Floods may not seem as bad as a fire, but it can damage property as much. Intense floods can damage walls, assets, ruin electrical systems and products.
Floods could also occur due to bursting pipes or accidental drainage (plumbing) damages. Water build-up can result in a long list of repairs after the flood has been drained.
Such floods can occur at any point and on any property. Hence, companies must have property all risk insurance before it is too late. The insurance may not instantly repair everything, but the coverage makes it easier to move on. Having the insurance beforehand can save a lot financially.
Vandalism Could Happen Any Point
Vandalism is when public or private property is damaged deliberately. It is a criminal act that can never be predicted or avoided most of the time. Vandalism could be criminals breaking in, graffiti or any intentional damage.
The risk may be rare but can occur anywhere and negatively affect the business. For example, someone may spray paint on the business wall or break the window during a city protest. The graffiti or smashed window ruins the property and may disturb the business activity.
Unfortunately, a firm may be unable to fix it with just a wet wipe, and expensive repairs may have to be done (depending on the type of vandalism). The company may need to buy new windows, doors or repair the entire property. Property all risk will cover vandalism damage so the business can quickly repair and move on.
Exclusion of Property All Risk Insurance
Property all risk insurance is great for businesses that could be affected by the above risks. It provides great benefits when facing property damage or loss. However, every company must understand the insurance in detail as there are various situations property all risk insurance will not cover.
Some property all risk insurance exclusions include:
- Product damage or loss is due to theft
- Damage due to defective equipment or design
- Wear and tear damage
- Damage or loss due to any form of business negligence
- Won’t cover any business vehicles
Companies May Also Need Business Interruption Insurance
Additionally, property damage can result in lengthy repairs and business interruption for long periods. Thus, companies should also have business interruption insurance extension on their property insurance.
Business interruption insurance will cover average revenue loss, wages, loan payments and more while the business is paused and there is no income.
Combining both insurances is the best financial protection when a company faces property damage and long-lasting repairs.
To Learn More about property all-risk insurance and protect your business property in Hong Kong & Asia, contact Red Asia Insurance.
