Small commercial insurance typically excludes certain perils within the insurance policy. While the exclusions vary by carrier many of these exclusions are very typical in property insurance policies. It would be prudent to know what types perils are usually excluded so that when you do your market analysis for proposals you can be better informed in making your decisions.
An exclusion that is in every commercial insurance policy unless you buy back the coverage is earthquake, earth movement and/or volcanic eruption coverages. Some parts of the country, such as Florida have sinkhole issues and losses to deal with. Many times sinkholes are included under the earth movement exclusions. Some policies have specific sinkhole exclusions. You need to read the definition of what is earth movement is in order to be certain. It is very common for the insurance carriers to have very broad definitions with regards to earth movement. You can exclude or cover such things as mudslides, landslides, sinkholes, shifting plates of the earth, water runoff et cetera.
The next big exclusion that is in almost all policies is flood. It can be surface waters, rising bodies of waters from rivers, streams, lakes, and/or oceans. Tsunamis that are more wind driven or earthquake driven are typically also excluded under the flood definition. Many times the flood definition expands what types of water losses are not covered. Sometimes below ground swimming pools that burst or leak and create a flood into abasement etc. would not be covered. Water that backs up to the sewers, pipes and drains and then ends up flooding the building are typically not covered and is excluded.
Riots and civil commotion and the damage done by the offending parties and/or the authorities responding to their civil duty usually are not covered. When authorities block off or close streets because of a riot or commotion the damages from lack of clients to your business is excluded. If there was a fire or something and the civil authorities’ shutdown your place of business for protection from a covered peril sometimes that would be covered under your policy because a fire would be a covered peril. Loss to power and your utilities such as your electricity, gas, telephone system, lighting etc. is usually excluded under your property policy.
You can usually buy business interruption, power interruption coverages from your insurance carrier. In almost all cases there is usually a waiting period for this type of coverage to take effect. The most common waiting period is 72 hours. Most utility services are usually up and running within 72 hours. Therefore the coverage is mainly designed for catastrophic events where you are out of business and it has been interrupted for more than 72 hours. These are some of the most common exclusions found in all property insurance policies for businesses.
R. Glenn Matsen, CEO, MBA, CPCU, ARM, CLU, ChFC, SEO has over 33 years of experience in providing marketing insurance solutions for the small business insurance owners needs and is an expert in SEO, link building and link acquisition, article marketing and ranking clients sites high on Google. His personal website contains detailed information on Commercial Insurance.