How Does Commercial Insurance Cover Water Damage


Jul 23, 2020

Water damage can be devastating for your business without the right commercial insurance coverage; here's how business insurance can cover water damage.

Like your own home or apartment, water damage is a real and impactful concern for your business's commercial property. Water can cause extensive damage to not only your business's building but your equipment, supplies and stock as well. As a business owner, especially a new one, you may not be familiar with business insurance and may wonder, "Does my commercial property insurance include water damage coverage?" Here are some tips on understanding what's covered in business insurance and what to look for in your commercial insurance coverage for water damage.

What Does Business Insurance Cover for Water Damage?

Although water damage is a concern for any property, businesses are often more at risk with water damage due to the increased number of people entering and roaming the premises as a public space. There are also often more dire consequences to water damage in a commercial property because there are likely goods and equipment that can be damaged, affecting future revenue. That's why every business should consider getting water damage coverage to protect their hard work.

How do you protect your business from water damage?

Every policy and insurance company can vary when it comes to commercial insurance for water coverage. Sometimes water damage is not included as a part of your Commercial Property Insurance, while others do include it. Business Insurance coverage for water damage can be similar to Home Insurance in that policies vary based on the source of the water and the cause of the damage. Some policies include only certain types of damage but you can add more coverage if you have specific concerns.

You should also keep an eye on a policy's exclusions as they often exclude certain levels or extents of damage. A common exclusion is water damage as a result of gradual leaking because it is considered negligence and not a sudden, unforeseen accident. A common cause of water damage are burst pipes - especially in colder areas where pipes can freeze and burst in the wintertime. Most insurance policies do commonly include this but you should still review a policy to confirm what is and isn't included.

A coverage you should also consider as a business owner is Business Interruption which is an extension of Commercial Property Insurance. It can cover profits, fixed costs - including ordinary payroll and extra expenses - when a claim arises to cover the profits your company would have earned had the loss not occurred. Water damage can cause extensive issues if it is not quickly and correctly dealt with; repair often involves drying out the affected area to prevent mold and restoration of damaged areas. During repairs, your business may have to temporarily close; Business Interruption can help cover the profits lost during that time.

Learn more about what steps to take if you have water damage at your business.

Commercial Insurance and water damage coverage can feel tricky to understand and navigate - especially if you're a new business owner and this is your first time looking for insurance! When every policy and company can have different options, it's important to review the coverage and exclusions, ideally with an insurance professional or an insurance broker. At Foxquilt, we help entrepreneurs get smarter insurance built for their business. Our team of insurance professionals can do the work of reviewing Commercial Property Insurance and shopping around for you so you can receive tailored business insurance for your specific needs with exclusive savings too. Get a quote today.

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