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Small Business Insurance Supplemental Coverages

Small business insurance supplemental coverages are additional protections that are applicable if there is a covered loss. Many insurance carriers have special property enhanced endorsements which expands greatly the coverages above and beyond the basic property insurance forms. The supplemental coverages are additional protections that are usually helpful in adjudicating losses for the insured. They’re not so much added benefits as they are helping to smooth the claims process to its completion.

As an example, if a church was maliciously burned to the ground and was destroyed due to arson many times it a typical supplemental coverage would be an arson reward coverage. The amount can range from $5,000 reward leading to conviction or possibly up to $50,000 for an arson reward for conviction of the arsonist. While this particular supplemental coverage does not directly benefit the named insured it does help the insurance company in possibly finding the culprit and getting some of their money back for the losses the insurance company has paid for.

Depending on your type of business just determining how to determine the values can be a daunting task. Therefore most property policies have a provision to provide an additional coverage expense of paying for inventory appraisals to determine the appraised amount of the loss.  The insurance carrier will typically pay for the appraisal but if the insured and the carrier disagree on the amount there is a mechanism within the policy to choose an umpire.

Depending on your location in United States the next supplemental coverage may or may not be of value to you. If you suffer a major loss to your building structure your foundation may also be damaged.  There usually is no coverage for foundations and underground infrastructure for property policies.  In certain parts of the country basements, underground parking, etc. can be a large cost item. So while most of the infrastructure belowground typically is not damaged much when there is a fire aboveground there can be a problem with getting a municipality building permit without also redoing the foundation (which usually is not a covered loss).

The amount for foundations and underground infrastructure varies by carrier but usually this supplement amount can be from a few thousand dollars in coverage up to $500,000.

Depending on your type of industry your inventory and products may or may not be heavily regulated. If your inventory and products are damaged there might be regulations and laws that determine what type of branding, labeling or notices that must be given to clients of these damaged goods or partially damaged goods. Almost always, there is no insurance protection for this unless you have additional coverage or increase the sub limits. Reviewing your sub limits of coverages and analyzing whether or not you need to increase your protection is a prudent thing to do as a small business owner.


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