This cover is designed to protect the physical assets of your business and reimburse you for any insured loss or damage which may arise. The physical assets will include your buildings, your machinery and contents as well as stock which will be made up of raw materials, work in progress and finished goods.
It will also cover tenant’s improvements which is work that you carry out to a building not owned by you and which you would not take if you moved out of the property. Examples of tenant’s improvements include wiring and cabling, additional offices, air conditioning etc.
The policy will define the insured perils and therefore only damage arising from these will be covered. Many policies are now written on an all risks basis but many also only cover specified perils. These would normally include fire, aircraft, explosion, earthquake, riot, civil commotion and malicious damage, storm, flood, burst pipes, impact and theft.
When arranging this type of insurance cover, it is really important to make sure that the sums insured are calculated accurately. Cover for buildings and contents is usually arranged on a reinstatement-with-new basis and therefore the value insured should be calculated accordingly. Do not use the written down values in your books. The consequence of under insurance can mean that insurers will not meet a claim in full.