When a business leases a new space there is usually some renovation that needs to be done to accommodate the business’ needs. It can be a minor renovation like mine. When I originally moved into my office, I had 2 windows installed in the office, so I could see through to the front door of my office, since I was the only one there. To add the windows cost me around $500. This was a very minor renovation. I’ve seen some businesses that I insure completely gut their space and build it out exactly the way they want it.
The cost to buildout your space is usually an overlooked coverage when businesses are tailoring their Business Insurance Policy. What most businesses don’t realize is that if disaster was to strike, like a fire, your landlord would not be responsible for building out the interior of your location the way that you customized it. They are only going to be responsible for rebuilding the exterior of the building and MAYBE putting back the interior to the original condition it was prior to your renovation. You would want to refer to your lease to see what your landlord’s responsibility is.
If you put $10,000, $25,000, $50,000 or more into customizing your space, you want to make sure that your insurance covers the renovation.
Insurance Companies will protect this exposure differently. Some may provide the coverage under the Building Coverage section of your policy; others will provide it with the Leasehold Improvements Endorsement and others may want to protect the exposure under your Business Personal Property coverage.
Getting the coverage under your Building Coverage Limit is usually the most cost effective because the Building rate is usually less than the Business Property or endorsement rate.
But ultimately in the end, it doesn’t matter under what section of the policy the Insurance Company covers it, you just want to make sure that it’s covered!
If you found this tip helpful and would like us to review your insurance and provide you with a no-obligation quote, give us a call 585-663-2004.
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