Fire Damage Insurance Coverage: What Business Owners Should Know

Key Takeaways

• The right commercial fire damage insurance policy can support business owners against high restoration costs and significant business losses after a fire.
• Commercial business insurance often covers fire damage, but policies can vary, and business owners should always review their policy and explore supplemental policies well in advance of a fire to ensure they are covered.
• Business owners must be aware of common policy exclusions, like deliberate or existing damage.
• The process for filing a claim for commercial fire damage includes documenting the damage, working with the adjuster, and hiring a professional service to manage the repairs.

Although a fire is not something anyone expects to happen to their business, business owners should be prepared. It’s crucial not to assume that your insurance automatically covers the impacts of a fire, as fire damage insurance coverage is not always straightforward. Understanding your policy is essential for ensuring you know what approach to take and have coverage if a fire does take place.

An effective fire damage restoration can bring a property back to its original condition, but it is a thorough process, and business owners shouldn’t have to cover the costs themselves. A fire can put businesses at risk of high repair costs and stunted operations, all affecting their bottom line. Having the right policy for fire damage insurance coverage can minimize these losses and put business owners a step ahead in the event of the unexpected.

Does Commercial Business Insurance Cover Fire Damage?

Commercial business insurance can cover fire damage, and many policies often do. However, it’s not a guarantee that the policy will cover all aspects of the repairs. Businesses should always review their policy directly to determine if it covers them against the full effects of a fire event.

The extent to which your insurance covers fire damage and issues around it depends on the policy. For example, some policies will only cover fire from the damage itself, while others may cover incidental factors like falling objects and fire department fees.

Types of Business Insurance

In addition to commercial business insurance, there are several other types of business insurance that may be able to provide support in the event of a fire. Businesses can pursue comprehensive coverage or supplemental insurance to protect themselves against the risks of fire damage.

Some of the types of coverage are:

• Property insurance – Unfortunately, property insurance does not cover fire damage by default, and some policies may have gaps that would cause you to pay for fire repairs out of pocket.
• Fire damage insurance – A commercial fire policy will give you extra protection in the event that a fire does break out. These policies will typically cover structures on the property, objects in the buildings, and sometimes the property of others.
• Disaster insurance – If a fire occurs because of a natural disaster event, then the damage from the fire may be covered by this insurance.

Keep in mind that with any policy, the extent of coverage will depend on the policy itself and the strength of your plan. Consider your risk and your business needs to determine which type of coverage makes the most sense for you and your operations.

If your business handles flammable materials, then it will be a good idea to add supplemental insurance for extra protection.

Common Exclusions and Limitations

It’s also important to understand the potential covered limits and gaps that may come up if a fire does occur. Similar to a house fire, a commercial fire may not be covered by fire damage insurance in specific situations. 

The most common exclusions include: 

• Deliberate damage – If a fire was set on purpose by anyone associated with the business, then an insurance company would not cover it.
• Existing damage – If a fire damaged parts of the property that were already damaged, then your policy will not cover any damage that existed beforehand.
• Incidental damage – Some plans cover incidental damage while others do not. This can include coverage for indirect effects of fire damage like falling objects or water damage from extinguishing a fire.

What Policies Do You Need To Cover Fire Damage?

Not all insurance coverage is comprehensive enough to cover fire damage. In fact, business owners should review their coverage to ensure they have coverage for not just the fire itself but also additional consequences surrounding the fire, like injuries and impacted operations.

Policies for covering fire damage can include:

• General liability insurance policy – A general liability policy will cover any damage to third parties, like vendor or supplier equipment, and bodily injury.
• Business interruption insurance – After a fire, a business can lose significant revenue from not being able to sustain its typical operations. Business interruption insurance can help fill the gaps and cover these losses.
• Business owners policy – A business owner policy bundles several types of coverage into one, covering commercial property, general liability, and business interruption insurance.

Understanding the various policies available for fire damage can better prepare you for an unexpected event. It’s a good idea to consider talking to an insurance broker who can guide you throughout the process and help you determine which option may be best for you.

Filing a Commercial Fire Damage Insurance Claim

Understanding how to file a commercial fire damage claim is crucial for getting the necessary coverage for repairs. If you are a small business owner, it’s important that you take the right steps to find support and maximize your coverage.

To file a claim:

1. Document all damage – Take pictures of any noticeable damage caused by the fire. Compile any necessary business documents that prove the value of damaged property.
2. Contact your insurance company – Contact your insurance company by phone to file your claim. When you do, you should have your photos and other documentation ready so that you can provide an accurate representation of the damage.
3. Record any business losses specifically from the fire – In addition to direct business losses from damage, you should also keep track of any losses that come from slowed business due to damaged equipment or the need for repairs.
4. Remain in touch with your adjuster – After you contact your insurance company, they will send out an adjuster to assess the damage. You should remain in contact with the adjuster throughout the repair process to ensure everything goes smoothly.
5. Contact a professional restoration company – The fire damage restoration process requires special expertise to ensure a thorough and successful result. Be sure to research companies with a track record of successful restorations behind them.
6. Keep records of repair expenses – As you navigate the repair process, be sure to track expenses so that you can be reimbursed by your insurance company. You should also record any expenses that will be directed toward preventing future damage.

A fire damage restoration requires a thorough process, from addressing the fire damage to the different types of smoke damage. It’s important to follow the proper steps when working with your insurance company so that you can get all aspects of the restoration covered. Hiring the right professional service can help you navigate the insurance claim process for the best possible coverage.

How Alpha Environmental Can Help

Fire damage insurance coverage plays an important part in helping your business remain prepared against unexpected disasters and costs. Therefore, it’s essential that you are proactive about understanding your policy and important steps. If a fire does occur, you will be prepared against stunted operations and know where to turn for a rapid resolution.

At Alpha Environmental, we provide fire damage restoration services to help return homes and businesses back to normal. Our process involves a thorough series of steps that includes addressing smoke damage, and even residual water damage from the fire department response.

We’ll even work with your insurance company to help you get your repairs covered. We use our 21+ years of expertise serving the Portland area to provide a restoration that allows your business to return to normal.

Contact us today to schedule an estimate and find guidance for your fire damage restoration.