Do You Need Named Perils or All-Risk Commercial Property Coverage?
Property managers understand the complexity of commercial property insurance, but when things like Named Perils and All-Risk come into play, they can be easy to overlook if you do not understand their meaning.
To ensure you have the coverage needed for your properties, you need to make sure you understand what these different types of coverage are.
The difference between named perils and all-risk coverage is confusing, so let us look at both to make sure there is a clear understanding of each.
Named Perils Policy
When you have named perils commercial property coverage, the insurance company will only cover losses that are part of the perils stated in the policy. For example, if your policy does not mention water damage and your building floods, you will not receive coverage under your insurance policy.
This means that a named perils policy is an insurance policy where “specific damages or losses listed in your policy” are all that have coverage.
If you go with a named perils policy for your commercial property, make sure you have a list of every peril or hazard, that needs coverage.
Options for Commercial Property Coverage
There are three types of named perils coverage for commercial property coverage:
- Basic: Covers common perils. These could be things like fire damage, vandalism, acts of nature, explosions, vehicle accidents, etc.
- Broad: Covers more uncommon occurrences such as falling objects that cause damage, frozen pipes, theft, water damage from accidents.
- Special: This coverage will cover all hazards unless there is something excluded from the policy.
Although having basic or broad coverage looks limiting, it is important to note you can include almost anything on your policy. You can do this through an endorsement if your insurance provider approves it.
Advantages of Named Perils Coverage
Some advantages to having a named perils policy include:
- The ability to include extra perils on your policy through endorsements.
- Excluding coverage you do not need.
- Customizing the perils in the policy based on your needs.
When including or excluding perils on your policy, you need to sit down with an insurance broker who understands these policies and can help you figure out your best plan of action.
It is also important to understand the cost of these policies mostly depends on the perils you include in your policy.
All-Risk Policy
All-risk insurance policies are like special named perils policies. All-risk policies cover every single risk not excluded from the policy. For example, if there is a snowstorm and your pipes freeze, but nothing in your policy says this is not part of your coverage, you will receive coverage.
So, where do exclusions come from? The insurer is usually the one to make exclusions on these policies, since they are the ones who know the risks.
Some of the most common exclusions from all-risk policies are earthquakes, war, government seizure or destruction, pollution, nuclear hazard, employee dishonesty, etc.
Like named perils coverage, if there is an exclusion you need coverage for, you can add it to your policy with an extra premium at the discretion of the insurance provider.
The most significant difference to note about named perils and all-risk policies is with named perils coverage everything named is covered and with all-risk coverage, everything not covered must be named.
Keeping Track of Multiple Named Perils Policies
You may end up with multiple named perils policies. For example, if you have an all-risk policy and pay an extra premium for coverage of something that was excluded from your policy, this will be done through an additional named perils policy.
So, how do you keep track of all these policies? With an easy-to-use Certificate of Insurance (COI) tracking software, like SmartCompliance!
With SmartCompliance, you can easily upload your certificates or have tenants and other third-parties upload their certificates into the system where they will be stored and checked for compliance.
Visit our website or sign up for a free product demo to learn how you can implement this insurance tracking solution into your property management business.
