I was reading the newspaper today and noticed something unusual – a business is expanding! I know with our economy, it’s hard to spend money, especially when it comes to a new building. It was a nice surprise to see a company is growing and needing more space! However, it got me to wondering…… will this business tell their insurance agent about the new premises?
I know insurance can be one of the last items considered when undergoing such a major company change. But if you don’t inform your agent about the new premises, you may have an unexpected problem in the event of a loss.
Basically speaking, the standard property policy provides coverage for your covered property (which includes buildings, fixtures, and permanently installed items) as well as your business personal property (such as furniture, machinery, and equipment). In addition, coverage may be extended to newly acquired or constructed property, which provides coverage for your new building and business personal property. Great, right? But hold on………
This extended coverage is limited to how much will be paid in the event of a loss AND you must report the new acquisition within 30 days. So, if you acquire a new building on July 1 and do not inform your agent within 30 days, the loss that you experience on September 1 at your new building would not be covered. Not exactly the new start you were looking for!
The moral of the story seems very simple: contact your insurance agent right away! However, life gets in the way, and those 30 days extended by the policy can disappear in the blink of an eye. So how can you avoid this happening?
- Contact your insurance agent BEFORE your take possession of the new building. In most cases, there is a lienholder involved such as a bank or landlord, and they will need proof of your insurance coverage prior to them giving you the keys. You may also be asked to list them as an additional insured or loss payee to protect their interest.
- Make sure you know the values of the building and your personal property. Your agent will guide you in what information will be needed to obtain these values.
- If you have already taken possession of the building and have not reported the acquisition to your agent, contact them immediately.
When making a change like this to your operation, be sure to add a phone call to your agent to your “to do” list. It’s an important and necessary part of the process, and once it has been completed (along with the rest of your tasks), you can kick back and relax in your new building!