Companies rely on all kinds of material items to carry out trade. Whether it’s as simple as one laptop, or a warehouse of specialist machinery, many businesses would buckle without their essential equipment. Some firms invest hundreds of thousands in their stock or tools, and wouldn’t be able to afford to replace them following a disaster.
Business contents insurance is a way for companies to insure their valuable equipment and business items against damage caused by fire, flood or theft at the company premises. Having these items insured reduces a company’s losses following a disaster, allowing them to focus on returning to business as usual as quickly as possible.
Find out about contents insurance for businesses in the following sections:
- What is business contents insurance?
- What is covered by business contents insurance?
- Do I need business contents insurance?
- How much does business contents insurance cost?
- How much cover do I need?
- How to find a business contents insurance provider
- Final thoughts & FAQs.
What is business contents insurance?
Business contents insurance, also known as commercial contents or business assets insurance, is designed to protect a company’s possessions and equipment kept at the business premises. It can pay out if any of the business’ contents suffer damage resulting from a fire, flood, theft or another insured event. Business contents insurance is not a legal requirement, but many companies choose to take out a policy to protect their assets, particularly if they hold large amounts of stock on site.
This type of policy can cover the cost of repair work on the contents or even the cost of fully replacing items that have been damaged beyond repair. Policies can cover items as small as mobile phones, all the way up to factory-grade machinery.
What is covered by business contents insurance?
Business contents insurance can provide cover for a wide range of events which are outside the business owner’s control, which lead to damage or destruction to a company’s possessions. Business contents insurance typically pays for the costs of repair for any items damaged by an insured event which could not have reasonably been prevented. Usually, these events are results of extreme weather or a break-in. If the contents on the policy aren’t repairable, the businesses insurer can pay for their replacement, too.
Most contents policies can protect items damaged or destroyed in the event of the following:
- malicious damage
When you take out a policy, you will have to give details of any items in the property and value the items owned by the business. Business contents policies tend to offer cover for the following equipment, objects and materials as standard:
- fixtures and fittings: this can include flooring, lighting, office equipment or kitchen utensils and appliances
- furniture: such as desks, chairs, shelving units
- office equipment: this might consist of computers, printers, scanners and modems
- manufacturing equipment and tools: this can cover a broad range of tools and machinery related to producing or packaging goods
- the belongings of any staff or clients in the building.
These features tend to appear with varying levels of indemnity on a standard business contents insurance policy. Alongside these fundamental features of cover, many insurers offer extensions, such as stock stored on the property or cash left in the premises. Many policies can also cover specialist equipment, such as expensive computer systems, generators or electrical items, so long as you provide details when you take out the policy.
It’s also worth noting that you can insure intangible assets as well as physical ones. These might be patents, copyrights or valuable business data stored on paper or computers, that may be destroyed in the event of a fire or insured incident.
Can I insure my contents and stock on the move?
Many companies rely on sending employees away from their business premises. This might be to attend important meetings, to visit clients or simply travelling between multiple business premises. On public transport or on the go, you’re at a higher risk of theft or accidental damage. If your senior sales consultant has their phone stolen on the bus or drops their laptop on the way to a meeting across town, they might be unable to contact clients or access crucial files for presentations, which may, in turn, lose you business. That’s why many contents insurance providers offer various forms of cover for items on the move.
One option is an ‘all risks’ policy. This kind of insurance can cover your portable equipment when you’re outside your business premises. Cover of this kind only applies to specified items, such as laptops or phones that employees regularly take off the premises. Depending on the insurer, an all risks policy can even include cover for work items taken abroad.
It’s also possible to insure your stock on the move, as well. Some companies attend trade shows to network and generate business. If you’re transporting items to a trade show or if you’re selling products at a fair, you can cover your stock while it’s in transit and at these events, offering peace of mind if the goods are damaged or stolen when they’re taken offsite.
Contents insurance may work differently for mobile businesses who are always on the move. If this applies to your business, check with insurers to see if they can offer cover suitable for your needs.
Are there any typical exclusions?
A business contents insurance policy tends to exclude any damage caused by general wear and tear. Some business contents policies can cover items damaged by theft or attempted theft, or replace items stolen completely. However, insurers typically do not cover theft if doors or windows were left unlocked. You may have to provide evidence of the security of the property, including entrances, windows and delivery hatches if you want to make a contents claim concerning a theft.
Some policies come with security requirements to cover any contents which are stolen, such as fitting specific types of lock or installing CCTV cameras. Be sure to check your policy and secure your property appropriately, so you don’t find yourself liable for replacing your equipment yourself.
Many policies, particularly tailored office contents policies, exclude manual work away. You might operate a business that is run from an office, but if work also takes place on client property, equipment may not be included as standard in these instances. If this applies to your business, it is worth speaking with an adviser on whether you’ll have cover for equipment used on client property before you take out a policy.
Similarly, for companies insuring their stock on the move, insurance providers typically exclude cover for couriers who transport third party goods.
Do I need business contents insurance?
Not all businesses choose to take out contents insurance. Whether or not you need it depends primarily on how much contents you have on your premises, and how much it would set you back if you had to replace everything you own.
Any business storing a high volume of stock should also consider business contents insurance. This is particularly relevant to retail companies, which might keep millions of pounds worth of goods in storage in a warehouse or factory. If a fire were to burn the premises to the ground, the business could be at risk of folding following such a significant loss.
The simplest way to determine whether you need business contents insurance is to add up the value of your business assets. You can then weigh this figure against your quote for contents insurance, to see how much you could save if the worst were to happen.
Some industries tend to rely on contents insurance more than others. Many providers offer specialist contents insurance policies for specific industries, such as tailored policies for the retail sector, offices, salons or surgeries.
What about home businesses?
Most people have a home contents insurance policy in place to protect their household items in the event of fire, flooding or theft. Should a burglar break in and steal some of your belongings, including an expensive laptop, one of the first questions the insurer may ask you is whether you use the computer for business or personal use.
They ask this because many home contents insurance policies exclude any equipment used for business purposes. If you use the stolen or damaged item for business, your home insurance policy is likely to deny the claim. What’s more, if a burglar stole both personal items and items you use for work, you may not be able to recover the costs of replacing your household items, either. Failure to disclose that you work from home may invalidate the whole claim, or even the entire policy, leaving you vulnerable to cover all your items.
If you operate your business from home, your home contents insurance may be able to cover you for work-related items, but only if you explicitly arrange it with your supplier beforehand. If you already have a home contents insurance policy in place, it is worth contacting your provider to see if you can add cover for your tools and equipment to your policy. Otherwise, you may need a separate business contents policy. Many providers offer insurance products tailored to home businesses, to insure all your goods in one place.
How much does business contents insurance cost?
How much you pay for your policy will largely depend on the value of assets or contents that you are looking to cover. When you take out a plan, you will also get to choose whether you want to cover the purchase price of your assets or the cost of a new equivalent, which may be higher.
The sector in which you operate may also have an effect on the price of your premiums. Businesses in especially technical or specialist industries that use high-value, sector-specific equipment in their daily operations will pay higher costs than a simple office setup.
Other elements that influence price include your claims history, as well as any ongoing disputes with other providers. The location of the premises also plays a role in the price: business sites in areas prone to flooding, for example, may pay more to reflect the higher risk to the insurer.
How to keep costs down
If you’re facing an expensive business contents insurance quote, there are several steps you can take to attempt to bring down the cost of your premiums. Some insurers will have their own checklist of measures you can implement to save money on the price of your policy, so it’s worth asking your provider directly. Some ways you can typically keep down costs include:
- implementing effective security, such as fitting windows, doors and entrance alarms or adding security lighting.
- opting for an insurance company who offers a no claims discount, to get a reduced price if you manage not to make a claim during the policy term.
How much cover do I need?
How much cover you need depends on the value of the contents you are hoping to insure. It also depends on which type of contents policy you choose, as there are two ways that you can take out cover for your contents. The two models are:
- Replacement as new policies. If your items suffer damage beyond economical repair, the insurer will pay for the value of a brand-new replacement.
- Indemnity policies. These pay for the actual cash value of the items, paying out for the cost of replacing them at its current market value. This figure takes into account depreciation over time as well as wear and tear. For some insurers, an indemnity policy refers to the initial purchase price, instead, which might be even less. Make sure you understand your insurance provider’s definition of an indemnity policy for clarity on the level of cover you have.
Most companies choose replacement as new policies so that they don’t have to put any funding towards the repair or replacement for items that have increased in value. Once you’ve decided on the level of insurance you need, it’s time to value your contents to figure out the extent of cover you require.
How to value your equipment and stock
Up to 80% of businesses underinsure themselves, and up to 40% of these are then unable to re-open following a catastrophe as they cannot cover the remaining losses themselves. It’s therefore crucial to value your assets correctly to get the right level of cover. Insurance providers will also need to know the total value of all the items you want to insure to work out an accurate quote for your premiums.
If you’re opting for a replacement as new policy, be sure to use the replacement value of each asset rather than its initial purchase price, and use these figures when working out the total value of your business items. This is particularly crucial for specialist equipment or machinery, that may have vastly increased in value since you bought them years ago. If this were the case and you had provided the value you paid for the items, you’d leave yourself underinsured, meaning you’d have to bridge the gap with your own funds.
Some policies include cover for stock as standard, or this may come as an optional add-on to a contents policy. When valuing the stock in your business, ensure that you take into account seasonal fluctuations. Swimwear companies may hold significantly more stock just before the summer months, for example, whereas toys stores might have more stock onsite on the run-up to Christmas. Bear in mind the amount of stock you have onsite in your busiest periods and account for this in your estimation, to avoid underinsuring your assets.
How to find a business contents insurance provider
Almost every business has different needs when it comes to insuring their physical assets. An office may require cover for computer equipment, servers, printers and intangible assets, like their essential data. A beauty salon will need protection for specialist equipment such as tanning booths, sunbeds or hair styling equipment.
It can, therefore, be beneficial to opt for a policy tailored to your industry, to find an appropriate level of cover. There are three routes to finding a contents policy that’s right for you.
Approaching insurers directly
Many commercial insurance suppliers have a contents insurance product available. Contents insurance tends to come as an optional extension to other insurance policies, such as buildings insurance or a comprehensive business insurance package. Bear in mind that contents insurance as part of a package deal is more difficult to compare like-for-like with other policies. Take into account the features offered by each policy, rather than looking solely at the price.
A multiproduct may be worth considering, particularly for smaller businesses. You might be able to save money on your premiums by taking out multiple forms of cover under one all-encompassing policy. For small companies, having various types of cover in one overarching policy can cut down on administration costs and time, too. Most providers offer their contents products on their website, where you can view the features of cover they can offer and generate an online quote.
Going through a broker
Brokers offer the advantage of having expert knowledge when it comes to all things insurance. They’re familiar with insurance jargon, technical policy wording, and also have fantastic links with leading insurance providers. This means they’re able to arrange you a policy which gives you the bespoke protection you need, and likely for a better price. Insurers will be able to advise you on an appropriate level of contents insurance for your company, as well as whether it would work out more cost-effective for you to insure your more expensive items under separate policies.
Similarly, they can build policies to cater for all your business needs in one place, saving you time and money. If something happens, having a broker as an intermediary can take the stress out of handling a claim, as they’ll communicate with the insurer on your behalf.
Another helpful way to compare policies is to use a comparison website. Numerous sites have cropped up over the last ten years, which compile quotes from a range of providers in a helpful list. Most sites give you the option to filter the results by specific criteria, such as price or the maximum level of coverage available.
Final thoughts & FAQs
Disaster can strike at any moment, and if your business premises are affected, operations can grind to a halt. However, business contents insurance can insure your valuable equipment, machinery, stock and portable items, mitigating the impact on your accounts and enabling you to continue trading as smoothly as possible.
Anybody operating from business premises, whether it’s an office, a salon, a warehouse or a shop, should consider insuring the items inside. Not only can a policy cover the cost of repairs or replacement in the case of damage, but they can help you make this happen as quickly as possible, allowing you to return to business as usual, as soon as possible.
Further questions on business contents insurance? Check out answers to common questions, below.
If I work from home and have home content insurances policy, do I need business contents insurance?
Home contents insurance policies won’t pay out for work-related items. Among many reasons, this is because equipment used for business purposes tend to be far more costly and difficult to replace than typical household goods.
In addition if you can, insuring this kind of equipment on your home contents policy can significantly bump up the cost of replacing a houseful of possessions.
Even a freelance photographer, for example, may have tens of thousands of pounds worth of kit in their homes, without even having a studio. Premiums you pay won’t take into account the value of this equipment, which is why insurers don’t want to find themselves liable to pay more than they bargained for. Many policies come with strict conditions that you must declare any items you use for business when you take out the policy.
Another significant difference is the geographical scope of business and home contents policies. Business contents cover can include worldwide cover for any portable business items, such as a laptop or phone. Home contents policies tend to have limitations about where the coverage applies.
Finally, commercial clients can expect a far quicker response and resolution time for their claims on a business contents policy. Insurance companies understand that businesses rely on their material assets to carry on trading, and therefore aim to process claims as quickly as possible to minimise their business and cash flow interruption. Claims on a home insurance policy are not typically afforded this luxury, which is why home business owners should take extra precaution to ensure they have an adequate level of protection for items they rely on to generate income.
Do business tenants need contents insurance?
Whether you own your business premises or not, it’s your responsibility to insure the items you own inside it. Therefore, if you want insurance for your business equipment, you must take out your own business contents insurance policy for the things you keep at your rented premises. Many landlords take out contents insurance for the items they have provided in a property, such as kitchen equipment, carpets, sofas or curtains.
However, this policy will not extend to any of the tenants’ contents. Leaving your business equipment uninsured exposes you to huge costs if there’s a fire or flood and they need repairing or replacing.
Do landlords need contents insurance?
Not all landlords opt for contents insurance. It largely depends on how much material contents you have provided in the property you rent out. Landlords with a residential portfolio may rent out fully furnished homes, in which case a contents insurance policy could be a sensible investment.
Similarly, if you rent out a commercial space designed with specific businesses in mind, such as buildings equipped with expensive catering equipment, you also may want to consider a policy that can cover these costly items. A broad commercial property insurance policy or buildings insurance policy is a condition stipulated by many mortgage providers for buy-to-let properties. Many buildings insurance policies include a certain level of contents insurance as standard. Otherwise, landlords can consider a combined buildings and contents policy, which tends to be cheaper than taking out two separate plans.
What other types of insurance do I need to consider for my business premises?
Contents insurance can save companies thousands in the event of a disaster wiping out their stock or damaging all their essential equipment. However, while this insurance can protect you against the value of these items, it cannot cover the losses that the business might incur while waiting to replace these items or while the property itself recovers from the incident.
For businesses with specialist machinery, they may lose months of revenue trying to source new machines. If your company would be unable to absorb the loss of several months revenue, you should consider business interruption insurance, which can pay out for any loss of income following an insured event.
This leads on to buildings insurance, another type of policy to consider for your business premises. Far more expensive than replacing your physical assets would be the cost of rebuilding the office, warehouse or space in which you operate if it were to burn to the ground. Buildings insurance can cover you for the costs of repairing and rebuilding your business premises, and can even pay for a temporary alternative location to continue trading in the meantime. What’s more, many buildings insurance policies offer business interruption either as standard or as an optional extra.
For businesses who rent their site, their landlords may have a buildings insurance policy in place that can cover your losses from business interruption following an insured event. Still, you must be sure to check what coverage you have before you leave yourself underinsured.