Does Business Equipment Insurance Cover Burst Pipes?

 

A good commercial property insurance policy can be comprised of many different types of insurance protection, many of which most businesses need.  Damage caused by leaking or burst water pipes is included in the coverage provided by many commercial property insurance policies, but check your policy to make sure.  Each business policy written is unique and available protections must be spelled out in the policy contract.

Business Owner Policy

A Business Owner Policy, or BOP, is a combination of insurance coverages providing protection for many of the liability and property risks a business owner faces, bundled together in one package.  While a BOP provides a bundle of basic insurance coverages most business owners need, it's sold at a discount from what the individual protections would normally cost. 

Typically, a BOP provides protection against losses stemming from:

• Property damage
• Liability
• Business Interruption

Businesses can also usually opt to add on additional coverages not provided by a basic policy.

Water Damage

While water damage from something like a burst pipe is likely covered by your commercial business property insurance policy, not all water damage to which your business may be subject is necessarily covered.  Flood damage, for example, is something that could possibly require coverage by a separate flood policy or special endorsement to your base policy.  It's also important to realize that if your water pipe bursts because your property was left unheated during a winter freeze your claim could be denied due to neglect.  Water damage caused by an overflowing sump pump will probably not be covered by the property damage portion of you policy.  Check the specifics of your policy.

Other Applicable Coverage

Several types of coverage may apply to damage caused by water from a burst water pipe.  If you have a great deal of expensive equipment used in your business and it gets damaged and requires repair or replacement, the costs may exceed the benefit limits on your property damage coverage.  Additional equipment coverage may be needed to ensure your full protection in the event that property or equipment damage is greater than your base policy can handle.

If water damage sustained requires you to shut down business operations or move them to a temporary location, business insurance can help cover loss of income because of business interruption.  If you're found liable by your landlord for damage done to his or her property a BOP can help there, too.