This mildly confusing terminology may not seem that important, but if you are a business owner, it is quite critical that you fully understand which business (commercial) insurance warranties you have and how they can affect potential payouts.
When you think of warranties, you probably think of the ‘safety net’ package that you purchase when you buy a new car or major home electronic. In fact, many people often think of warranties and insurance as just two sides of the same coin. But, in terms of insurance, the word “warranty” has a very different meaning.
Insurance warranties are guarantees< that the insured party makes to the insurer. These guarantees are designed to protect the company providing the insurance, rather than the customer that purchased the insurance.
As the owner of a business insurance policy, the most important thing to realize is that your insurance policy almost certainly has warranties, which may not have been well explained to you. You need to examine your policy, identify all warranties, and fully understand them.
Effectively, the warranties in your policy are contracts that declare that you will follow certain protocols or rules in regard to the insured property. If you don’t follow the agreed to protocols, you are considered to be in breach of the warranty and the provider will not pay if you experience a loss that would normally be covered.
There are two common insurance warranties, both related to theft, which are most likely to affect your business:
By paying attention to the requirements of warranties, you can implement policies that will ensure your business is always protected in case of loss.
If you have any questions about warranties or business insurance in general, feel free to contact Sean McNamara at Mitchell & Whale Insurance Brokers at 1-800-731-2228 or email me at firstname.lastname@example.org. I’d be happy to help you with any type of commercial insurance you may need.