That's an expensive cup of coffee

How many times have you been the first one to arrive at the office and you venture to the break room and find the coffee machine has been on all night and the glass coffee pot is caked with burnt coffee.  Just what you wanted to do -- clean the coffee pot.

With winter upon us now I’m sure the consumption of this hot beverage is up.  By now you are probably scratching your head trying to figure out how coffee and insurance go together. 

It might resemble a very similar relationship between a police officer and a doughnut. 

I’m not sure of a business owner or a business out there that does not have a coffee pot sitting somewhere.  Maybe even a hot plate on a desk sitting next to a stack of past reports.  Whatever the case may be, you should pay close attention to those items before you leave for the night.

Why?

Because of Fire Legal Liability Coverage.

To give you a visual, Penelope Quick Print leases and occupies the first floor of a multi-tenant building valued at $1,000,000. Through the negligence of Penelope Quick Print’s employee who left the coffee pot on, a fire started in Penelope Quick Print’s premises. 

The fire did $300,000 worth of damage to Penelope Quick Print’s premise and also caused $400,000 worth of damage to other parts of the building.

If the fire damage limit for Penelope Quick Print was $50,000 the insurer would only pay that part of the $300,000 in damage to the part of the building occupied by Penelope Quick Print. 

Penelope Quick Print needs a higher fire damage limit. 

A lot of small business owners ask what this coverage is for.  What needs to be understood is the fire legal liability coverage is subject to a separate limit.  Insured’s have a tendency to think this is covered under property damage and it is not. 

You will find that it is typical to see only $50,000 in coverage unless you and your insurance agent discuss the value of the amount of space you occupy.

Here is a simple formula to consider:

You occupy 5,000 square feet of a 30,000 square foot building valued at $3,000,000.  In other words, you occupy 1/6 of the building. 

Using this simple formula would give you a minimum value of $500,000 needed for insurance coverage.  Once the fire leaves the space you lease or rent, any subsequent damage would be covered under the Per Occurrence Limit of your policy.  You also have the ability to insure against perils other than just fire. 

All of this over a cup of coffee.