What is Material Damage insurance?
Material Damage insurance can be best described as insurance cover for commercial “fixed assets”. Some examples of these being buildings, business equipment, leasehold improvements and stock.
Material Damage is sometimes referred to as “Contents Insurance” or “Plant and Equipment” insurance.
Who should consider it?
Material Damage Insurance can be taken out for a small tools policy for a Tradie, all the way up to a multi national exports business insuring their buildings, manufacturing plant and stock.
What can it cover?
Assets are normally insured for full replacement, or on occasion on an indemnity basis (second hand value or depreciated value) for older equipment. As a business owner you will want to reinstate or replace your income generating assets as quickly as possible following a loss. The same principle occurs with stock, but its insured at cost price, thereby indemnifying you for the lost stock value.
The main insured perils are accidental loss/damage, fire, flood, burglary and natural disaster. However there are many different extensions that provide additional cover, such as landslip and subsidence as mentioned below.
The policy will come with automatic extensions that are designed to provide additional cover free of charge. Refer to you insurance schedule and wording for more detail. However an example of some common extensions are:
– Money: theft, burglary of cash, cheques and cards from onsite
– Employees effects: provides cover on clothing, personal effects, and tools of trade of Directors, and Employees where not insured elsewhere.
– Landslip & Subsidence: loss or damage to insured property following a landslip or subsidence at the situation insured.
– Transit: the Material Damage policy normally covers Assets at a specified location/s. However limited value of temporary removal and transit cover is often included.
What usually isn’t covered?
Some common exclusions to a Material Damage policy are:
2. Electronic Data
3. Building Defects
Theft is another common exclusion however this cover is included with a higher excess, normally $2500.
As with all insurance policies, the devil is in the detail……. so please do read the wording and schedules issued by your insurers. At Balance Advisors we are always here to help you navigate and review these policies so you have a good understanding of what your covered for. We are here to help!