Understanding Your Office Insurance: Wear and Tear vs. Property Damage

Never assume everything imaginable is covered under your commercial property insurance policy. A basic plan covers a wide range of perils that warrant filing a claim, but it typically doesn’t cover damage from wear and tear. Here’s how insurance companies view the difference between worn and damaged items.

Damage or Wear and Tear: What’s the Difference?

An insurance firm doesn’t necessarily use clearly defined standards when evaluating property damage. In fact, each insurance company sets its own methodology for determining what scenarios fit its payouts. A commercial property insurance plan usually views wear and tear as normal use, and it’s up to the owner to maintain quality through proper care.

The main difference between a wear and tear issue and property damage is that the former is a slow degrading process, whereas property damage happens suddenly. Any damage that results from neglect or improper maintenance of equipment or other items will be dismissed by the insurer as outside the policy’s coverage. Damage caused by a storm covered by commercial property insurance is fairly easy to prove.

Who Decides If It’s Wear and Tear or Property Damage?

Insurance companies often rely on adjusters to evaluate property damage without the assistance of an engineer. It may help your case if an engineer provides input as to whether a piece of equipment was destroyed in a natural disaster or from wear and tear. Sometimes a claim can get denied without an adjuster or an engineer involved. Ultimately, your insurance company will determine the nature of the commercial property damage and the pay-out.

What Factors Influence Whether It’s Considered Property Damage or Wear and Tear?

Most issues determined to be wear and tear involve old items that are 10 to 20 years old. A modern roof has a lifespan of 20 to 50 years, but after about ten years, there’s usually evidence of wear and tear, such as small leaks or cracks. An inspector will be able to estimate how long a leak has grown and identify it as a new problem or wear and tear issue.

Wear and tear is not covered in a standard commercial property insurance plan because it’s predictable damage that the owner can do something about through strategic planning. Business owners are supposed to know products only have a certain lifespan. Insurance companies are not in the business of paying to replace old worn-out products, although some offer special coverage for excessive wear and tear.

Tips for Preventing a Property Damage Claim Denial

One of the best tips for handling property damage claims is to hire a professional inspector to inspect your property once per year. It will help spot leaks early and ensure long-term damage isn’t developing from wear and tear. Here are other important tips to help prevent a claim denial.

  • Document all business maintenance
  • File your claim as soon as possible, so you don’t miss the deadline
  • Only provide accurate information
  • Gather plenty of photographic evidence of the damage
  • Keep an inventory list of your valuables on file with your insurer

Take proactive steps to reduce your risks of property damage so that your business is not disrupted. Inspecting your equipment periodically and addressing repair issues immediately will extend its durability. To learn more about commercial property insurance in CA, contact our experts at Knight Insurance Services today!

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