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Commercial Property Insurance

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What is commercial property insurance?

Commercial Property Insurance

Commercial Property Insurance

Commercial property insurance, also called business property insurance, helps protect the real estate (owned or rented) and other property owned by the business. Things covered under commercial property coverage are buildings, tools and equipment, office furnishings, and other things.

Do you need commercial property coverage?

In many ways, this question answers itself. Simply put, if your small business owns or rents commercial property, you’ll want to buy a commercial property policy.

What if my business leases space?

What if you don’t own your office or commercial space? In most cases, your landlord will require proof of general liability insurance and commercial property coverage as a condition to lease.

Frankly, even if a landlord or mortgage does not require property insurance, if your business owns any property, real estate, equipment, furnishings, and even inventories, you’ll want to consider buying property coverage to protect these valuable assets.

Commercial Property Insurance Policy

Who buys commercial property?

Not sure if your business needs property coverage? As you consider your business insurance needs, if any of these describe your small business, you may need commercial property coverage:

  • Rent or lease commercial real estate (eg. office or retail space)
  • Your business owns commercial real estate
  • The business owns capital equipment or tools
  • Your business leases capital equipment
  • Your business has stocks an inventory
  • You have expensive furnishings or computing equipment

What ISN’T covered by commercial property insurance?

Be aware that your commercial property insurance policy doesn’t cover every type of property damage. This coverage can’t help your business if:

  • Your customer drops their laptop when they trip over a box in your office
  • One of your employees puts a hole in your client’s wall
  • You get into an accident while making a delivery to a customer and damage your vehicle
  • A nearby brook overflows after a heavy rainfall causes flooding near your building and damages your inventory
  • You or your employees intentionally damage property

You can get other types of commercial insurance to give your business more protection against these kinds of claims. Get an insurance quote today and see how you can protect your business.

Understanding commercial property coverage?

A complete business property insurance plan is one of the smartest investments you can make in your business. It protects your company’s costly, physical assets such as the building, its contents, and any indoor or outdoor fixtures such as signs and fencing.

Savvy business owners know that a fire or severe windstorm can shut down a business for an extended period, often leading to a permanent closure. But with comprehensive business property coverage, you get support and business income coverage to help you recover quickly.

The property plan basics:

Commercial property insurance plans vary from policy to policy.

Basic property insurance usually covers losses caused by fire, lightning, wind, hail, or acts of vandalism. Additional coverage can be added for earthquakes and the breakage of glass.

The essential items to insure in a business property insurance plan include your building, office equipment, inventory, and outdoor items on the premises such as fencing, storage sheds, or outdoor signs.

Property valuation:

Commercial property insurance pays for losses based on the settlement valuation you select when buying the policy. You can choose the replacement cost of the property or its actual cash value.

  • Replacement cost (RC) refers to the amount necessary to repair, replace, or rebuild property on the same premises, with comparable materials and quality without deducting any amount for depreciation.
  • Actual cash value (ACV) is the cost to replace it with new property of similar style and quality, minus depreciation.

Typically, the premiums for policies written on an ACV basis cost less. This is because there is less coverage. For ACV policies, the insurance company will deduct depreciation upon settlement of a loss. As a result, an ACV might not be enough to adequately replace the insured property.

However, if you elect to insure the property on an RC basis, the premium may be a bit higher, but you’ll get a settlement for the replacement cost of the lost or damaged property.

Not sure which is right for you? Speak with your insurance agent to review which loss settlement option is right for you.

How much does a commercial property policy cost?

commercial property insurance costs

Many sites will quote you average costs for commercial property insurance. However, many factors influence the cost of an insurance policy, and your business may not be average. Here are some of the factors that impact your cost:

  • Industry and risks
  • Deductible selected
  • Property location
  • Value of property insured
  • Settlement valuations (ACV or RC)

The best way to know if you’re getting a good price on commercial property coverage is to compare quotes. You can start a quote online, or call an insurance agent.

Can I bundle commercial property insurance?

If you don’t want to purchase commercial property as a stand-alone coverage, there are ways to bundle this coverage with other critical business insurance protections.

business owner’s policy (or BOP) is a convenient way for small business owners to bundle commercial property coverage, general liability insurance, and business interruption. Frequently, when purchased through a BOP you can get significant savings. 

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commercial property?

How do I buy commercial property insurance?

Property insurance policies for small businesses may be purchased as a stand-alone or as part of a comprehensive business owner’s policy that includes property and general liability coverage. You can customize your coverage for your unique business interests, including selecting the type or amount of property insurance you need.

There are typically two types of coverage offered by insurance companies:

  • Replacement cost: Pays to repair or rebuild property with materials of the same or comparable quality.
  • Actual cash value: Pays the current value of the damaged property, and the cost to rebuild or replace property, generally replacement minus depreciation.
Is business property insurance required by law?

Like many other forms of business insurance, commercial property is considered optional under your state’s laws or regulations.

However, while it may not be required by law, a property insurance policy is highly recommended for all business owners with valuable property. Further, your landlord or lender may require you to carry property insurance to protect their investment.

Will I be able to add my lender to the policy?

Yes. Just like your home insurance, you can add mortgage holders and other additional insureds as needed.