Commercial property insurance protects your business assets from fires, explosions, theft, vandalism, and other covered perils. This policy is useful, especially when your business has valuable physical assets that directly or indirectly affect your business income. Also known as commercial real estate insurance, it covers your building and its content, such as tools, equipment, furniture, inventory, and so on.
Commercial Property Insurance Coverage
Commercial property insurance covers your home against damages caused by
- Lightning Strikes
- Acts of vandalism
If you lost your business property due to these perils, your commercial property insurance policy will pay to replace or repair the lost/damaged items.
Exclusions to Commercial Property Insurance
There are certain instances where you will not be covered by commercial property insurance, such as:
- Your company vehicle is involved in a car accident during business hours (covered by commercial auto insurance)
- Floodwaters damage your office building (covered by flood insurance)
- A client sues you for damaging their wall during a visit to their business premises (covered by general liability insurance)
How to Obtain Commercial Property Insurance?
There are two ways to obtain commercial property coverage, namely:
- Replacement cost –
This coverage pays the exact cost of rebuilding or replacing lost business property. It doesn’t take deduction or depreciation into account.
- Actual cash value –
As this coverage factors in depreciation, it only pays the current value of the damaged or lost property. This value is usually lower than the actual cost of replacing or rebuilding the property, so the insured may have to pay the difference out of pocket.
- Replacement cost –
Costs of Commercial Property Insurance
The following are a few factors that will be considered while determining the cost of your commercial property insurance:
- Your Location–
If your location is prone to hazards like wind or storms, you’ll usually pay more in premiums
- Building Material Used–
If your business building is constructed with fireproof materials, you may have to pay less for coverage
- Your Industry–
A busy restaurant will cost more to insure than a tax consultant’s office
- Security Systems in Place–
The protections you have in place against risks like burglary and fire, such as security and fire alarm systems, can get you discounts on premiums
- Claim History–
If you have a history of frequent claims, you may have to pay higher premiums
- Coverage Limits–
You will have to pay more for greater coverage limits
How Much Coverage Do You Need?
The amount of coverage needed for your business will depend on the type and value of assets you want to cover. You can get customized policies to suit your unique business needs. If you have leased out your business space to others, check your lease agreement in case you need to fulfill certain insurance obligations.