Factors that Impact the Cost of Commercial Property Insurance
Here are a few things an insurance company will consider when quoting your business a price for commercial property insurance:
- Where your business is located
- The size of the premises
- How old your building or equipment is
- The value of your property, including equipment
- Security measures you employ
It’s easy to see how policies can vary greatly from business to business. A showroom of designer wares that’s located in a high crime area, for example, would probably pay more for commercial property insurance than a small gift shop in a safe neighborhood. A business located in an old building that could be more susceptible to fire would pay more than one in more modern facilities.
Additionally, when selecting a commercial property policy you may have to choose whether or not you want replacement-value coverage, which is more expensive, or cash-value coverage. With replacement-value coverage, your insurer will pay the full price to replace an item that is stolen or damaged beyond repair. With cash-value coverage, they will only pay what the property that you lost was actually worth. So, for example, if a computer you’ve had for three years is stolen and you have cash-value coverage, your insurance may not pay you enough to actually purchase a new computer. Which option you choose depends on the specific needs of your business.
Many small business owners qualify for a Business Owner’s Policy, or BOP, if they have less than 100 employees. A BOP combines commercial property and general liability insurance in one package, making it more affordable and convenient for a small business to gain two important coverages.