What Commercial Property Insurance Is All About:
Running a successful business is not without its risks. Most business owners are proud of the work they do and the property they utilize to get the work done. Unfortunately, nature is not always so understanding. Every year, business owners have their business property damaged or lost as a result of events completely beyond their control.
Commercial Property Insurance is for any business that has physical assets. Although your building or other business property may not be making money for your company, its loss could still be very costly.
This insurance type is all about insuring your building, the physical assets inside of that property, and many other types of physical objects owned and used by your business. Whether that property is small office furniture or a large warehouse, any property your business owns should be protected.
Read on to understand if this type of insurance is right for your business.
What Is Commercial Property Insurance?
Thankfully, this insurance policy is one of the simplest and most common forms of business-centered policies available. Commercial Property Insurance is designed to cover most physical properties your business owns. The focus of this insurance is to help businesses recover quickly after suffering property damage or loss.
All types of business property are covered by this type of insurance policy. Many businesses choose to purchase this policy as insurance on a physical building. However, other types of business property can be covered by this policy, including physical copies of company records which are often stored onsite. All costs related to the business property can be covered. The cost of rebuilding after a building has been destroyed, or the cost of replacing property that has been completely lost are common coverage areas.
Any revenue that is lost, and that is insured by this type of insurance, can often be recouped. This insurance is designed specifically to help a business continue operating after property loss or damage.
Do I Need Commercial Property Insurance?
This insurance may come in handy if:
- You own or operate a business
- Your business has any physical assets
- Your physical property is essential to your company’s revenue
- Your physical assets do not draw revenue but have other important uses
Still not sure what you need?
CoverWallet's Insurance Checklist , you'll find a list of insurance types needed for your specific business or industry.
What Does Commercial Property Insurance Cover?
At a High Level...
Commercial Property Insurance covers everything you own that fits under the definition of a “physical asset." This can be anything, as long as your company can prove that the item was purchased for business purposes, or that its use is solely business-related. Even if your company only stores physical documents, these too could be at risk. Office equipment, buildings, and mechanical equipment are only examples of what can be covered. Speaking with an insurance agent can help business owners determine the full list of items their business owns that will be covered.
Getting Into the Details...
Not all businesses utilize physical assets as part of their daily operations. For example, a small business that operates online may not have many physical assets beyond computers. However, those computers would be considered business property. As such, their loss could be costly at best and potentially catastrophic.
Whether property is lost or damaged as the result of a natural disaster, criminal mischief or any other event beyond your control, any loss will result in a financial burden. This type of insurance will cover the cost of replacements, repairs, lost income, building costs, and can even cover higher costs that due to inflation.
This type of insurance covers a very wide of instances, such as:
|Type of Claim||Description||Example|
|Natural Disasters||Coverage for natural disaster events that result in a loss||Cover the cost of repairs for a building damaged as the result of a flood|
|Equipment breakdown||Coverage for property that is damaged as the result of equipment failures||Covers the cost of repairs or revenue loss if a piece of equipment fails and damages other property|
|Revenue Loss||Coverage for lost revenue as a result of property damage or loss||Will provide a revenue stream while repairs are completed on damaged property, or during the time required to find a replacement|
|Construction Costs||Coverage for the cost new construction after property loss||Will cover the construction cost incurred when replacing insured property or repairing damaged property|
You’ll Know It’s the Right Policy If It Covers...
- All forms of physical business assets
- Revenue loss
- Property loss as a result of natural disasters
What Does Commercial Property Insurance Not Cover?
Although this type of insurance covers almost all forms of commercial buildings and business property, it does not cover everything. It also does not cover all instances of property loss.
Here is a list of things not covered by Commercial Property Insurance:
- Commercial vehicles
- Property damage resulting from employee error
- Property that was not purchased for the business
- Personal assets that may be used by the business
- Amounts beyond the agreed value of the property
- Employee wages as a result of lost revenue due to property loss or damage
- Property intentionally damaged by the business owner or employees
What Are the “Limits” on a Commercial Property Insurance Policy?
Commercial Property Insurance is specifically limited to property owned by the business. This property must have either been purchased by the business or have been purchased from someone else and had its ownership transferred to the business. This property should be essential to the operations of the business, even if it is not directly tied to the revenue stream. This type of insurance does not cover commercial vehicles. Although commercial vehicles could be considered “property” of the business, separate insurance exists for commercial vehicles due to separate regulations. However, insured property that is damaged as a result of a commercial vehicle failure (for example, faulty brakes) would be covered under this policy.
How Much Does Commercial Property Insurance Cost?
Cost of this type of insurance will depend on several factors. The value of the building and the assets inside of it will determine the cost. A set rate is often determined by calculating the total value of these assets, and will typically include a risk factor. Different business properties have different risk factors, dependent upon their location and the nature of the business.