Commercial property insurance is also known as business property insurance. This insurance protects a company’s real estate and onsite physical assets, like the personal property of others and business personal property, from numerous types of covered perils, like burst pipes, vandalism, fire, theft, lightning, and wind.
Commercial property insurance can cover any type of rented or owned physical location where you do business, including warehouses and office buildings, as long as the address is registered as an insured location on the policy. In this article, you will learn all that you need to know about this insurance.
What is Commercial Property Insurance?
Commercial property insurance is an agreement between your business and a small business insurance company that agrees on how you are rewarded if your business’s physical assets are destroyed, stolen, or damaged due to any problem covered by your policy.
This insurance is regularly bundled together with business interruption insurance and general liability insurance as part of a business owner’s policy. A lot of businesses, such as service-oriented businesses, manufacturers, retailers, and not-for-profit organizations, need this policy.
How Does Work?
Commercial property insurance works when there is damage to a building structure or an item. Your commercial insurance will cover the costs that will be used to replace or repair any damaged items or building structures, up to the valid coverage limits.
The replacement cost policy replaces or fixes any or all damaged assets with new items or materials of similar quality without accounting for devaluation. The actual cash value policy covers the cost of both replacing and repairing lost assets with new, similarly styled assets without adding the depreciated value.
A lot of insurers provide a wide range of authorizations you can add to a commercial property policy to enhance coverage or fill in gaps formed by exclusions, including:
- Equipment breakdown coverage.
- Inland marine coverage.
- Also, Business interruption coverage.
- Accounts receivable coverage.
What is Covered Under Commercial Property Insurance?
This insurance pays to repair or replace any of your business property if it has been damaged due to a problem covered by your policy, like a fire or theft. There are only two (2) policies that commercial property insurance offers, and they include:
An open peril policy:
This policy offers broader protection. An open peril policy will cover any type of problem except those recorded as exclusions. Because it will cost more than a named peril property insurance policy.
A named-peril policy:
Meanwhile, this policy covers costs only from problems precisely recorded in the policy, which naturally include fire, vandalism, wind damage, theft, and a lot more.
What Does Commercial Property Insurance Cover?
This insurance normally does not cover the following, which may be covered with detached insurance policies or additional coverage authorizations:
- Damaged customer property.
- Reputational harm.
- Loss of income.
- Equipment breakdown.
- Environmental damage
- Damage outside your building, like detached signs.
- Floods.
- Earthquakes.
- Goods in transit.
- Business vehicles.
- Employee theft.
- Employee injury or illness.
- Wear and tear.
What Problems Are Covered?
The lists below are the types of problems covered by this insurance, and they are as follows:
- Wind.
- Fire.
- Also, Vandalism.
- Hail.
- Lightning.
- Lastly, theft.
The above lists are the only type of problem that is covered by commercial property insurance.
What Physical Assets Are Covered by Commercial Property Insurance?
The types of physical assets covered by this insurance are as follows:
- Business records.
- Inventory.
- Tools.
- Building (either rented or owned).
- Equipment.
- Furniture.
- Also, Computers.
- Personal property.
- Supplies.
- Lastly, Outdoor fixtures (like fences and signs).
If you are the type that rents your business location, your landlord’s insurance would normally cover the damage to the building. However, your rent agreement may state that you will be accountable for certain types of damage to the building.
Who Needs Commercial Property Insurance?
Businesses with a physical location and respected or essential assets such as equipment or inventory can benefit from having commercial property insurance. All these businesses may contain manufacturers, retailers, wholesalers, and professionals across all industries.
Third parties, such as mortgage lenders and landlords, may also demand proof of commercial property coverage to decrease their risk of a commercial hire or financing agreement.
Conclusion
The price of commercial property insurance coverage hinges on a lot of factors, which are not limited to the value of your physical assets and buildings. In addition, the amount of your industry and coverage affects policy cost; it has to do with the year of construction, the location of your facility, and you’re past claims history.