Does Your Business Need Commercial Property Insurance?
Many businesses own or lease commercial property. If you experience a loss, commercial property insurance pays for the repair or replacement of your property and possessions, including the structure in which you operate, furniture, computers, inventory, and supplies. Since commercial property insurance coverage is so extensive, we’ll help you figure out the details.
What is commercial property insurance?
Commercial property insurance is a type of commercial insurance and is often combined with professional liability insurance in your policy. It pays to repair or replace your building and any items owned by your business on business property if they are damaged or lost in a covered claim.
What does commercial property insurance cover?
As with all insurance policies, there are certain events, called perils, that a commercial property insurance policy protects against. Although the losses covered may vary depending on your provider, here are some of the more common risks covered by a commercial property insurance policy:
- Exploded pipes
Commercial property insurance covers both real property and physical objects. The items covered are:
- Real estate
- Office furniture
- Office electronics
- Supplies and materials
- Signs and lighting
Essentially, anything that you physically use for your business is considered commercial property and would be covered by your policy. You don’t need to itemize your business assets to get coverage, although an inventory will ensure you have sufficient coverage for everything including office chairs, reams of paper, and other supplies.
What is commercial property insurance not blanket?
Certain types of claims are not covered by a commercial insurance policy. Common exclusions include damage and loss resulting from a hurricane, earthquake or flood. Coverage for these natural disasters often requires a supplemental policy to the commercial property policy. Read your policy to identify any exclusions from coverage.
Also note that a commercial property policy will not protect you against general liability claims or business interruption. General liability claims include third party claims that you are responsible for personal injury or property damage to others. Business interruption insurance pays for lost income if your business is closed due to a covered loss. A business owners insurance policy or other stand-alone policies will cover these claims.
Why Should You Consider Commercial Property Insurance?
Any business owner with commercial property should consider purchasing a commercial property insurance policy. Without commercial property insurance, you would pay for loss recovery by dipping into company coffers, taking out a loan, or closing a store. With a commercial property insurance policy, you trade in a monthly or annual premium for the peace of mind that your business assets are protected.
In the long run, insurance can save thousands of dollars. To put these savings into context, take a look at the average costs of some common demands:
- Burglary and theft: $ 8,000
- Water and frost damage: $ 17,000
- Wind and hail damage: $ 26,000
- Fire: $ 35,000
Most small business owners don’t have that kind of money, so it’s important to have a good commercial property insurance policy.
How much does commercial property insurance cost?
The costs of commercial property insurance policies depend on many factors. Your premium will increase as you insure more real or business property. If you choose a higher deductible, you can lower the annual premium, although you should only choose a deductible that you are comfortable paying. The location of your commercial property will also affect the price, as some neighborhoods are considered riskier than others.
the median commercial property insurance price is $ 63 per month, or $ 755 per year, according to Insureon. It’s based on a value limit of $ 60,000 and a deductible of $ 1,000.
How is your property covered?
The loss-covered business asset is either paid for at its new market cost or at its amortized cost. It is important to understand how your policy is written. For example, a policy based on amortized cost will not pay the price of a new printer. Instead, you will receive a check for the value of the printer before the loss.
When a policy pays depreciated value, it is known as an actual cash value (ACV) policy. When a policy pays the new market cost to replace the item, it is called a replacement cost policy. Replacement cost policies are more expensive than actual cash value policies because they will make you harmless in the event of a loss. If you can afford it, a replacement cost policy is the best policy.
What if you don’t own the building in which your business is located?
If you are renting the building, you will still need commercial property insurance. Read through the terms of the lease to determine exactly how much coverage the landlord requires from you. Many homeowners demand a million dollars in coverage for damage to the property they are renting to you. It would pay to rebuild the building in the event of a fire or any other significant loss. Review your landlord’s requirements and leasehold improvements with your insurance agent to make sure you have sufficient coverage to protect yourself.
What if you have someone else’s property in your possession?
Certain types of businesses frequently have consumer goods in their possession as part of standard business operations. Think of a computer repair shop or consignment store, where the company is responsible for the property for a specified period of time. In cases like this, make sure your business has coverage for the property in your care.
In many cases, you will need an additional policy to cover third-party property. This policy is often referred to as “garage mechanic insurance”. Some business owner policies will include coverage for the consumer goods for which you are responsible. Check with your insurer if you are interested in this type of coverage.
How do I get commercial home insurance?
You can purchase a commercial property insurance policy as a stand-alone policy or as part of a business owners insurance policy. Contact a commercial insurer or broker for a quote. To get an accurate price, you will need to have an idea of the value of the commercial property and other details such as your location and the industry you serve. Once you’re happy with a quote, the next step is to bind the policy. Commitment means you pay the required premium and the policy is in effect. As soon as you take out a policy, it covers you against losses.