Commercial property insurance covers damages to commercial property that result from natural disasters, theft, fires, and other hazards. It protects commercial property in much the same way that personal property insurance protects homeowners. One important difference, though, is that commercial property insurance premiums are usually tax deductible for business owners.
Commercial property insurance can cover you for damages your business incurs, whether you own, rent, or lease your building, or if you work out of your home. If you work out of your home, your homeowner's insurance policy might not cover your business-related equipment or equipment you store there.
What does commercial property insurance cover?
Commercial property insurance covers a lot of the same things as personal property insurance, including damages caused by fires, storms, and theft. Certain natural disasters, like earthquakes and floods, aren't covered under traditional commercial property insurance, but you can add on protection through separate policies.
You may also need to add on additional coverage for commercial property that isn't attached to your building, like commercial vehicles, signs, or outdoor fences. Your insurance agent can help you create an insurance policy that will cover everything you need.
Damages that are covered under commercial property insurance include:
Loss of income
The office building
Signs on the building
Leased equipment or property
Types of commercial property insurance
Here's a rundown of the different types of commercial property insurance:
Direct Damage Property Insurance
This is what most people think of when they see the phrase "property insurance." Direct damage property insurance covers the physical loss of property or physical damage to property.
Commercial property insurance policies usually cover the replacement or rebuilding of property. You can also include coverage for cleanup and debris removal after a covered natural disaster. Certain natural disasters are included. You should talk to your insurance agent if you have specific concerns to make sure you have the right coverage for your location.
Direct damage coverage is flexible, and you can add on, remove, or adjust coverages as you need through endorsements. You'll want to work with an insurance company that specializes in commercial property insurance to make sure your business is fully covered.
Time Element Coverages
With time element coverages, the losses your business incurs due to an incident are directly tied to how long it takes to repair the damages. The longer the repairs take, the more your losses grow. Time element coverage is generally tied in with direct damage coverage.
Extra expense coverage This covers additional expenses that your business incurs to stay open, or at least to minimize the amount of downtime you need to before you can reopen.
Business income coverage This covers any income that your business loses that's directly tied to your company being forced to close for the time being because of physical property damage for a covered incident.
Leasehold interest coverage This coverage protects you by covering any financial loss you incur due to your lease being canceled as a result of physical damage or loss of commercial property.
Commercial vehicle insurance
If your business owns vehicles, they probably aren't covered under your personal auto insurance. Commercial vehicle insurance will insure company vehicles and cover damages in the event of an accident or break-in.
What impacts the cost of your commercial property insurance
How much your commercial property insurance costs will depend on several factors, including the type of business you own, where it's located, and how much coverage you want.
Location: Your business will have different environmental risks depending on where it's located. Your land value will also impact how much your premiums cost, as will the area's crime rate.
How large your business property is: A small one-room rented office will be able to get insurance for less than a manufacturing facility.
How old your building is: Older buildings tend to cost more to insure than newer buildings since they are more susceptible to damage.
What equipment needs to be insured: The type and age of any equipment you need to insure will play a large role in how much your insurance policy costs. Heavy machinery will cost more to insure than a couple of laptops, and older machines with -rare parts might cost more to insure because they are more difficult to repair.
Commercial property insurance and BOP
A business owners policy (or BOP) covers property that's on-site. It's a good starting place for business owners since it's more comprehensive than personal property insurance and is still affordable. A BOP combines business liability insurance with commercial property insurance, so your business will be covered from any claims related to property damage as well as claims related to bodily injury and personal injury. If you're interested in combining your commercial property insurance with your business liability insurance, talk to an insurance agent today to see how you can get full coverage.
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If you're a business owner, you should have commercial property insurance to stay protected in case of a disaster. Enter your zip code in the box above and click “Let’s Start” to get a quote fast and easy. If you prefer you can reach one of our specialists by phone at 1-877-907-5267.