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Commercial Property Insurance
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Commercial Property Insurance protects the stuff your business needs to run. It can pay to repair or replace your business property if it's stolen, damaged, or destroyed in a fire or natural disaster. Most policies can cover…

  • Office space owned by your business.
  • Fixtures.
  • Furniture.
  • Inventory.
  • Supplies.
  • Equipment.

Without Commercial Property Insurance, most small businesses and startups can't replace their equipment after a covered event. Just look at the study from insurance company The Hartford. It lists the average cost of common small business property claims:

  • Fire: $35,000.
  • Wind and hail damage: $26,000.
  • Water and freezing pipe damage: $17,000.
  • Burglary and theft: $8,000.

Getting business property insurance doesn't mean your equipment will always be safe and sound. But it can help your business stay open when that property is damaged.


What Is Commercial Property Insurance?

When certain events happen, Commercial Property Insurance can pay for business property that is stolen, damaged, or destroyed. That property typically includes…

  1. Your building. This usually means the structure, but it can include permanently installed fixtures, machinery, and equipment.
  2. Contents of your building. This includes items that can be easily taken out, like inventory, office equipment, and other supplies.
  3. Other people's property. This category includes items that are left in your care, custody, or control. For example, a customer might use an outlet on your premises to charge her laptop. Once it's in your care, you could be responsible if it's damaged.

Like most policies, business Property Insurance has inclusions and exclusions. For example, most Property Insurance pays when your stuff is damaged by common problems like fire, theft, or windstorms. But some things that cause property damage are often excluded. Two big ones are floods and earthquakes.

Read your policy carefully. Ask your agent if you're concerned that a specific kind of risk may not be covered. They can often help you find ways to increase your coverage.

Property Insurance usually doesn't cover flood or earthquake damage.

Who Needs Business Property Insurance?

You might want to consider this coverage if you…

  • Own a commercial office or building.
  • Rent a commercial office or storage space.
  • Have valuable property, such as computers, culinary equipment, or specialized tools.
  • Have property you rely on to run your business.

Worth noting: many commercial landlords require their tenants to have some Commercial Property coverage. Usually, they want you to purchase a policy that covers only your contents in the leased space. Read your lease carefully to check for potential insurance requirements.


How to Choose Business Property Insurance that Fits Your Budget

Want to protect your property and also keep your Commercial Property Insurance costs down? Here are a couple tips:

  • Consider "actual cash value" coverage. This will cost you less than a "replacement value" policy – but it also offers less coverage. Actual cash value insurance tends to work well if you can easily replace all your equipment with used equipment. Before making this choice, be sure to consult your insurance agent, who will know if the savings is worth the lower payout.
  • Consider "named perils" coverage. "Named perils" coverage usually costs less than an "open perils" policy because it covers less. So again: if your risk exposure is limited, this might make sense. But it could also end up costing you in the long run. Your agent is a great resource for more information, and so is this blog post: What We Talk about When We Talk About All Perils Coverage.


Get More Out of Your Commercial Property Insurance

You can beef up your business property insurance by bundling it with General Liability Insurance. This option is called a Business Owner's Policy (or BOP Insurance). Most of our small-business customers get their Property Insurance through a BOP because…

  • It's affordable.
  • It offers more protection.

You can also add Business Interruption Insurance to your Property Insurance policy. When certain events force your business to temporarily close, Business Interruption Insurance helps reimburse you for lost income.

Finally, some businesses might want to add Inland Marine Insurance to their Property Insurance. It can cover property when it's in transit or temporarily stored somewhere other than your shop. Read "What Is Inland Marine Insurance?" for more details.

Commercial Property Insurance: Further Reading