Factors that Affect the Cost of Commercial Property Insurance
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Factors that Affect the Cost of Property Insurance

Commercial Property Insurance doesn't come in one size. It doesn't even come in small, medium, or large. And there's no "seventy-five cents more to get a triple-XL with unlimited refills." If these kinds of Property Insurance policies were available for your small business, chances are, you'd either be grossly underinsured or paying far too much in premiums.

Every business has unique insurance needs, and the best way to address those needs is get tailored coverage. And depending on what you own, you may end up paying more or less for your Property Insurance.

In that way, outfitting your business with Property Insurance is kind of like shopping for a car. There are endless options available, each with its appeals and drawbacks. Do you want a trendy foreign sports car? Then parts will cost more. How about a family-sized SUV? Gas-guzzling, but cheaper maintenance. An old clunker? Low upfront cost, but possibly not a lot of life left in it. Then you consider things like four-wheel drive, antilock brakes, MP3 or CD players, interior fabrics… the list goes on.

The same type of attention goes into figuring out what rate you'll pay for Property coverage. Is your business really small? Is your office building really old? Do you have super-expensive equipment? These are just some of the things that your insurance company takes into account when calculating your premiums.

Major Factors That Affect Property Insurance Rates

Here are some things insurance companies consider when figuring out your Property Insurance rates:

  • Geography. This can help your provider determine which environmental risks your business may face, such as flooding, tornadoes, etc. Also, land value and local law can affect what premiums you pay.
  • Size of business premises. A large office or factory building will likely cost a lot more to insure than a single rented room.
  • Safety and security. Is your business located in a high-crime area? Does your business possess toxic materials or engage in dangerous activities like mining? Do you have stringent security measures? These can all affect insurance rates.
  • Age of building. Old buildings can be more susceptible to certain types of damage, so they may cost more to insure. For example, a fire caused by old electrical wiring could translate into costly repairs if the building needs to be rebuilt to code.
  • Type of equipment. Heavy industrial equipment will cost more to insure than an at-home business's sewing machine.
  • Age of equipment. You may pay higher premiums if your equipment is hard to repair because of scarce parts, or if it's more likely to break down because of heavy use. Alternatively, it might be cheaper to repair older equipment than buy state-of-the-art technology.
  • Replacement value vs. actual cash value. Replacement-value coverage costs more because the policy pays out what you need to replace damaged items with brand-new gear. You may have the option of cash-value coverage, which only pays out what the depreciated property is worth. On the bright side, those policies cost less.

In addition to these factors, an insurance company might offer lower premiums when you buy Commercial Property Insurance through a Business Owner's Policy, or BOP.

As you can see, there's a lot of information that goes into generating a price for your policy. But taking the time to process all these facts results in a Property policy that's custom-fit for your business. You can have the coverage you need without paying for excessive protection. And should disaster strike, your business will be able to get back on its feet with minimal inconvenience. It's a whole lot better than picking out a policy that looks like it might fit, only to realize there's not enough coverage for your expenses.

Fill out an application with insureon today to receive free quotes for Commercial Property Insurance, or contact an agent to discuss your business's needs. (Just to be clear, though, you won't get unlimited refills for seventy-five cents.)

Commercial Property Insurance: Further Reading