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Commercial Property Insurance: What You Need to Know

Business Insurance

By Gabrielle Reid | August 6, 2019

Commercial property insurance is a necessity if you run a business. Why? Commercial property insurance serves to protect the property where you work in addition to its contents and any external property features.

What is commercial property insurance? Who needs it? What are the benefits of commercial property insurance? These are just a few of the questions we plan to answer in this blog post.

What is commercial property insurance?

Essentially commercial property insurance is what its name implies. This type of commercial coverage works to protect any commercial property related to your business. It can protect your building and your company’s belongings from perils such as a natural disaster fire and theft.

A commercial property policy is enacted when your property suffers an insured peril; it can help your organization to get back on its feet by offsetting the repair and replacement costs as seamlessly as possible. Coverage options vary depending on the policy however so if you aren’t sure just what your commercial property coverage entails contact your insurance broker.

Who needs commercial property insurance?

There are a lot of different businesses which require commercial property insurance. Anyone with a building premises or tools products or items relating to their work. Here are a few examples:

Small businesses

This includes clothing pet book and furniture stores restaurants florists bakeries and more that fall under small businesses.

Contractors

Welders painters home builders construction companies and electricians all need commercial property insurance.

Professional services

Professional service providers need commercial property insurance too. This includes but isn’t limited to copywriters photographers marketing consultants graphic designers and dietitians.

Essentially if your business operates in any property – whether that your home a place you’ve leased or rented or a building that you own – it can be protected by commercial property insurance.

What are the benefits of commercial property insurance?

Protection when disaster strikes

You can do all the preparation in the world to help safeguard your business from threats it could face but in the end it isn’t up to us. When natural disasters happen they can wreak serious havoc on your place of work and rack up some serious costs. Fires extreme winter storms and cold snaps theft and vandalism flooding and hail are all examples of potentially insured perils which could affect your commercial property. Luckily commercial property insurance is here to help. Remember to check in with your insurance brokerto see just what your commercial property insurance policy will cover.

Repair and replacement expenses

After you submit an insured claim and pay your deductible your commercial property insurance will kick in to help you with any repair costs or – if the damage is too extensive – replacement costs. For instance if your retail business suffered a fire your commercial property insurance could cover the repair of your building and replacement of any damaged or destroyed inventory and equipment.

Business interruption

If your business is forced to closed after an insured event (such as a during repairs or a mandatory evacuation) you can receive funds to keep your business going throughbusiness interruption insurance. Pay your employees bills and avoid depleting your reserves. Some policies even help with temporary relocation for your business to get back up and running faster.

This coverage is often an add-on to a commercial property insurance policy but some insurers include it as part of a business package.

Financial Security

A major repair or destruction of inventory or essential equipment can cripple a business. With commercial property insurance you’ll have help recovering. Your company’s financial security will be preserved and you can have peace of mind that you can get through a tough time.

What’s covered by commercial property insurance?

What’s covered by a commercial property insurance policy will vary depending on your business and your insurance company. However all will offer a certain amount of coverage for your business property including:

  • Your premise structure
  • Furniture
  • Equipment
  • Computers and electronics
  • Fixtures and lighting
  • Signage
  • Landscaping
  • Inventory
  • Tools
  • Office supplies

Insured perils often include:

  • Fire
  • Theft
  • Vandalism
  • Storms including damage done by wind and hail
  • Water damage from burst pipes
  • Earthquakes **
  • Sewer back up **
  • Overland water (flood insurance) **

** These require endorsements (add-on coverage) and may not be available for all businesses.

Not every scenario will be covered or may need a special add-on or separate policy. Commonly excluded perils include:

  • War or terrorism
  • Government seizure or destruction
  • Seepage
  • Wear and tear
  • Rust corrosion fungus decay deterioration settling and other time- or maintenance-related causes of damage
  • Damage caused by rodents insects or animals
  • Pollution

Of course some of these can be covered with specialty insurance policies. Your broker will have more information about what is and isn’t covered and your options for coverage.

What factors affect my commercial property insurance?

Like with any insurance policy your commercial property insurance premiums are determined by a variety of factors. Here are a few of them:

  • Age – The age of your property reflects its likelihood to withstand damage. Often the newer the building you operate in the lower your rates will be. If you do work within an older building and decide to make some upgrades this can help. Talk to your insurance broker!
  • Location – Where your commercial property is located and whether it is prone to experiencing natural disasters cold snaps fires and so on can influence your commercial property insurance premiums. In addition insurance providers will factor in how near you are to emergency services such as fire stations and potential hazards like large bodies of water.
  • Replacement Costs – This is the amount of money it would take to completely replace your commercial space in addition to its contents. This factor directly reflects the cost of your commercial property insurance premiums.
  • Plumbing – Since water damage tends to be a relatively prevalent cause of insurance claims it’s not a surprise that plumbing is a factor when it comes to calculating your insurance premiums.
  • Insurance History – How long you’ve been insured and the number of claims you’ve made will also impact your premiums.
  • Coverage Options – Your insurance choices also impact your rates. Talk to your insurance broker about your options for reducing your costs – keep in mind that this often comes at the expense of your coverage.

In order to mitigate your commercial property insurance premiums there are a few steps you can take. Many insurers offer discounts for damage mitigation such as security devices and upgraded materials.

If you have any questions regarding commercial property insurance be sure toget in touch with a broker. They’ll be able to help answer your queries and provide you helpful advice for your insurance needs.

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