Commercial Property Insurance
Finding the right Commercial Property Insurance policy can be tricky. We'll help make it easier for you.
Property Insurance for Business
What is Commercial Property Insurance? Business property insurance protects a business’ physical assets. Whether you own your work building or lease a workspace you should protect your assets with business property insurance. Business property insurance covers for damages to the building and contents due to a covered loss, such as a fire.
The policy will also cover theft of certain business items. However, some items may not be covered under this policy and may need to be listed on a separate inland marine policy.
You should always discuss in detail with your agent what assets the company has and if those items would be covered under this policy form. The policy can also include coverage for increase in expenses due to property loss or loss of income.
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Why is commercial property insurance important?
If you are leasing a space for your business this coverage may be required. Even if you are not required to carry business property coverage it is highly recommended.
If your business were to suffer a sudden loss such as a fire and all of your assets were compromised would you be able to re-purchase your assets and get up and running in a timely manner? Many small businesses could not. The loss of your business assets also ties into loss of income.
If you do not have the required equipment to run your daily operations you will most definitely suffer a loss of income, in turn compromising the stability of your business and potentially losing something you’ve put all your hard work into.
How Much Property Insurance do I Need?
There are two different policy forms for commercial property coverage, specific limit or blanket. Each individual business will have different needs where this is concerned. Below is a brief explanation of each.
For specific limits there is a specific limit designated for each building and contents at that building.
For example, building one is covered for $500,000 with the contents limit of $100,000 and building two is covered for $300,000 and $50,000 contents. Blanket limits are a single limit listed to covers all properties being insured. Such as having a blanket policy for $1 million that covers three buildings–building 1at $200,000, building 2 at $500,000 and building 3 at $300,000.
The total limit is available for claims arising on any of the locations up to the policy limit.
This can be a concern if one location has a large loss, it can exhaust the policy limits in one loss. Both business property insurance policies contain coinsurance clauses at the specific limit selected at policy purchase. It is common to be listed at 80% or 90% coinsurance.
It is very important to have the building adequately covered based on replacement cost valuation or appraisal. Being underinsured at the time of the loss can result in severe underpayment especially due to the coinsurance clause.
It is important to contact your agent on an annual basis to have your values re-calculated to confirm you are adequately insured.
The majority of lenders if you are purchasing a new property or refinancing your home, will require you to carry a certain policy limit in order to help protect their investment in the property however it’s an advantage to a homeowner to take out a private policy because you benefit from the long list of coverages automatically included.