Commercial Property Insurance for Business Assets

What Is Commercial Property Insurance?

Commercial property insurance covers physical assets used in your business operations. This includes buildings you own, equipment, inventory, furniture, fixtures, and important business documents. The policy responds to covered perils like fire, theft, vandalism, and certain weather-related damage, paying to repair or replace damaged property.

Why You Need Commercial Property Insurance

• Protects your significant investment in physical business assets
• Helps you rebuild or relocate after catastrophic property damage
• Covers inventory loss that could otherwise devastate cash flow
• Landlords typically require tenants to carry property coverage
• Provides business interruption coverage to replace lost income
• Often required by lenders if you have a business loan or mortgage

Understanding Covered Property

Commercial property insurance can cover buildings you own, including permanent fixtures and building systems. It protects business personal property like equipment, machinery, computers, furniture, and supplies. Inventory and raw materials receive coverage. You can also insure improvements you make to leased spaces and property belonging to others while in your care.

Covered Perils and Exclusions

Most policies use either named perils or special form coverage. Named perils policies cover only specifically listed events like fire, lightning, explosion, windstorm, and theft. Special form coverage protects against all perils except those specifically excluded. Common exclusions include flood, earthquake, and gradual deterioration. You may need additional policies for excluded perils.

Business Interruption Coverage

Business interruption insurance, often included with commercial property coverage, replaces income lost when covered property damage forces you to suspend operations. This coverage pays ongoing expenses like rent, utilities, and payroll while you repair damage and restore operations. It provides crucial cash flow during recovery periods.

How Much Coverage Do You Need?

Insure property at replacement cost value rather than actual cash value to avoid being underinsured. Replacement cost pays to rebuild or replace damaged property without depreciation. Conduct regular property valuations as your business grows and you acquire new assets to ensure adequate coverage limits.