InsuraFAQ InsuraFAQ

2024-01-01 · business, property

Commercial Property Coverage

Overview

Commercial property insurance helps businesses repair or replace physical assets after covered losses. It can protect owned or leased buildings, equipment, inventory, and tenant improvements.

What commercial property insurance typically covers

  • Buildings and structures: offices, warehouses, and permanent fixtures.
  • Business personal property: furniture, equipment, tools, and supplies.
  • Inventory and stock: raw materials and finished goods.
  • Loss of income add-ons: coverage may be available via endorsements or a BOP.

Common exclusions and limitations

  • Flood and earthquake damage: usually excluded without separate coverage.
  • Wear and tear: maintenance-related issues are not covered.
  • Outdoor property limits: fences and signage may have sublimits.
  • Vacancy clauses: reduced coverage if a building is vacant.

Key cost factors

  • Building construction and age: newer, fire-resistant construction costs less.
  • Location risks: crime rates, weather exposure, and fire protection.
  • Total insured value: higher limits increase premiums.
  • Security and safety features: sprinklers and alarms can reduce rates.

How to compare policies

  1. Confirm replacement cost vs actual cash value: replacement cost offers stronger protection.
  2. Review covered perils: ensure common risks like fire, theft, and wind are included.
  3. Check sublimits: understand caps for electronics or outdoor signage.
  4. Evaluate deductibles: balance premium savings with out-of-pocket risk.

Tips for choosing coverage

  • Keep an updated inventory of assets to set accurate limits.
  • Consider business interruption coverage to protect cash flow.
  • Review policy limits annually as equipment and inventory grow.

Frequently asked questions

Do I need coverage if I rent my space? Yes, you still need to insure your business personal property and tenant improvements.

Is business interruption included? Not always; it is often an endorsement or part of a BOP.

Does it cover equipment breakdown? Mechanical breakdown is usually excluded without an equipment breakdown endorsement.

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