A commercial property insurance policy provides a financial safety net for your business in the event of damage to property. The coverage pays to repair or replace the structure of your building, as well as business personal property that is stored on the premises.
Insurers offer a variety of coverage options, each of which is designed to meet the unique needs of your business. They also provide strong customer support during the claims process.
1. Property Damage
Commercial property insurance protects buildings and the contents that are stored in them from damage. It also protects against theft and vandalism and certainly covered perils, including weather.
Insurers consider many factors when setting rates for business property insurance, such as the age and condition of structures, building materials used, safety features, and security measures. In addition, where your business is located can affect the cost of coverage.
If you live in an area with frequent severe weather, your insurer may raise your rates to reflect the likelihood that your business will suffer damage from storms. Other location-dependent situations, such as if your business is next to a toxic waste site or in a high crime area, can also increase your costs.
Several different types of commercial property insurance policies exist, each covering a broad range of incidents and losses. These include basic form, broad form, and special form policies.
2. Business Interruption
Business interruption (BI) insurance protects your business from income loss and extra expenses caused by an unexpected event that results in a temporary shutdown or reduction in operations. It can help you to pay bills, retain staff and maintain your supplier relationships and client base.
The primary risk covered by this type of policy is direct physical property damage, but other types of risks can cause loss and financial disruption to businesses. These include a wide range of events and incidents, from cyber attacks and product, recalls to civil unrest and terrorism.
The amount of coverage you need will depend on your company’s size, the number of employees, and the type of business you operate. For example, you may need more or less BI insurance if you run a retail shop, restaurant, or office building.
3. General Liability
General liability insurance is a type of business insurance that protects you against claims made by other people, including bodily injury or property damage. In addition, it can help cover your legal costs to defend yourself against a claim.
In some states, it is required as a condition of doing business. For example, a plumber may be required by law to carry general liability insurance before working on a home.
The cost of general liability insurance varies by company size, industry, and location. It is best to get quotes from several companies and compare them.
For example, a small retail store would pay less for general liability insurance than an engineering firm or a construction company. The size of the building and the number of employees can also have an impact on your rates.
General liability policies can be written as standalone coverage or bundled with other business insurance. Many business owners buy this policy when they start their business or if they’re expanding.
4. Business Auto
If your business needs to use a car or truck for transportation, you’ll want business auto insurance. It’s a type of liability and property insurance that’s designed to protect your assets in the event you get sued for using a company vehicle.
A business auto policy (BAP) provides both liability and physical damage coverage for your vehicles, including cars, trucks, vans, and trailers. Liability coverage can include medical payments and uninsured motorists’ coverage, and property coverage can pay for the damages your business is responsible for if an accident results in property damage or injury.
You can choose the types of coverage your business needs based on how you use your vehicles and what they’re worth. Your local State Auto agent can help you make the best choice to meet your business’s needs.
In addition to a BAP, your business might need general liability insurance to cover lawsuits filed by people who are injured or damaged while they’re on your property. You’ll also need to have workers’ compensation coverage if you employ employees who drive your company vehicles.
5. Equipment Breakdown
The equipment that runs your business can be one of the most critical elements in ensuring your success. A malfunctioning piece of machinery can shut down operations entirely, resulting in lost revenue and a huge repair bill.
This is why it’s important to take a close look at the coverage that is available to you from your insurance provider. The right policy can make a big difference in avoiding the hassles that come with an unexpected breakdown.
Many business owners choose to bundle equipment breakdown coverage with their commercial property insurance. This can help them get the most convenient and affordable rates while still offering the right level of protection to their business.
In addition to helping with the repair costs, equipment breakdown insurance can also provide cover for a variety of other losses. These losses include damage to the business’s merchandise, spoilage, and even loss of income if the failure stops production for more than a certain number of days.
6. Business Income
Commercial property insurance can help replace income if your business is shut down due to a covered loss. These policies can cover employee wages, rent, and other operating expenses until your business resumes operation.
When choosing a commercial property policy, consider how much coverage you need and the type of buildings you own or lease. You’ll want a policy with enough limits to cover your business for more than a few days if a major disaster strikes.
If you’re a small business owner, you may want to bundle your coverage into a business owners’ policy (BOP), which often includes property, liability, and business interruption insurance. This can be less expensive than buying each of these policies separately.
When comparing commercial property insurers, it’s important to look at company reputation and customer satisfaction levels. Companies with strong reputations have better track records and are more likely to treat you fairly in the event of a claim.
7. Extra Expenses
If a business suffers damage to its property that interrupts the operation of that business, Extra Expense coverage can be a vital part of the recovery process. Often added as an endorsement to commercial property policies, it provides cash to help businesses continue operating while their building is being repaired or replaced.
This coverage can be important for businesses that depend on their physical space to run efficiently, as well as for those that cannot shut down because of the services they provide. Examples include data centers, airport shuttle services, and security services.
For extra expenses to be covered, they must be considered reasonable and necessary. They also must occur during the period of restoration, which is the time between when a business has suffered property damage and when it has been restored to full operating capacity.
8. Crime
Crime insurance is an optional coverage in a business owner’s policy that covers loss of money and property due to crime, including employee theft. The coverage also includes losses resulting from forgery and computer fraud, which are growing threats to businesses in the digital age.
Most crime policies have a set of named perils that determine the types of crimes covered. This allows business owners to tailor their coverage to their specific needs.
One of the most important issues to consider is your company’s risk profile and industry. This is why it’s important to work with an agent who understands your industry.
Employee dishonesty and theft are a concern for almost every business, regardless of its size or industry. However, a business that manages money or securities on behalf of its customers is at a much higher risk than a retail store.
9.Conclusion
Commercial Property Insurance is an essential part of a business owner’s policy and helps businesses protect all their assets vital to the daily operation. It covers buildings, business personal property, and a range of other physical assets including equipment, furniture, inventory, and technology.
The cost of a Commercial Property Insurance policy is based on the building or property’s risk rating and claims history. Premiums for a basic or broad form commercial property policy are generally lower than those for a special form policy.
Coverage for Replacement Cost Value versus Actual Cash Value
Most commercial property policies automatically include coverage for the replacement cost of most properties, but you may choose to purchase additional coverage for some items that are difficult or costly to replace. This coverage typically pays you in current dollars instead of the value of the property at the time it was insured.
Per Building Deductible
The deductible in a commercial property policy determines how much you must pay before the insurer begins paying for a claim. The deductible is set in the contract and resets for each building and each damage event.
Reimbursement for Loss of Income During Restoration
In the case of a direct, physical loss to your business, commercial property policies provide protection against lost revenue. This means that you will have money to make ends meet while you recover from the damage or repairs.
A good commercial property policy should provide a clear understanding of how the insurance company will respond to a claim. Many policies offer a dedicated claims line and handlers who are trained to assist customers through every step of the process.
