Types of Commercial Property Insurance for Businesses

As a business owner, you want to protect your investment from potential risks and losses. Building insurance is a type of commercial property insurance that covers damage to the physical structure of your building.

This can include damage from fire, storms, or other disasters. For example, if a fire breaks out in your warehouse, building insurance can help cover the cost of repairs or even rebuilding.

Business interruption insurance, on the other hand, covers lost income and expenses when your business is forced to close due to a covered event. This can include damage to your building, equipment, or inventory.

Having the right commercial property insurance can give you peace of mind and financial security in the event of an unexpected disaster.

Commercial property insurance comes in various forms to suit different business needs. A business owner's policy or commercial property policy provides little or no coverage for property situated at another location, such as a job site, or while it's in transit to or from your premises and another location.

There are specialized policies like inland marine insurance, which covers property transported over land. Inland marine insurance is a broad category, and the type of coverage you need depends on the property you want to insure. Contractors can insure tools, machinery, and equipment they use at job sites under contractor equipment coverage. A theater company can cover its costumes, musical instruments, lights, and other equipment under entertainment equipment insurance.

Inland marine policies are also known as "floater policies" because they cover moveable property.

Builders Risk insurance is a type of insurance that covers buildings under construction. It provides funds to recover from losses and move operations forward.

Suppose you're building a new warehouse and it's damaged by a storm before completion. Builders Risk insurance would give you the necessary funds to recover from the loss.

This type of insurance is crucial for businesses that are in the process of building or renovating a property. It helps to minimize financial losses and get back on track quickly.

Builders Risk insurance can be purchased to cover various types of construction projects, from small renovations to large-scale developments.

Inland Marine insurance covers property transported over land, not water, and is often necessary for businesses that regularly move equipment or supplies.

This type of insurance is an offshoot of ocean marine insurance, which covers ships and cargo transported over the ocean.

Inland Marine policies are also known as "floater policies" because they cover moveable property, such as tools, machinery, and equipment used at job sites.

Contractors can insure tools, machinery, and equipment under contractor equipment coverage, which is a specific type of inland marine insurance.

A theater company can cover its costumes, musical instruments, lights, and other equipment under entertainment equipment insurance, another type of inland marine policy.

Aircraft can be insured for physical damage with aircraft hull insurance, which covers planes, jets, and other aircraft.

This type of insurance is broad, covering damage by any peril not specifically excluded, whether the aircraft is on the ground or in the air.

Aircraft hull insurance can be paired with aircraft liability insurance for comprehensive coverage.

The value of the aircraft must be accurately stated on the policy, as it determines the maximum amount of coverage.

This ensures that the insurance policy provides adequate protection for the aircraft's value.

There are several types of commercial property insurance to consider for your business. Most small businesses should consider commercial property coverage, especially if they own or rent their location, use expensive equipment, stock inventory, or rely on physical property to conduct business.

Professions that commonly need commercial property coverage include contractors, restaurants, retailers, wholesale businesses, architects, consulting companies, real estate agents, and accounting firms. These businesses often have valuable assets that need protection.

Some particular places on your property to consider insuring include the building, office equipment, accounting records, manufacturing or processing equipment, inventory, fence and landscaping, and signs and satellite dishes. It's essential to review your specific business needs to determine what areas to focus on.

Here are some key areas to consider when evaluating your business's commercial property insurance needs:

Reducing damage risks is crucial to protecting your business and its assets. Installing cameras, security lights, and other safety features can help prevent commercial burglary.

Maintaining fire extinguishers, smoke alarms, and sprinklers is essential for fire safety in the workplace. This will not only reduce the risk of damage but also save lives in case of an emergency.

A building's location can affect its fire rating, with those in cities or towns with excellent fire protection typically costing less to insure. On the other hand, buildings outside a city or in areas with limited fire protection will have higher premiums.

A building's construction can also impact its fire rating, with those made of potentially combustible materials having higher premiums. Conversely, those made of fire-resistant materials could earn a discount.

Here are some factors to consider when evaluating a building's fire rating:

By taking these factors into account and implementing safety measures, you can reduce the risk of damage to your business and its assets.

Insurance coverage is a crucial aspect of commercial property insurance. Property insurance covers your business's physical assets, including buildings, business personal property, and business interruption. This type of insurance can help you rebuild or replace damaged or stolen assets, as well as cover expenses and lost revenue caused by business interruption.

Commercial property insurance can be customized to your needs, and you can add optional coverages, called endorsements, for protections that a standard business owners policy might not cover. For example, you can add an endorsement for tools and equipment, spoilage, or equipment breakdown.

Here are some common types of property insurance coverage:

It's essential to assess your business's needs and risks when determining the amount and type of property coverage you should have in your business owners policy. By understanding your business's unique requirements, you can choose the right insurance coverage to protect your assets and minimize potential losses.

Commercial property insurance covers your business's physical assets, including buildings, business personal property, and business interruption. This type of insurance can help you rebuild or replace damaged assets, and also cover expenses and lost revenue caused by the disruption.

There are two main types of commercial property insurance policies: all-risk and named perils. All-risk policies cover losses caused by anything your policy doesn't exclude, while named perils policies cover only what's listed in your policy.

You can customize your commercial property insurance coverage to meet your business needs. To do this, list the property that's essential to your operations when getting a quote. You can also add optional coverages, called endorsements, for protections that a standard business owners policy might not cover.

Some common commercial property endorsements include tools and equipment, spoilage, and equipment breakdown. These endorsements can provide additional protection for your business's specific needs.

Commercial property insurance doesn't cover all property-related incidents. It typically excludes claims involving earthquakes, hurricanes, floods, commercial autos, and employee injuries. If you're located in an area prone to natural disasters, you'll need to speak with your insurance company to learn how to get coverage.

Here are some examples of what commercial property insurance covers:

And here are some examples of what commercial property insurance doesn't cover:

Liability insurance policies can be written in two ways: occurrence or claims made. Most commercial general liability insurance policies, or CGL policies, are written with an "occurrence trigger", meaning the policy in effect at the time of the alleged injury or property damage covers the event.

This means that even if the store switches insurers, the original policy will still cover the claim. For example, if a person slips in a shoe store and doesn't experience severe back pain until several months later, the claim will be handled by the company that was the store's insurer at the time of the fall.

Claims made policies, on the other hand, are used for only a small percentage of liability insurance, mainly for medical malpractice and other types of professional liability. This means the current liability insurer is responsible for claims made during the policy period, even if the event occurred in a prior year.

In the case of a claims made policy, the shoe store's current insurer would be responsible for the claim, even if the fall happened when the store was insured by a different company.