Every year, business owners have their Commercial Property damaged or lost as a result of events completely beyond their control. Running a successful business is not without its risks. Unfortunately, nature is not always so understanding.
Commercial Property Insurance is for any business that has physical assets. This insurance type is all about insuring your building, the physical assets inside of that property, and many other types of physical objects owned and used by your business. Any property your business owns should be protected, it doesn’t matter if it’s a small office furniture or a large warehouse.
This insurance policy is one of the simplest and most common forms of business-centered policies available. It is designed to cover almost all of your business’ physical properties. One of the purposes of the commercial property insurance is to help your business recover quickly after going through property damage or loss.
Calculating how much you’ll pay for commercial property insurance is going to be based on the value of your business assets, including your building. Other factors that determine your premium includes:
- Location – is your area prone to natural disasters?
- Construction – is your building constructed with fireproof materials? Does it have new or upgraded electrical wiring, plumbing and HVAC?
- Occupancy – what industry is your business in? A realtor’s office generally carries less risk than a restaurant.
- Fire and theft protection – does your business have a fire alarm and/or sprinkler system? How far is the nearest fire hydrant and fire station? Do you have a security system?
The commercial property insurance is also one half of the Business Owner’s Policy (BOP Insurance). It is an affordable insurance package for small businesses that bundles General Liability Insurance and Commercial Property Insurance. The BOP Insurance basically protects a business by covering some of the most common risks, including:
- Damage to your equipment, furniture, and other business property.
- Lawsuits over defamation, copyright infringement, slander, and other advertising injuries.
- Lawsuits over customer injuries or property damage.
In simple terms, the two policies that make up the BOP Insurance offer two distinct protections: coverage for lawsuits and coverage for your property.
Businesses, however small they are, offer a form of risk in one way or another. Every business owner recognizes the need to protect their business’ material assets from theft and damage. That’s one of the reasons why the Commercial Property Insurance is an essential part of the BOP Insurance.
Customizing Your Property Coverage
Keep in mind two important things when considering what kind of property policy you need:
- Renting vs. owning – When you’re renting an office you can get a policy that only covers the contents of that space. Also, insure the equipment that you lease but this will depend on your arrangement with the owner. But when you’re already owning your own business space, it’s much preferable to purchase a policy that covers the actual building and everything in it, including mechanical and electrical elements.
- Replacement value – Assets can be insured for their actual cash value or for full replacement value. The cash-value policy has lower premiums, but it only pays out the item’s depreciated value. Consider which option is more cost-effective for your business. A replacement-value policy comes with higher premiums, but it pays out what you need to buy brand-new replacements.
“Schedules” is the first way to customize your Property policy. It lets you list specific items of property on the insurance form for coverage. There may be expensive pieces of equipment that if damaged, would exceed your coverage limit when replacing it. Adding these scheduled items increases your premiums but ensures that you have the coverage you need in worst case scenarios.
A good idea is to schedule items that are both costly to replace and crucial for day-to-day business. Do not underestimate the full cost of replacing your equipment when disaster strikes, many businesses tend to do this. You can save your business from losing valuable revenue and time in the aftermath of an event by quickly getting you the funds you need to resume operations.
Riders are another tool that lets you tailor your policy that’s specific for your business. It amends your policy so that it covers different types of property and losses that your policy excludes. For example, most Property policies exclude coverage for damage caused by earthquakes and hurricanes, having a rider could cover these types of losses.
Having a Commercial Property Insurance policy that’s tailored for your business is a big help in protecting your business’s assets and keep the revenue flowing if and when something should get stolen, lost, or damaged.