August 23, 2022

The Importance of Commercial Property Insurance

Regardless of the size of business or industry you serve, every business accumulates physical assets that are required to be successful. From your office furniture to the software on your employee’s computers, these items represent your investment in the success of your business. These assets are typically accumulated gradually over time, and if something happens to them, it can cost hundreds of thousands of dollars to replace them all at once. For the typical small business owner, this is more than they have on hand. This makes it hard for a business owner to rebound from a loss without going deep into debt. 

What does basic commercial property insurance cover?

Having commercial property insurance is one way to prepare for disasters that might impact the business and cover yourself in case of potential future losses. The typical property insurance policy covers the business building and the contents of the building, like computers, furniture, and any specialized tools needed to complete work. It can also cover damage done to fencing, landscaping, and signs on the exterior of the business property. Businesses that have a fleet of vehicles or extremely valuable inventory, like a jeweler, might need supplemental coverage to protect these items. Damages done to the main business property due to fire, vandalism, extreme weather, theft, water damage caused by burst pipes, smoke exposure, and other common causes are typically covered. 

How Much Does Commercial Insurance Coverage Cost?

The cost of your premium for commercial insurance coverage is dictated by a few factors, including:

  • The type of coverage: Does your coverage include add-ons to protect other assets, or is it commercial property coverage alone? The more types of coverage you add, the higher the premium typically is.
  • Total amount of the coverage: This is typically determined by the business owner and the insurer together and is based on the value of the business building and contents. It should be an amount that is enough to replace all your assets at current market price.
  • Age of the commercial building: Older buildings might be charming and historical, but they can also contain outdated wiring and highly flammable building materials.
  • Risk level: The inherent risk level of your business varies based on the industry and location. For example, a nightclub or restaurant where crowds come to have drinks has a higher risk level than an administrative office.
  • Protective measures: Having a security system, working smoke detectors, and a fire sprinkler system in place can stop a disaster from happening. These protective measures can also help you get a lower premium on your insurance coverage.   

What Are The Exclusions of a Commercial Property Insurance Policy?

There can be many types of commercial property insurance that a business owner might need to purchase in order to be prepared for any disaster. For example, many general property insurance policies do not cover damages done due to flooding. A special policy may need to be taken out to cover these kinds of losses. In areas that are typically impacted by earthquakes, businesses may also need a special policy based on the risk assigned to the area where the business is located.

What are the Different Types of Commercial Property Insurance?

Just as you might hold several insurance policies in your personal life to cover your home, car and health, business owners may need a few policies to cover all the commercial property and types of losses that might occur. Some commercial property insurance policies have coverage that makes up for any lost profits while the business is closed due to property damages. This is sometimes called lost profits coverage. If a small business is gutted by a fire, for example, it can take several months to rebuild the location. While this rebuilding is happening, the business owner still has to pay debts, rent, any loan payments for commercial equipment or vehicles, and more expenses.

If you have a business and need commercial property coverage to help prepare yourself for anything, Alpine Castle Lake can help. Contact us today to find out more about commercial insurance coverage, Types of commercial property insurance and how it can benefit you to have a policy in place.