Owning and maintaining a business can be difficult. Your business can sometimes face unpredictable events that may hinder or halt your operations. Making sure you have the right coverage to protect your investment is part of any successful business plan. Commercial property insurance can protect you and your business against risk. Read on to learn more about commercial property insurance and how it can shelter your business from potential perils.
What is Commercial Property insurance?
Commercial Property insurance (also known as Business Property insurance) provides coverage for your business and its contents or physical assets. It can also help to cover your repair or replacement costs if your business property is damaged or destroyed as a result of a covered loss.
Commercial Property insurance is designed to protect the physical assets of a business against loss or damage from a broad range of causes. A fire, hurricane, ice storm, earthquake and water damage are just some of the natural disasters that business owners need to prepare for. Vandalism is another possible threat to business operations.
Who needs Commercial Property insurance?
Commercial Property insurance can be customized to fit your specific business needs. You should consider property insurance coverage if one of the following scenarios applies to you and your business:
- You operate in a commercial space
- Your own or lease a building
- You have equipment or inventory
- You do business off-site
- You use computers, machinery or electronics for business purposes
Here is a sampling of industries that could benefit from this coverage:
- Contractors and skilled trades
- Home builders
- Clothing stores
- Gift shops
- Pet stores
- Book stores
- Furniture stores
- Graphic designers
- Auto repair
- Home-based business
- Real estate
What does Property insurance cover?
Commercial Property insurance covers many physical assets essential to the operation of a business, including:
- Your premises (buildings). By an insured peril, including signage and other physical structures on your land
- Equipment. All tools, equipment, machinery and computer systems
- Contents: Inventory, computer equipment, machinery and furniture
- Loss of income due to business disruption (shut down)
- Inventory: Both onsite and while in transit
Commercial Property insurance covers the cost of repairing or rebuilding your business premises, or replacing your stock or equipment. It can protect your company’s physical assets from a variety of perils, such as:
- Storms (including damage done by wind and hail)
- Water damage from burst pipes
- Earthquakes **
- Sewer back up **
- Overland water (flood insurance) **
** These require endorsements (add-on coverage) and may not be available for all businesses.
What is not covered under Commercial Property insurance?
The following types of protection are not commonly included:
- Equipment wear-and-tear
- Loss that cannot be explained
- Deliberate damage to your property
- Cash and securities
- Theft at vacant locations
Commercial Property insurance typically does not cover events, such as earthquakes and floods, unless those perils are specifically added to the policy. Check with your isure advisor to understand what is covered under your policy to ensure you have what you need.
What types of coverage are there?
- Replacement Cost – Covers property repair or rebuild with materials of the same or comparable quality.
- Actual Cash Value – Covers the current value of the damaged property minus the depreciation.
Benefits of Commercial Property insurance
Peace of mind: When natural disasters happen, they can wreak havoc on business operations and increase your costs. Having Commercial Property insurance can help lessen the long-term effects of property damage caused by an insured peril, such as winter storm damage, hail damage, water damage or fire. It allows your business to get back up and running quickly.
Repairs & replacements: Should your business experience a covered loss, it can help recover the repair costs in order to get your business up and running as quickly as possible. Property insurance can also cover the replacement costs of damages if the loss is too great to repair.
Financial security: Worrying about depleting your cash reserves to help pay for a loss can be stressful. Commercial insurance can alleviate this pressure and help you maintain operations.
Additional coverage options
Additional coverage (also known as endorsements) can provide additional protection for your business. Here are a few endorsements commonly added to Property insurance policies:
If your business is forced to close after an insured event, you can receive compensation to help your business survive and pay your bills and employees.
Product Liability Insurance
This coverage extension can provide further protection from customer claims made against your products or services after the sale, including legal cost reimbursement.
Storing sensitive data about your business’ financials and operations should be a top priority. Cyber insurance coverage can be customized to meet your organization’s unique needs. Protection can be provided for your business from both first and third party losses, including:
- Income loss from disrupted online sales
- Electronic data loss and damage
- Threat to reputation
Also known as Errors & Omissions Insurance, this coverage can protect you in the event of damages from your acts, errors or omissions in providing professional services. Professional Liability can cover legal fees, settlement agreements and loss of wages due to the lawsuit process.
Equipment Breakdown Insurance
Should your equipment break down, it may cause a serious interruption in the service you provide your customers. As a business owner, adding Equipment Breakdown insurance as an add-on to your policy protects you in an event like this by helping with the repair and replacement costs of your machinery.
Commercial Auto Insurance
Whether you have one vehicle or an entire fleet, Commercial Auto Insurance can cover you financially in the event of an environmental incident, like a hailstorm or tornado, or damage caused by theft or vandalism.
Factors that affect premiums
In determining the premium you’ll pay for your business, a variety of factors are taken into consideration:
- Location: This can have a big impact on what you pay, specifically if you are in an area which experiences a good deal of vandalism, or if you are remotely located in a wooded area.
- Age of your property: As your building gets older, the likelihood of a loss increases and your insurance premium will reflect that. A newer commercial building will have a lower insurance premium.
- Replacement cost: Premiums depend on overall your replacement cost. If you have a high value premises and expensive equipment, your premiums may be significantly higher.
- Coverage options and limits: A comprehensive commercial property policy will cover your building and all its contents; with add-ons for damages caused by unfortunate situations, such as sewage problems.
- Plumbing, electrical and building upgrades: Older building insurance premiums can be reduced by maintaining and/or renovating your older building to meet safety codes.
- Theft & fire security systems: The addition of anti-theft devices and fire security systems will help to reduce the premium you pay.
- The type of operation: A simple ‘mom & pop’ bakery will have far less to insure than a large grocery outlet, so prepare for your premiums to reflect your business coverage needs.
- Your insurance history: As with all other types of insurance, your claims history will play a part in determining your premiums.
How can I reduce my premiums for a better rate?
Here are some useful tips to get cheap commercial property insurance:
- Taking stock of your business: Assess your needs each year. This is important if you are trying to grow your business or have recently changed locations. Be sure to get a new quote annually.
- Secure your business: Installing security systems, inventory control systems, hiring security, and other preventive measures could qualify you for savings.
- Avoid too many claims: Filing too many claims will increase your insurance payments. Make sure it is worthwhile before you open a claim with your insurer.
- Work with an expert: A commercial insurance expert can help you find the right solution. Get help assessing your needs, finding cost savings, and choosing a plan.
Whether you operate out of a home office, storefront or coffee shop, proper coverage for your assets is imperative. Our isure representatives can provide options for combining property with other business insurance coverages. Let us tailor the commercial property coverage that best suits your business needs!