Overview of Commercial Property Insurance

Overview of Commercial Property Insurance

Insurance is an important part of protecting your assets and your business.  Property insurance can be written mono-line, as part of a Package policy or as part of a Business Owners (BOP) policy.  This is a brief overview of the basic property insurance components.

Property insurance is important because it provides coverage to the property from perils such as fire, theft, vandalism and storm damage. This could be the building itself, or the personal property for your business, such as your computers, furniture, equipment inventory, etc.  Property insurance will also provide coverage for your fences, landscaping, outbuildings, signs, and property of others.

Building Coverage

If you own the building that your business uses, then you need to have building coverage.  Some leases require tenants to also cover the building for the duration of their lease term and occupancy. Building coverage is more than just the structure itself. Building coverage also includes permanently installed equipment and machines such as air conditioning units and furnaces.

Business Personal Property Coverage

Property that is not part of the building structure is Business Personal Property.  This includes machines and equipment that are not permanently installed, your furniture, tools, inventory, computers, etc.  Often times, if you lease equipment, the leaseholder will require that Property coverage is obtained for this equipment. 

Property of Others

Leased property where the contract requires insurance coverage, was already mentioned above.  Property of others is coverage for property that you do not own, but it is on your premises. Some leased property does not require the business to provide property insurance, but because they are not the owner of the property, Property of Others will cover this type of leased property.   For a business that has temporary possession of the property of others on a frequent basis, such as a repair shop, or a dry cleaner, this coverage is not sufficient and Bailee’s Insurance is a necessary coverage.

Business Income and Extra Expense

If you cannot operate your business due to a covered loss, every day that you are not open is more income lost. This will cover your loss of income, as well as covering your necessary expenses during the time your business is not in operation. 

Other types of Property Insurance limits that are important include:

·         Property off Premises  – Business Personal Property that is away from the premises, such as for a trade show or convention.

·         Spoilage – for restaurants, grocery stores and any business that has temperature-controlled goods, this coverage will cover the cost of replacing these items due to spoilage from a power outage or equipment failure.

·         Equipment Breakdown – this coverage is for electrical or mechanical breakdown to boilers, refrigeration systems, and machinery that use/generate/transmit electrical power.

The best way to ensure that you are covered fully is to have your agent review your business insurance needs with an in-depth review of your business operations to determine your insurance needs and to ensure that your policy limits are adequate.  For businesses big or small, we have markets that provide extensive coverage for all your insurance needs. Our markets can customize their policies to ensure that your unique business needs are met.