Regardless of whether you own a property or not, even if you work from home; commercial building insurance is something your company needs. As one of the main aspects of a business owners policy or BOP as it is otherwise known, commercial property insurance will help to protect the building and its contents, along with other external elements, such as outdoor signage and fencing.
In this post, we answer your questions about commercial property coverage and explain why you need it, along with how it works and what it covers.
Commercial property insurance is designed to protect your company’s assets from storm damage, fire, theft, burst pipes, explosions, and vandalism. Natural disasters such as floods and earthquakes are not usually covered under a commercial property insurance policy unless specifically added or requested.
The cost of commercial property coverage will usually be determined by an assessment of your business assets. There are a number of other factors that can impact the amount of money you need to pay to cover your commercial property, these include;
The industry you belong to will impact the cost of your commercial property policy. For instance, a real estate office will generally be determined to have a lower risk than a hotel.
#2 Building Construction
How and when your building has been built will also play a part in the final price you pay for business property coverage as well. Things such as whether or not your building was made with fireproof materials, the state or age of the electrics, HVAC, and plumbing systems will also be considered.
#3 Your Location
If you are based in an area that is particularly prone to natural disasters or storms, for instance, this can affect the price of your commercial building insurance.
#4 Fire and Theft Coverage
For this element of risk, your commercial property insurance company will look at things such as where your nearest fire station and fire hydrant are located. Other things, such as whether you have a sprinkler system installed, and a fire or security system will also be taken into account.
Most business property insurance policies will cover your building, the contents, and some other external items too. These may include:
There are two main types of commercial property insurance; these are buildings insurance and contents insurance.
Company contents insurance will usually cover the costs involved in replacing your company equipment or inventory if it is stolen or damaged.
If you buy a business contents insurance policy, then the cost will be insured against its cost price and not the sale price. If there is ever a time you are holding more stock in your premises than normal; for instance, during your peak season of operation, then you must always inform your business insurance company of this.
There are two different types of commercial contents coverage offered for your company equipment.
Actual Cash Value – This will factor wear and tear into the calculations, and it will replace any items at their present valuation. For instance, if you purchased a computer in 2015 for $2000, and that same item is presently valued at $1200, then your insurance company will pay the present valuation and not the cost you originally paid for it.
Replacement as New Policy – this is as straightforward as it sounds. If an item has been damaged beyond repair or stolen, then they will replace the item with a new one.
A business building insurance policy will cover the cost of rebuilding or repairing your premises in the event they are destroyed or damaged. This type of business insurance is not fundamentally required by law. However, the majority of mortgage providers will insist you have this coverage in place prior to giving you a business loan.
If you own your business premises, then you should still consider buying commercial building insurance so that you are covered against the cost of a rebuild or repair should the worst happen.
If you rent a business premise, it is usually the landlord’s responsibility to buy this type of coverage. However, you should still consider buying commercial contents insurance to protect your company assets.
Although each business insurance policy is different, the majority of standard commercial insurance policies will not provide coverage for:
Because a commercial property insurance policy covers everything inside of your building, such as your valuable assets, along with the building itself; it is an essential type of business insurance coverage that is needed whether you own your company property or not. If you have a business owners insurance policy (BOP), it is likely that you will have commercial property coverage, along with business liability coverage as a part of this overall business insurance policy. If you do not have a BOP, then you can buy business property insurance separately.
A commercial building insurance policy is essential for businesses of all sizes, but more so for smaller companies who simply do not have the funds to replace everything should the worst happen. When you consider the fact that it provides you with essential protection against theft, fire, riots, subsidence, burst pipes, falling trees and more; it delivers comprehensive protection and peace of mind. Without this coverage, you could risk going out of business.
Whether you work from home, own a building outright, or rent your premises; you should have some form of commercial property insurance in place. You might only need commercial content insurance if you rent the property, but getting the right type of business property insurance in place is key.
The majority of businesses simply couldn’t afford to replace their inventory and equipment without commercial insurance, and in some cases, this could result in a total closure of an otherwise successful business.
Disclaimer: This information has been written for the public as informational only. Since coverage varies from state to state, it is important to speak to a licensed insurance agent in your state.