Demont Insurance Agency Blog

Commercial Property Insurance: What You Need to Know for your Small Business

If you run a business, you need Commercial Property insurance, no questions about it. Whether you lease your space, own your building, or work from home commercial property coverage is essential. Especially for small businesses that may not have the cash flow to replace a location, equipment, or precious inventory if a fire or other unforeseen event occurred.

Commercial Property Insurance Explained

Commercial property insurance provides protection for your business’ tangible assets against events like fire, explosion, storms, burst pipes, vandalism, and theft.  Let’s say you lease your space, and while you don’t need to secure coverage for the building, your landlord may have requested that you take out a business liability policy. But you may have overlooked adding property coverage for your contents or inventory to that policy.

Not only will property coverage protect your business equipment, it can also protect any improvements you may have made to make your leased space yours. Some lease scenarios will state that the tenant is responsible for any betterments or improvements they make. It’s crucial that you understand when entering into a rental agreement, you know what your responsibilities are.

Securing property insurance for your business is as easy as any other policy. You can add property coverage to a general liability policy or depending on your business type, a business owner’s policy (BOP) will provide property coverage as well. And in most cases, commercial property covers the following:

  • Your building. Typically, this means the structure itself. It may include fixtures that are permanently installed, machinery, and equipment.
  • Contents of your building. Generally, this will be items that can be quickly taken out, like office equipment, inventory, and other supplies.
  • Things outside of the building. This may include exterior signs, fence and landscaping, or other equipment.
  • Property of others. This category covers items that are left in your care, custody, or control. For instance, a client might use an outlet on at your location to charge their iPhone or laptop. Once it’s on your premise, it could be your responsibility if it’s damaged.

As with most policies, commercial property insurance has items that it specifically covers and specific exclusions as well. For example, most commercial property insurance pays when your possessions are damaged by common problems like theft, fire, or windstorms. However, other occurrences that cause property damage are often excluded, the two most common are earthquakes and floods.

Why Your Business Needs Commercial Property Insurance

Chances are if you own your building, the lender you purchased it from asked that you carry property insurance as part of the terms of the loan. If you would like a review of that policy, we would be happy to help. For those that lease their space or work out of their home, commercial property insurance is essential.  If you were working from home and a loss occurs, damaging all your inventory for your online clothing boutique, your homeowners insurance may not cover it, and you would be left with a massive hit to your bottom line.

Maybe you lease your space, let’s say you put in custom shelves and racks to display all your merchandise. However, a pipe in the ceiling burst and damaged not only your stock but the shelving and racks. All of it would be your responsibility to replace.  There is a good chance your bank account couldn’t sustain a hit like that. Some common claims and the cost associated with them include:

  • Burglary & Theft $8,000
  • Water & Freezing Pipes $17,000
  • Wind & Hail $26,000
  • Fire $35,000

The Cost of Commercial Property Insurance

There are several factors that go into the cost of commercial property insurance. These factors include the value of all your business property; the building if you own it, inventory, equipment, and other items used within your business. Other factors that decide your premium are risk-based, including:

  • The location of your property. – If the structure lies in a floodplain, or if the area is predisposed to storms and other natural disasters it will affect your premium.
  • Your business occupancy. Your industry matters. A realtor’s office is generally considered less risky than an auto repair shop or restaurant.
  • The construction of your building. – Buildings constructed with fire-resistant materials, new or upgraded electrical wiring, HVAC, and plumbing generally have lower premiums.
  • Fire protection. A building that is close to a fire hydrant and fire station can have lower rates, just as a structure outfitted with a fire alarm or a sprinkler system.
  • Anti-theft devices. – Having a security system or video surveillance system will help reduce the cost of insurance.

Running a business can be stressful, don’t add to the stress by leaving your business unprotected.

To learn more about commercial property insurance contact the professionals at at (850) 942-7760. Our licensed insurance experts will be happy to answer any questions that you may have.

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