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Commercial Property Insurance

Commercial Property Insurance

Get a quote on Commercial Property Insurance

Protecting your business from potential risk means safeguarding the property you own, from commercial office space to furniture and business equipment. Accidents and disasters can be costly, and Commercial Property Insurance can help diminish these expenses, by providing funds to repair or replace damage to pr company property operty.

What is Commercial Property Insurance?

Commercial Property Insurance or Commercial Property Coverage helps protect the value of your business’s physical assets. If an unforeseen event, accident, or natural disaster hits your business, having a commercial property insurance policy can help your business recover from property damage. In exchange for the premium you pay, the insurance company will pay you for the value of the lost or damaged property when a loss occurs.

A few examples of situations that property insurance can cover include:

Who needs Commercial Property Insurance?

Commercial Property Insurance is beneficial for any company that owns commercial buildings, inventory, equipment, tools, or any other business property. Consider securing property coverage if your business:

What types of property does Commercial Property Insurance cover?

Commercial Property Insurance covers business assets including buildings, contents, and the property of others in your care.

It’s important to note that commercial vehicles are excluded from property insurance. If you want to cover your business vehicles, you should purchase commercial auto insurance.


Commercial Property Insurance covers commercial buildings or offices that your business owns. If you lease or rent your building, and your lease requires that you insure the entire building you’re using, you can set up your property insurance to cover your landlord’s building as well.

In addition to the building itself, tenant improvements, outdoor signs, fences, and landscaping are also commonly included in the building’s coverage.


Commercial Property Insurance also covers the contents of a building, also known as business personal property, which can include furniture, equipment, machinery, computers, tools, and inventory stored on or near the business premises.

If your business leases expensive equipment, many vendors require you to insure the leased equipment while it is in your possession. Commercial Property Insurance can also cover this leased property.

Many businesses also store valuable documents or billing records in paper form on site. In the event these records are destroyed or damaged, property insurance can provide some coverage for the cost to recover or replace these business records. For more comprehensive coverage, you can purchase valuable papers and records coverage.

Property of Others

If your business has property that belongs to others in your care, custody, or control, and that property is destroyed, Commercial Property Insurance can cover the loss.

For example, if you borrow your neighbor’s copy machine, and it is destroyed by a fire, it would be covered. Also, leased equipment that your business does not have a contractual obligation to insure is also considered property of others.

It’s important to note that the limit of liability coverage for property of others is separate from your contents coverage. It also usually has a very low coverage limit by default. This policy limit can be increased by paying additional coverage premiums.

This coverage is not sufficient for businesses that frequently have temporary possession of others’ property such as dry cleaners, valet parking, or computer repair businesses. If you have this kind of business, you should buy bailee’s insurance.

What types of property are excluded from Commercial Property Coverage?

While Commercial Property Insurance can provide coverage for much of your business property, there are several types of coverage that are excluded in standard policies. Some of the more notable exclusions include:

What commercial property risks are covered by Commercial Property Policies?

Commercial Property Insurance can be purchased on either a named perils or open perils basis. Named perils means that only the risks specifically listed in the insurance contract are covered. Open perils covers any risk that is not specifically excluded from the insurance policy. Open perils premiums are higher than named perils because the coverage is more comprehensive.

Both earthquakes and flood insurance are commonly excluded from property insurance policies, including open perils policies. Also, dishonesty and theft by employees are usually excluded as well.

Named Perils

The most commonly covered named perils include:

Every insurance contract covers different perils, so it is important to read your contract closely and discuss what hazards are covered with your insurance agent or company. Note that every commercial insurance policy is based on what risk levels your business is exposed to during its everyday operations. 

Open Perils

Under open perils coverage, your property will be covered if it is damaged or lost for any reason, unless the reason is specifically excluded in the insurance contract. Make sure you check the listed exclusions in your contract to understand what won’t be covered.

What risk exposures are excluded from Commercial Property Insurance Policies?

Common exclusions from named and open perils policies include:

Does Commercial Property Insurance have a deductible?

A deductible applies to most property insurance policies. The deductible is the amount of the loss that your business is responsible for before the insurance company’s coverage begins.

Having a deductible gives your company a financial incentive to take care of the property that is insured rather than transferring the full amount of risk to the insurance company. The deductible usually applies to each loss separately, meaning the insurer will subtract the deductible from each loss that you experience.

A higher deductible typically lowers your commercial property insurance premium, as it reduces the amount that the insurance company would potentially pay out if there is a loss.

Commercial Property Insurance Pricing

Insurance companies take the basic information that you provide to them and calculate the risk of loss for your business resulting in Commercial. Property Insurance costs. Part of this calculation will involve assigning a Commercial Property Insurance rating, which is specific to the building or property you’re looking to insure. The higher risk your business is rated, the higher the premiums will be.

Some of the factors that can affect your premium pricing include:

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who are commercial property insurance carriers:

ProviderCommercial PropertyBusiness InterruptionInland Marine

Replacement Cost vs. Actual Cash Value

When insuring your property, you have a choice between a replacement cost policy (RC) or actual cash value coverage (ACV), which are two common methods for how insurers value your property.

Replacement cost coverage covers the cost to repair or replace your property with a new item of a similar kind and quality, without any deduction for depreciation.

Actual cash value policies cover the value of the property at the time of loss in an “as-is” condition which considers depreciation and obsolescence of the property.

The premiums on RC coverage are typically higher than the premiums on ACV coverage, due to the higher potential payouts.


Applying for Commercial Property Insurance Coverage

In order to apply for business property insurance, you’ll need to gather some key information about your business. You’ll want to compile a list of all the property your business owns.

Important information the insurer will need include:

You’ll also want to gather key papers such as a lease for those who rent their space and a copy of the mortgage for owners. Insurers will also ask for personal information such as a Social Security number or Federal Tax ID. If you already have insurance, you’ll also want to provide a copy of the declaration page of your current policy. The insurance company will also ask you whether you’ve had insurance losses in the past.

The insurer will ask you about neighbors that you share the building with. If you have neighbors that have high-risk activities, it may affect your insurance risk.

Coinsurance and Underinsurance

In commercial property insurance coverage, many policies require the policyholder to insure a minimum percentage of the property value in order to get the full value of a claim paid. This minimum percentage is called coinsurance, and it is often set at 80%. The reason for coinsurance is that partial insurance losses are more common than total losses, so businesses may be tempted to report lower values for their property than the actual value in order to save on premiums.

When a loss occurs, if the amount insured is below the coinsurance percentage, the insurance company can reduce the claim payment.


Final Word

Businesses that own or lease commercial property, from commercial space to office equipment, can benefit immensely from Commercial Property Insurance. Commercial Property Insurance can reimburse you for business property that is damaged or destroyed in an accident or disaster, saving you time and money in a wide variety of unexpected events. Securing this coverage can give your business the financial lifeline it needs when a disaster strikes, allowing you to focus your resources and time on building and growing your business.

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