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Commercial property insurance will cover your business property from a slight hiccup to a significant loss.

What is Commercial property Insurance?

Commercial property insurance protects commercial property from such risks as fire, theft, and natural disaster. A variety of businesses, including manufacturers, retailers, service-oriented businesses, and not-for-profit organizations purchase commercial property insurance. It is generally combined with other forms of insurance, such as commercial general liability insurance.

When determining the amount a company should pay for commercial property insurance, the value of a business’ assets, including the building, is the primary factor. A business should take an inventory of their physical assets located at their property. This information will help determine what exactly would be the replacement value and the level of coverage the business should get.

Factors Associated with Commercial Property Insurance

Location: Buildings in areas with excellent fire protection typically cost less to insure than buildings in a areas with limited fire protection.

Construction: Buildings made of potentially combustible materials will have higher premiums, while those made of fire-resistant materials could earn a discount.

Occupancy: A building’s use also affects its fire rating and premium levels. An office building will likely rate better than a restaurant or auto repair shop.
Fire and theft protection: How far are the nearest fire hydrant and fire station? Does the business have a fire alarm and sprinkler system? Is there an active security system in place?


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The replacement of a building, inventory or equipment can be an expensive cost, that's why you need commercial property insurance.

What Does Commercial Property Insurance Cover?

Commercial property insurance covers your business’s physical property, which could include a building and your business’s contents, equipment, and/or stock.

The most common items that are covered under commercial property insurance include:
Business personal property
Fences, signs, and landscaping
Customers personal property

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Frequently Asked Questions

How Will My Building Be Valued by Commercial Property Insurance?

There are three types of property valuations that are used in commercial property insurance:

   • Replacement Cost
   • Actual Cash Value
   • Functional Replacement Cost

Why Do I Need Commercial Property Insurance?

Commercial property insurance is one aspect of a business’s insurance program and can help get a business back up and running if it suffers a loss, such as a fire, tornado, or even a power outage.

While you may not enjoy paying the bills for it, it’s much better to pay those bills now and know that your business can survive a major loss. Without insurance, your building and all of your business’s contents and equipment would be completely lost with no source of money to rebuy them.

Some of the most common consequences of not carrying commercial property insurance include:

   • Bankruptcy & closure
   • A ruined reputation
   • Legal trouble
   • Spoiled inventory

How Much Does Commercial Property Insurance Cost?

The cost of commercial property insurance varies and largely depends on the following factors:

   • Size, age, and condition of the building

   • Loss settlement option (replacement cost, actual cash value, functional replacement cost)

   • Value of the building

   • Value of your business's personal property

   • Location and cost of building supplies in your area

   • Nature of the business and building

Is Commercial Property Insurance Mandatory?

If you’re taking out a commercial loan to purchase your property, your bank or finance company will likely require you to have commercial property insurance. Similar to banks requiring homeowners insurance if you’re taking out a mortgage, banks simply want to know that their money won’t be totally lost if something does happen to your building.

Even if it’s not required by a bank, commercial property insurance can be a valuable form of protection for your business. Starting and operating a business requires a lot of money and capital, which oftentimes isn’t there for a second go around. Operating a business without commercial property insurance means that if you do have a loss, you’ll have to start from scratch.

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