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What Is Commercial Property Insurance?

 What Is The Definition Of Commercial Property Insurance?


 Any commercial property can be covered by commercial property insurance.
Commercial property insurance safeguards commercial property against risks such as fire, theft, and natural disaster.

Commercial property insurance is carried by a wide range of businesses, including manufacturers, retailers, service-oriented businesses, and non-profit organizations.
It is frequently combined with other types of insurance, such as commercial general liability insurance.

Important Takeaways

Commercial property insurance protects property and equipment against natural disasters.

Commercial property insurance covers a wide range of properties and equipment.

When determining the cost of commercial property insurance, several factors such as location and occupancy are taken into account.

Commercial Property Insurance Explained

For businesses that use equipment worth millions or billions of dollars, such as railroads and manufacturers, commercial property insurance can be a significant expense.For consumers, this insurance essentially provides the same level of protection as property insurance.

Businesses, on the other hand, can usually deduct the cost of commercial property insurance premiums as an expense.In most cases, commercial property insurance does not cover losses caused by tenants using the building.

The value of a company's assets, including the building, is the primary factor in determining how much it should pay for commercial property insurance.A company should take an inventory of their physical assets located on their property before meeting with an agent to discuss coverage.

This information will assist in determining the exact replacement value and the level of coverage that the company should obtain.Weather conditions in the area where the building is located have also become an important factor in determining the cost of commercial property insurance as the number of natural disasters has increased.

Commercial insurance rates are generally higher for properties located near or within geographies prone to weather-related disasters.In California, for example, rates are higher for properties near areas prone to wildfires.

Commercial Property Insurance Factors to Consider

Buildings in cities or towns with excellent fire protection tend to be less expensive to insure than buildings outside of cities or in areas with limited fire protection.

Construction. Buildings constructed of potentially combustible materials will face higher premiums, whereas those constructed of fire-resistant materials may receive a discount.
Additions to an existing structure may affect the fire rating, so consult with an agent or insurance company before remodeling.

A fire rating can also be affected by internal structural elements.
Using wood partitions, floors, and stairwells in a fire-resistant building will almost certainly negate any rate reduction.Interior fire-resistant walls, floors, and doors can help keep a good fire rating.

Occupancy. The use of a building influences its fire rating.A restaurant or auto repair shop will most likely score higher than an office building.In a multi-tenant building, one hazardous occupant will have a negative impact on the overall fire rating of the building.

Premiums will be higher if a business is located in a building with a more dangerous tenant.

Protection against fire and theft:

  • What is the distance between the nearest fire hydrant and fire station?
  • Is there a fire alarm and sprinkler system in place?
  • What about installing a security system?

Considerations for Commercial Property Insurance

Consider insuring the following locations on your property:

The location of your business, including whether it is owned or rented 

All office equipment, whether owned or leased, including computers, phone systems, and furniture

Accounting records and important business documents

Equipment for manufacturing or processing

Inventory is kept on hand.

Landscaping and fencing

Satellite dishes and signs

Commercial Property Insurance Examples

Commercial property insurance can be used to protect against a variety of risks.
It can, for example, be used to seek compensation if a fire destroys your office equipment.

Commercial property insurance is also beneficial in the event of theft.It can also be used to file insurance claims in the event of a natural disaster.

According to Insurance Journal, the impact of Hurricane Maria in Puerto Rico left insurers dealing with 279,000 claims.


 You can learn more about Commercial Property Insurance here


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