Commercial Property Insurance 101

By Published On: October 19, 20214.4 min read

Risk protection is a crucial facet of business that every entrepreneur must understand in depth. With a wide range of coverage, from workers to equipment, commercial insurance ensures that your company does not go under the bridge due to financial crises in adverse times.

But before you choose property insurance coverage for your company, it is essential to have an overview of this industry’s landscape.

Let’s go through the most important things you need to know about commercial insurance:

What is Commercial Insurance?

As home and vehicle owners have insurance to cover different damages, business proprietors also need a plan that would protect company assets against any loss. Commercial property insurance is designed to offer protection to your company in its entirety.

This plan covers your organization against losses from theft, property destruction, and income loss due to property damage.

Because businesses vary in size, structure and niche, there are multiple insurance plans with different policy options available to company owners. You can have more than one plan for your enterprise.

Types of Commercial Insurance

The three main plans available for enterprises include property, worker’s compensation and liability insurance.

1. Liability Insurance

In the course of business, your company might cause damage to another party. Because it is nearly impossible to predict the timing and magnitude of such damages, liability insurance coverage will be your escape strategy. If there’s litigation against you, this policy protects your company against the risk of going bankrupt.

General, professional, employment practice and cyber are subtypes of liability insurances that cover specific damages a company might bring about to other parties. For example, if a visitor gets injured within your business premises, a general liability policy will cover for the bodily injury.

2. Property Insurance

Destruction of property by fires, vandalism, and other natural disasters can lead to huge losses. Commercial property insurance provides protection to company property as well as its contents against such damages. If your business encounters income losses secondary to property damage, you might also be eligible for compensation.

Even so, be sure to discuss in detail with your insurance agent what a given policy covers before buying one.

3. Worker’s Compensation

Employees are integral in the production process. As such, it is essential to compensate them for possible injuries within the workplace. Besides that, worker’s compensation insurance will also protect you from any litigation an injured employee might file.

While all these three plans are crucial for any business, we’d like to focus on commercial property insurance in this article.

What Does Commercial Property Insurance Cover?

We have already alluded to some of the damages covered by a commercial property policy. This insurance plan protects your business premise and all its contents from multiple causes of destruction. The building and its exterior fixtures, including outdoor signs, all fall under commercial property cover.

The contents of your property, which include furniture, tools and equipment, inventories, computers, and any other essential item stored within the premises, are also covered by commercial property and casualty insurance.

Most policies provide coverage for the destruction caused by fires, storms, vandalism, burst water and gas pipes, explosions and theft. Natural calamities such as floods and earthquakes are rarely included.

However, if you live in areas prone to such disasters, the insurers might have an option that covers such contingencies. For instance, in Tampa, commercial property insurance will ensure your business gets back on its feet as soon as possible without going bankrupt. That is why it is important to hire a reputable company that can help restore your workplace even after the worst catastrophe.

How Much Does it Cost to Insure a Commercial Property?

Insurance premiums always vary depending on multiple factors, including property value, location and other protective measures in place.

A building made of fire-resistant materials and equipped with modern cooling or heating systems that have a lower risk of breaking down will merit lower rates than old buildings of poor construction.

Again, the type of your business and the risk involved will also affect your rates for commercial insurance. Preventive measures such as security surveillance with anti-theft and fire detection and alarm systems might also reduce your commercial property insurance charges.

With all these factors considered, your company is likely to pay $1,000-$3,000 every year for a million-dollar coverage, depending on the worth of your business. You might even pay lesser amounts in some areas.

What Do You Consider Before Buying a Commercial Insurance Policy?

Commercial property insurance is not a one-size-fits-all concept. Businesses differ in various aspects, including financial structures and injury risks involved. As a result, the insurance needs will also vary. Choosing the right policy means taking into account the size of your company, the risks in your business and the security of the neighborhood, among other information.

It is also important that you understand the terms and conditions of the policy before making the final decision.

Another Part of Investing

As an investor, you need to understand how commercial property insurance works and the types of damages covered. Then you can select the best plan for your company. You’ll have peace of mind, and it’ll be easier to recoup your losses if something unfortunate happens.

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