Commercial Property Insurance: How To Get What You Need

Commercial property insurance is insurance coverage that protects businesses against unforeseen events that may cause a loss to physical property.

It is used to protect commercial property against threats like fire, natural disasters, and even theft. Whether you are a manufacturing, retail, service-oriented, or not-for-profit business, commercial property insurance can safeguard you from major financial losses. These losses could occur in the form of:

  • A leak in the water pipe ruined important documents
  • An earthquake caused the back wall of the factory to collapse
  • Heavy rainfall destroying your billboard
  • A workplace fire could destroy all contents of your building.

Why Do I Need Commercial Property Insurance?

As a business owner, opting for commercial property insurance coverage can be highly beneficial. When your business makes use of equipment and machinery worth millions of dollars, losing them to a fire or natural disaster can mean unbearable losses.

Similarly, for a small-scale business, it can be even harder to replace stolen or destroyed machinery with the existing lack of cash and financial strength. 

Commercial property insurance is designed to protect all physical assets of your business. This ensures that, in case of any unforeseen circumstances, you do not have to shut down your business for a long period of time while you attempt to recover its progress. Investing in commercial property insurance is the smartest thing you can do for your business. 

Moreover, if you rent a workspace or a piece of land, your landlord is most likely to require property insurance cover from you. While the landlord will have the land ensured, they will not take responsibility for any contents that you put into the building once you rent it. 

commercial property insurance

What Does Commercial Property Insurance Cover?

Commercial property insurance for your business will cover all physical assets of the business, including the land, the building, and everything in and outside it. Some commercial property insurance covers also protect important documents and even other people’s property that might get affected by the same tragedy. 

In case of a fire, a theft, or a natural disaster, you can rely on your insurance cover to meet the cost of repair or replacement of equipment and machinery. 

How Much Does Commercial Property Insurance Cost?

Like any insurance cover, the cost of commercial property insurance will depend on the book value of the business’ assets and the level of risk associated with its operations. Premiums are calculated by multiplying the value of the property to a value assigned to the level of risk. 

Amid the coronavirus pandemic, commercial property insurance rates in the US have risen. This is largely due to the increase in natural disasters, the rise in social unrest in the country, and COVID-19 itself.

A report published by Willis Towers Watson about the state of the insurance market in the country says commercial insurance prices will continue to rise through 2021 owing to the systematic changes in risk. 

There are five crucial factors that are taken into consideration when commercial property insurance cover is estimated. These include:

1) Location

The location of your factory or workplace is one of the biggest factors affecting your insurance premiums. For example, if the building is located in an area that is prone to natural disasters like earthquakes or floods, your insurance cover will be more expensive. This is because the cost of insurance is directly related to the level of risk involved.  

2) Construction

The construction material used in a building plays a huge role in determining how safe and secure it is. For example, if you set up your business in an old building that is made of combustible materials, you will be charged higher premiums. 

3) Operation

The cost of your insurance cover can also vary according to the type of business activity you carry out on the property. Insurance premiums for an office building are likely to be much lower than that for a workshop. 

4) Fire Protection

One of the biggest threats to any type of land or building is that of fire. Consequently, fire safety is one of the most important factors that are taken into consideration when calculating insurance premiums. If your business has nearby fire hydrants, fire stations, or has fire alarms and sprinklers installed, the insurance premium might cost less than otherwise. 

5) Security Measures

Similar to fire safety, measures to protect a business against theft are also important when it comes to insurance cover. Having a reputable security system installed on your property will lower your chances of getting robbed and, thus, will lower your insurance premium. 

Are There Any Legal Risks Covered By Commercial Property Insurance?

Although commercial property insurance covers the cost of repairing and/or replacing all registered items on your property, it might not cover all of your business’ legal risks.

This means that any item that is not attached to the building might not be covered. For example, motor vehicles, outdoor fences, and plants. In fact, you might have to get additional coverage for these items if you wish to insure them.

Who Can Get Commercial Property Insurance?

While it is advisable for all businesses to invest in commercial property insurance, some business owners are more likely than others to purchase a policy. These include:

  • Businesses owning or renting a store, building, or office.
  • Businesses owning or renting valuable equipment or tools
  • Businesses possessing inventory 
  • Businesses possessing expensive assets

Depending on the value of the business, its operations, and the amount of risk associated with it, business owners often pair their commercial property insurance with other policies. This is to ensure maximum coverage and to avoid heavy financial losses in case of an unprecedented event. The table summarizes the different types of business insurance that might be helpful for your business. 

Type of Insurance What it covers
General Liability Insurance Financial loss from property damage, bodily injury, libel, medical expenses, lawsuits, and slander.
Product Liability Insurance Financial loss from a defective product that might have caused harm or injury.
Professional Liability Insurance Financial loss caused by errors, negligence, and malpractice
Business Interruption Insurance Day-to-day expenses, relocation, and revenue loss for your business while it is shut down to recover from a loss through an insurance claim.

You can combine one or two of the above-mentioned policies with commercial property insurance to provide sufficient protection for your business from significant financial loss. Business Owner’s Policy combines the property and liability aspects of your business and covers claims resulting from both.  Additionally, you can also purchase riders to add to your commercial property insurance cover to achieve more protection.

What Is Business Owner’s Policy Insurance?

While there are multiple business insurance policies that are designed to protect your business from financial losses, business owner’s policy insurance combines the most important aspects into one, business property and business liability. 

Business owners’ policy has been given its name because business owners have the option of tailoring their policy to meet the specific needs of the business.  The policy can be entirely customized according to the needs of the industry and is a great policy for protection, especially for small businesses. 

You can best benefit from a Business Owner’s Policy Insurance if your business has a physical location, if there is a possibility for your business to be sued, if you have sensitive customer information data and if you have valuable assets that might get damaged or stolen. 

What Is An Insurance Rider?

A rider is an additional protection you can acquire from an insurance provider by paying a higher premium. It is, in fact, a small modification to your insurance policy, which makes it more suitable for your business and negates the need of buying a whole other policy. 

Riders are one of the more important aspects of business insurance because they allow you to customize your insurance plan according to the needs of the business. Business insurance policies, including commercial property and general liability, do not offer such convenience in themselves. 

There are multiple ways you can use riders to devise an insurance plan that best fits your business. However, there are always policy limits and deductibles attached to every insurance policy. 

Rider (Modification) Purpose
Commercial Property Floater Rider To cover assets not stored at a fixed location. 
Coverage for specific types of property  To include property that commercial property insurance does not.
Endorsement for workers’ compensation insurance  To extend benefits to employees that are not obligated to be covered. 
Communicable disease rider To cover losses caused by infectious diseases.

What Are Policy Limits?

Policy limits are the coverage cap that insurers place on your insurance policy, deciding the maximum amount they will pay to settle your claim if your business is to suffer a loss. Also known as the limit of liability, the size of these caps is determined by the amount of insurance you purchase.

The limits differ according to the type of insurance. For example, limits in workers’ compensation insurance are determined entirely by the type of loss suffered. There are two types of policy limits. 

Per-Occurrence Limits

When an unfortunate incident occurs, and you make a claim, per-occurrence limits determine the maximum amount the insurer will be liable to pay to your business. 

Aggregate Limits

Aggregate limits are used to establish the maximum amount an insurer will pay to settle all your claims throughout the duration of your policy period. 

What Are Deductibles?

An insurance policy deductible, or annual deductible, is the amount you are expected to pay yourself before you make a claim to the insurance agency. This proves as a type of risk-sharing between you and the insurer. You have plenty of options for setting deductibles. If you’re a small, new business and wish to keep your deductibles low, you might be charged a higher premium and vice versa. 

Deductible Premium
Low High
High Low

How Do I Get Commercial Property Insurance?

Getting your hands on the most suitable insurance cover for your business can seem like a daunting task. There are a plethora of things you need to keep in mind, including your budget for insurance expenses. However, there are just four broad steps you need to take to secure a suitable policy for your business. 

1) Risk Assessment

In order to estimate how big of an insurance policy your business needs, you might need to take into consideration all threats that it might be predisposed to.

These include any possible accidents, natural disasters, and even lawsuits that might cause a loss for the business. This is important if you want to minimize the financial loss resulting from an unprecedented event. 

2) Finding An Agent

Once you’ve evaluated the level of risk associated with your business and its operations, you can start looking for an agent to provide you with a reasonable quote.

There are many insurance agents in the market who can help you find a policy that best suits your budget and your needs. Make sure the agent is licensed and reputable in order to avoid insurance fraud. 

3) Looking Around

When you are in the market looking for an agent, it is important to take your time and thoroughly compare rates, benefits, and terms for the offers.

Getting in touch with multiple agents at the same time is a good way to get a better look at the market in a short period of time

4) Re-Assessment On An Annual Basis

The assessment of risk does not only happen once. If over time, you decide to renovate our office building and install a security system that wasn’t there before, you ought to inform your insurance provider because the reduced level of risk will affect your coverage and premiums.

A qualified insurance agent will be able to guide you through what changes will have an effect on your policy terms. 

Are There Any Legal Requirements For Commercial Property Insurance?

Setting up a business is not easy. There are many things you have to keep in mind and never-ending paperwork. Some of this paperwork is for the insurance policies you purchase for the financial protection of your business. 

While laws regarding business insurance policies differ from state to state, there are some insurance covers that are mandatory for a business to purchase. These include:

Mandated by the government, workers’ compensation insurance protects workers’ incomes through the provision of benefits if they suffer a work-related injury or sickness. 

  • Disability Insurance

Disability Insurance protects the partial income of an employee who is unable to work as a result of a disability. It should be noted that disability insurance does not cover medical expenses, nor is it long-term. It also does not categorize employees over the age of 65 as eligible because they are considered to need long-term care. 

Unemployment Insurance protects employees’ incomes if they are made redundant. This type of unemployment is through no fault of their own, which is why they are eligible for unemployment benefits from the state. Individual states in the US have different programs, but they all follow the same basics.  

While commercial property insurance is not required by law, it is always advisable for business owners to invest in the protection of their assets. Acquiring additional coverage beyond what is mandatory can provide your business with financial protection and can play a key role in determining how resilient your business is.

Start a quote in minutes to understand the unique needs of your business and what you can do to fulfill them. 

The Rub

Talking about the technicalities of insurance policies, premiums, limits, and claims can make it all seem like a complex matter. Many business owners are hesitant when it comes to purchasing insurance plans because they don’t completely understand how it all works. This is where we come in. 

At Rogue Risk, our biggest mission is to ensure that our clients are aware of all of their options and make a decision that is in their best interest. Our insurance products guarantee the greatest savings and protection from financial losses. We work hard to customize packages and deals for each individual client so that their unique needs are met. 

As a business owner, it doesn’t matter if you’re manufacturing a product or providing a service, Rogue Risk has insurance products to meet your needs for all types of businesses. The most recent addition to our extensive list of insurance policies is the AirBnB Insurance Policy.

This policy ensures the financial protection of your income and property so that you do not have anything holding you back from expanding your business further. 

From Landlord Insurance to Vacation Home Insurance, Rogue Risk has it all.

I look forward to introducing you to a new way of viewing your insurance program.

Thank you,

Ryan Hanley

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