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What Is Commercial Property Insurance?

By Teri Dormer

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If you think property insurance is only necessary for businesses who own their own buildings, you might be surprised to learn how important commercial property coverage (also known as business property insurance) is for business owners who lease their spaces — or even work from home. 

If you run a business but don’t fully understand commercial property insurance and the impact of that coverage on your business’ contents & equipment, you need to read on as we break down the most important elements of commercial property coverage.  

What Is Commercial Property Insurance?

Commercial property insurance protects the physical space you work out of and includes insurance for your business content and equipment in the event of theft, vandalism, fire, or any other covered peril. It’s one of the most essential elements of business insurance that almost every owner needs

One of the biggest areas of confusion around commercial property insurance includes small business owners who work out of their own homes. Because you’re already paying for homeowners or renters insurance coverage, you don’t need to pay for additional commercial property coverage on your own home, right?

Not necessarily. While a conventional homeowners policy may include some level of coverage for your small business, there are some specific scenarios that may be expressly excluded from coverage.

If you store expensive equipment or inventory in your home, your personal homeowners coverage likely limits the maximum claim you can file after a loss. Some homeowners policies will deny a claim for business inventory or equipment damaged in your home if you haven’t previously disclosed it.

What Does Commercial Property Insurance Cover?

Commercial property insurance is designed to cover every aspect that is essential to your daily business operations, including losses to your building, your business’ personal property, equipment, inventory, and any other physical assets of value or deemed necessary by the business. 

It’s important to recognize that the specific elements of your commercial property insurance will fluctuate from policy to policy, but that your coverage should be tailored to the region your business operates out of.

In the same way that a homeowner in Florida wouldn’t need the same coverage as a homeowner in California, businesses should tailor their coverage to the types of loss most common to their location. 

What Isn’t Covered By Commercial Property Insurance?

Your commercial property insurance won’t cover every legal risk to your business, and some things may be excluded from coverage. The exact details of your policy may be different, but losses typically excluded by commercial property insurance include: 

  • Damage or theft to vehicles used for business purposes, even if they’re stored at or within the business property (including warehouses)
  • Money stored on-site at your business location that may become stolen or damaged. 
  • Loss to the physical land (including plants and other foliage) where your business is located
  • Outdoor elements of your business, including fencing or signage, that aren’t physically connected to your main property

Commercial Property Insurance Definition 

Commercial property insurance is defined as coverage for the property your business operates out of and all of the contents related to your business that are typically stored in that space. 

Here are some common examples of business content & equipment that are also included under the protection of your business property insurance: 

  • All technology equipment, including computers, printers, and point-of-sale devices
  • All your standard furniture and equipment, including desks, chairs, and display cases
  • All inventory stored on location for your business
  • All interior and exterior signage and marketing materials
  • Sensitive documentation stored on-site for your business
  • All external fences, landscaping, and foliage

As you can see, commercial property coverage is about so much more than physical property. Even if you’re only renting your space, or if you work from home, it protects all the tangible aspects of your business from covered perils. 

So what exactly is a covered peril?

For commercial property coverage, the most commonly covered scenarios include fire, theft, vandalism, major storm damage, and burst or ruptured pipes. These are the only scenarios protected by commercial property insurance, but you may need an additional rider to include additional coverages, including flood protection

Who Insures a Commercial Property?

As with most elements of business insurance, most standard insurance companies will also offer commercial property coverage for your business. 

If you already use a certain insurance provider for your personal coverage, you might want to get your first quote for business property insurance from them. Many insurance providers offer discounts and savings for bundling multiple policies together, including business and personal coverages.

Once you know how much money you would save by using your current insurance provider for business coverage, you can continue to shop around to ensure you’re getting the best possible deal on the policy that’s right for you and your business.

Get a Quote Compare multiple policies to get the coverage you need at the price you want.

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