Commercial Property Insurance: Why Do You Need It?

Commercial property insurance policies protect your business’ physical assets from perils such as fire, theft, or other physical destruction. These policies cover the building and its contents like computers, furniture, equipment, inventory, important records, and documents, as well as external fixtures like outdoor signs and fencing. Commercial property insurance may also cover an increase in expenses and loss of income resulting from damage to your property.

Here are some of the important things to know about commercial property insurance.

How do I Purchase Property Insurance?

You can purchase commercial property insurance as a stand-alone policy, or you can have it as part of a comprehensive policy that includes general liability coverage. You can work with your insurance broker to come up with a customized policy that addresses the inherent risks in your business. Generally, there are two types of commercial property coverage.

• Actual cash value policies – These base compensation on the current value of the property, the cost of replacing or rebuilding the property minus depreciation.

• Replacement cost policies – These policies rebuild or repair property with the same or comparable quality materials.

What if You’re Not the Owner of the Building?

In many cases, business owners lease commercial spaces to house their businesses. If you’ve leased your business premises, you should review the fine print of your lease agreement and find out your obligations when it comes to insurance, says the Insurance Information Institute (III). The owner of the building should specify in a lease agreement what type of coverage their insurance offers and what is not covered. This will allow you to make an informed decision about the amount and types of insurance to purchase for your business.

Factors that Determine Commercial Property Insurance Premiums

• Construction: You will pay higher premiums for a building made of combustible materials. Conversely, you may earn a discount if your building is constructed with fire-resistant materials. Any additions to your current structure can impact the fire rating, so it’s always prudent to talk to your insurer or agent before you remodel.

• Location: Buildings in localities with great fire protection usually attract lower property insurance premiums. Conversely, you will pay more for a building in locations with inadequate fire protection.

• Theft and fire protection: Things like having a sprinkler system, alarm system, or proximity to a fire hydrant or fire station can all impact insurance premiums.

• Occupancy: The type of business you operate can also impact insurance. For instance, you’ll likely pay better rates for an office building that houses an accounting firm than you would pay for a multi-tenant building that houses an auto repair shop and a restaurant.

Important Considerations when Purchasing a Policy

• The commercial building in question
• Office equipment such as phone systems and computers
• Processing and manufacturing equipment
• Inventory
• Satellite dishes and signs
• Landscaping and fence

These are some of the important things to know about commercial property insurance. At CF&P Insurance Brokers, we will help you find the right commercial property insurance policy for your needs. To get started, call us today at (925) 956-7700.

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