Commercial Property Insurance in NYC
Last Updated: March 20, 2017
Commercial property insurance is designed to protect your building and its contents from catastrophic loss. If your building is severely damaged by a hurricane, for example, do you have the money set aside from your profits or assets to repair the damage and to replace mission-critical equipment? Most business owners would be unable to answer that in the affirmative.
In the following guide, we'll go over what this type of policy covers and the two methods that are used to assess the value of your facility and everything inside of it at the time of loss.
What Does Commercial Property Insurance Cover?
This type of policy covers not only the building itself, but also many other items:
- Artwork and decorations
- Computers, printers, phones, etc.
- Tools and machinery
- Valuable papers
- Personal property while in transit, such as an offsite meeting
- Personal property of others left in your care
- Real estate that you acquire
- Real estate that you lease
The specific coverages of the policy may vary according to whether you own or lease all or part of the building, and whether you're an "owner occupier," a renter, or a landlord. Depending on your situation, you may need more than one type of insurance policy to cover all the bases, but we can bundle multiple policies into one package to keep things simple.
Does Commercial Property Insurance Cover Theft, Fire, Riots, and Vandalism?
Yes, absolutely. In turbulent political and economic times, disgruntled citizens can wreak havoc in your area, and your business might get caught in the crossfire, so to speak. It might also be targeted directly, especially if you have a lot of valuable tools, equipment, or inventory that a thief can easily sell on eBay or Craigslist.
Actual Cash Value vs. Replacement Cost (Commercial Property)
Insurers require some way of determining the value of your property at the time of loss. The two methods that they use are replacement cost and actual cash value.
Replacement cost valuation (RCV) is exactly what it sounds like. The insurer will pay (up to the policy limit) whatever it costs to replace your property with one of a similar kind and quality. However, the dollar amount is based on the cost of the property at the time that it was built, not what it would cost to rebuild the same facility in today's dollars. Let's say that you built your office in 2002 for $100,000, and it got leveled by arson in 2017. But now, the cost to rebuild what you had is $150,000. By adjusting your policy limits on a regular basis to keep up with the rising costs of labor and materials, you'll be able to secure payment for the current cost to rebuild your property.
Actual cash value (ACV) is defined as the replacement cost minus depreciation. The insurer will pay (again, up to the policy limit) whatever it costs to replace the property with one of a similar kind and quality, less depreciation. Using the same example as above, the office that you built in 2002 now costs $150,000 to rebuild, but it has depreciated over the last 15 years (3% each year, let's say). In 2017, it's worth approximately $63,000, so it has depreciated by about $37,000. Therefore, the insurance company would give you $113,000, not the $150,000 that you really need to replace the building.
It's important to note that, for commercial insurance purposes, the "market value" of the building is meaningless and should not be considered when determining ACV or RCV. In the event of a loss, all the insurance company cares about is making you whole – in other words, restoring your building to its original condition so that you can get on with your business.
Types of Commercial Property Insurance Coverage
We provide coverage for all types of commercial property, including:
Apartment Buildings and Condos – Commercial rental property insurance includes condominium and coop complexes, and a typical package will include loss of rent / loss of income insurance.
Commercial Office Buildings – Coverage for office buildings, including mixed-use properties.
Warehouses – Coverage for the structure and contents within a warehouse.
Manufacturing – Our packages are tailored to your type of manufacturing facilities and include product liability insurance.
New York City Business Group specializes in commercial insurance, and we offer all of our clients a free policy review. We'll go over the details of what's covered in your current policy, and then we'll review the needs of your business operating in the NYC environment. Next, we'll confirm that those coverages are in the policy.
Once we've established the correct coverages, we look at the policy limits, and that's generally where we find inflated limits. This is done to increase policy premiums and agency commissions, but at the NYC Business Group, we take the necessary information about your business or property and quote your insurance policy with many different insurance companies so that you don't overpay for coverage.
If your business is located in Manhattan, Queens, Brooklyn, the Bronx, or Staten Island, call us at 718-554-3425 or request a free policy review or quote online. We look forward to speaking with you soon.