NYC Insurance Blog

How Does Commercial Property Insurance Coverage Work?

Commercial property insurance protects your business's physical assets from perils like fire, theft, vandalism, explosions, burst pipes, and storms. Since each business differs, insurers customize policies to meet your unique needs. However, commercial property insurance does not cover floods and earthquakes unless they are added to the policy. 

What Does Commercial Property Insurance Cover?

Commercial property insurance covers the building and everything inside and outside, including:

• Furniture and fixtures, e.g., desks and chairs
• Fence and landscaping
• Important documents
• Equipment, e.g., computers

If you operate your business from home, you must purchase commercial property insurance because homeowner's insurance does not cover losses resulting from stolen or damaged business equipment. If you are a small business owner, you can combine general liability insurance and commercial property insurance as a business owner's policy (BOP) to reduce costs. Understanding your policy is important, allow us to review your policy or help you get a New Policy!

How Does Commercial Property Insurance Work?

Cash value vs. Replacement value

When buying commercial property insurance, you can choose between cash value and property value. You will enjoy cheaper premiums with cash value, but if your items are stolen or damaged, you might have to pay out of pocket. The cash value policy only pays out what the item is currently worth. However, if you opt for replacement value in your policy, the insurer replaces the stolen or damaged equipment with brand new. Although replacement value policies attract high premiums, they are the best choice to avoid incurring extra costs in replacing damaged or stolen equipment.

Rental property vs. Owned property

If you rent a property for business purposes, you can purchase an insurance policy that only covers the items you own. However, it is also possible to insure the items you lease to avoid financial losses. Small business owners should consider purchasing business renter's insurance to have peace of mind and financial security. On the other hand, buying an insurance property that covers the building and all its contents is the best option if you own the property. 

Schedules vs. Riders

When buying your commercial property insurance, you can customize it as a schedule or rider to suit your needs. With the schedule option, business owners protect specific equipment named in the insurance policy. The schedule option is highly recommended to business owners who rent or own expensive items. Since the business owner can incur a heavy financial loss if the item is stolen or damaged, commercial property insurance will cover the loss. On the contrary, riders only cover an item from events excluded from your insurance policy. 

Mobile vs. Stationary property

Commercial property insurance covers stationary businesses and property, for example, your office space. Therefore, if your business property is in transit or you move the equipment to different worksites, consider purchasing inland marine insurance.

Do You Own Business Vehicles?

If the answer is YES, you must purchase commercial auto insurance because personal car insurance does not cover property damage or medical costs resulting from business-related accidents. If you or your employees use your personal vehicles for business purposes, consider purchasing Hired and Non-Owned Auto insurance (HNOA). 

Commercial Property Insurance Exclusions

Commercial property insurance does not pay for property damage resulting from natural disasters such as floods, earthquakes, hurricanes, and tornadoes. If you live in an area prone to natural disasters, consider adding an endorsement to your policy. Check with your insurer to ensure your commercial property insurance includes all the necessary coverage. Having a broker will help make understanding your policy easier, Give us a Call Today!

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