What is commercial property insurance?

Commercial property insurance protects your movable property and business location from risks like fire, theft, vandalism, and other incidents. Commercial property can include buildings, equipment, and inventory that your business rents or owns.

This coverage is included in a business owners policy (BOP), which packages liability, property, and other key insurance coverages for small businesses. It's sometimes referred to as business hazard insurance.

What does commercial property insurance cover?

Commercial property insurance covers your business's physical assets, including:

  • Buildings: If a building you own or rent is damaged by fire, wind, or another covered event, property coverage can help you rebuild. Building coverage can include additions, permanently installed fixtures, and other equipment that's named in your policy.
  • Business personal property: Inventory, supplies, computers, furniture, and tools are covered, even if you don't run your business out of a commercial building.
  • Business interruption: If property damage impacts your business, business interruption insurance can cover expenses and lost revenue caused by the disruption.

Explore our BOP coverage guide for more information and get a commercial property insurance quote to start protecting your business property today.

How insurance for commercial property works

Commercial property insurance coverage can be customized to your needs. To ensure your business is protected, list property that's essential to your operations when getting a quote. You can add optional coverages, called endorsements, for protections that a standard business owners policy might not cover.

Common commercial property endorsements include:

  • Tools and equipment: Covers tools and equipment belonging to contractors and their employees or rented from third parties.
  • Spoilage: Protects perishable goods in case of equipment failure, power outage, or contamination.
  • Equipment breakdown: Covers the repair and replacement of business equipment.

It's key to assess your business's needs and risks when determining the amount and type of property coverage you should have in your business owners policy. For example, a bakery owner would want to protect their ovens, refrigerators, and computers, in addition to their building. They might also opt to protect their ingredients with a spoilage endorsement.

Evaluating your assets

When determining your commercial property coverage, start by evaluating your assets and inventorying your property. Be sure to consider signs, outdoor fixtures, attached structures, and replacement costs, as well as potential risks. Risks could include both industry-specific hazards and weather events typical of your location.

What commercial property insurance doesn't cover

Commercial property insurance doesn't cover all property-related incidents. It typically excludes claims involving:

  • Earthquakes, hurricanes, and floods: Most policies exclude these events. Speak to your insurance company to learn how to get coverage if you're located in an area that's prone to these types of natural disasters.
  • Commercial autos: Whether you have a fleet of cars or one delivery truck for conducting business, you'll need a commercial auto policy to cover accidents involving your work vehicles.
  • Employee injuries: Employers need workers' compensation insurance to help pay for medical expenses and other costs for employees injured on the job. If your covered equipment malfunctions and harms an employee, you'll still need workers' comp to pay for their injuries.

Our business insurance experts can help you explore coverage options to make sure you have the protection you need for your business.

Who needs commercial property insurance?

Most small businesses should consider commercial property coverage. Professions that commonly need it include:

If you own or rent your location, use expensive equipment, stock inventory, or rely on physical property to conduct business, commercial property insurance can help you recover from unexpected incidents and minimize financial losses.

How much does commercial property insurance cost?

Commercial property insurance cost depends on specific features of your business, such as your profession, location, and the value of your assets. A business owners policy is a cost-effective way for small and medium-sized businesses to get liability and property coverages.

Premiums will vary depending on the unique features of your business. For example, a company that rents an older warehouse will typically pay more than a business that rents a smaller, newer office building.

Learn more about commercial property insurance cost and find affordable rates for your business.

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