Damages on commercial property can have a heavy financial burden on a business. According to data, a single warehouse fire can cost a business upwards of $128,099 in property damages.
Therefore, you must have the right commercial property insurance policy in place to shield your business against these losses. Apart from offering financial protection against property damage, commercial property insurance provides potential tax benefits, employee protection, credibility, and reduces business stress.
Here’s what you need to know about commercial property insurance and why you should consider getting a policy for your business.
What is Commercial Property Insurance?
Commercial property insurance is coverage used to protect any commercial property from perils such as theft, fire, and natural disasters.
Commercial property insurance is crucial for various businesses, such as retailers, manufacturers, not-for-profit organizations, and service-oriented businesses. Typically, you’ll find commercial property insurance bundled with other types of insurance, such as commercial general liability insurance.
What is Covered by Commercial Property Insurance?
Commercial property insurance offers coverage for various damages and losses affecting your business property. They typically include the following:
Your Commercial Building
Commercial property insurance covers your business’s commercial building. This can be a structure or property you own or have leased and are responsible for insuring.
Apart from the actual structure, your commercial property insurance will also cover various parts of the building, such as indoor and outdoor fixtures, completed additions, and permanently installed equipment and machinery.
Personal Property in Your Business
Commercial property insurance also covers business personal property. This section extends coverage to your building’s contents. These include furniture and fixtures, stock, equipment and machinery, all improvements, betterments, and upgrades made to the rented space, all personal property owned by you and used by the business, and leased personal property that you are obliged to insure.
Most commercial property insurance policies will extend coverage to personal property only within 100 feet of the insured building.
Third-Party Personal Property
An often overlooked but crucial part of commercial property insurance is coverage for third-party personal property. This is the property of others under your custody, care, and control. It includes borrowed property and customer’s property.
Just like personal property coverage, this section of commercial property insurance only applies to third-party personal property within 100 feet of the insured building.
All claims made under this section are paid directly to the property owner and not you, the policyholder.
Reasons You Should Get Commercial Property Insurance
There are various benefits to getting commercial property insurance. Here are the top ones.
In most instances, businesses with commercial property insurance stand out as more credible than their uninsured competition. Businesses with commercial property insurance give suppliers, customers, and other stakeholders confidence that the business can survive a catastrophic peril to its facilities and still fulfil its obligations without running into tough financial challenges.
This can be crucial to winning customer trust and critical contracts in a competitive market.
Protection Against Property Damage
Commercial property insurance keeps your business safe by protecting it against property damage. It shields crucial infrastructure in your business, such as machines, buildings, supplies, and stock, ensuring you can recover in case an insured peril strikes.
Insurance will help you fix damages or replace destroyed property and buildings, ensuring you don’t lose money and dig significantly into your capital.
Reduces Business Stress
Running a business is often stressful and time-consuming. Getting commercial property insurance helps reduce some load off your back by protecting against harmful perils such as theft, natural disasters, and fire.
You manage your business stress-free, knowing any damage to your property is covered financially by an insurance policy.
Potential Tax Benefits
Premiums for commercial property insurance are often tax-deductible. Therefore, they can be written off as a business expense, reducing your taxable income and boosting overall net profits.
Moreover, if a natural disaster destroys your commercial property, you can qualify for a tax deduction, which will significantly reduce your business’s financial burdens.
Protection Against Business Interruptions
Damages to your commercial property can cause sudden and expensive business interruptions. Temporary shutdowns lead to loss of revenue and often cost more to restart business operations.
Commercial property insurance can include business interruption insurance to cover the financial impact of business interruption caused by damages to the commercial property. The insurer will pay you for lost earnings, allowing you to cover ongoing costs, maintain financial stability, and pay wages while your business recovers.
Getting commercial property insurance helps boost employee protection and make your workforce feel safe within the premises. This allows you to promote a healthy work environment and better work ethics, reducing employee turnover.
Factors that You Should Consider When Getting Commercial Property Insurance
There are several factors you should consider when selecting the best commercial property insurance policy for your business. They include the following:
The Type of Property
Each business has unique property needs. Therefore, you must choose an insurance policy that factors in your business’s property needs and offers the best coverage for it.
For instance, your business’s building may be an office complex, apartment complex, factory unit, shopfront, or any form of leisure or recreational center with defined boundaries. You should be aware of your business’s full responsibilities towards the building and, thus, the best cover for it.
Location and Environmental Concerns
Location and weather conditions will have a significant impact on your commercial property insurance policy. You need to assess the effect of the local climate, including trees and rainfall, to determine the best policy for your business.
Weather and environmental concerns will also affect your premiums, with high-risk areas, such as areas prone to flooding or wildfires, demanding higher premiums than low-risk zones.
The nature of your business will have a substantial impact on the commercial property insurance you need. Most policies will differ based on business type, considering the assets that need protection and overall industry concerns.
Your policy must cover potential and foreseeable business risks, ensuring the facility and everything in it is working correctly to maintain good business operations.
Get the Right Policy
Commercial property insurance is necessary to ensure that perils affecting your business’s buildings and infrastructure do not affect your cash flow and accounts.
Talk to an insurance professional and ensure you’re covering all of your business’s building needs.