What Does Commercial Property Insurance Cover?
Business owners who own their buildings or equipment need commercial property insurance to mitigate disaster. It ensures your business will still be standing even if equipment breaks down or your building suffers serious damage.
In this article, we’ll look at what commercial property insurance covers, what it doesn’t, the 3 most common types of commercial insurance, and how you can pick the right plan to protect your business from disaster.
First, What Does Commercial Property Insurance Cover?
Commercial property insurance covers a variety of risks that come with owning physical assets.
If your building is damaged by fire, vandalism, burst pipes, explosions, or anything that may cause serious damage outside of your control, then you should be covered. As with any insurance plan, some are more comprehensive than others, so make sure your building is covered by the threats that are most prevalent in your environment.
Commercial property insurance covers assets inside and outside of the building as well. Specialty equipment, even if it needs to be used at off-site locations, is often covered under this plan. Inventory is insured as well through a variety of circumstances. With plans that offer inland marine and cargo transit insurance, your inventory is protected while it’s in the process of traveling to and from you.
Lastly, commercial property insurance can come with business income coverage. If you can’t operate because you’re rebuilding, or you’re waiting for new equipment to be delivered, you’re going to be missing out on a lot of income. The right plan helps you get through that rough period and ensures key employees don’t need to be fired.
What is not covered by Commercial Property Insurance?
As mentioned earlier, not all policies are created equally. While some plans do offer coverage for the incidents we are about to mention, it is common for many providers not to.
- General Wear and Tear: Damage to property that occurs naturally over time.
- Lack of Maintenance: Damage to property that occurs from a lack of care. Mold, rust, insect infestations, and rot are a few examples of this type of damage.
- Earthquakes: Damage to property from an earthquake. Insurance companies in California may offer earthquake coverage as an add-on, or you will have to purchase it independently.
- Flood Damage: Damage to property from a flood. Most policies include water damage but consider a flood outside of that scope. In coastal areas where flood damage is prevalent, you may have to purchase separate insurance.
- Pollution: The cost of cleanup for indirect spills, discharge, leakage, and the release of pollutants is often not included in the plan.
It’s vital when choosing commercial property insurance that you’re aware of what is covered and what’s not. Talking to a team of experts can help relieve the burden and simplify the process.
What are the 3 most common types of Commercial Property Insurance?
Under the commercial property insurance umbrella there are three common types of protection offered.
Direct Damage insurance protects your buildings, equipment, and inventory against physical damage. This also includes loss of income that occurred from physical damage to property.
Inland Marine insurance is popular amongst businesses that transfer equipment and inventory often. It covers property that is damaged during transportation.
Criminal Activity insurance protects your place of business from theft. This may include employees or customers stealing inventory and cash, forgery, or a cyber attack through an on-site computer.
Who Pays for Commercial Property Insurance?
If you’re renting out equipment or a building for your business, then it can get complicated on who pays for the commercial property insurance.
The property owner is ultimately responsible for arranging insurance since they are the ones at risk of a financial loss if damage occurs. Once the insurance is arranged by the property owner, the cost will often be transferred to the tenant.
However, if you make tenant improvements to the building that aren’t covered by the property owner’s insurance then you may need to take out coverage on your own for those improvements.
How to Choose a Commercial Property Insurance Plan
When choosing a commercial property insurance plan, it’s crucial you’re aware of the threats to your business. Some industries might be more prone to criminal activity, while others only have to worry about direct damage. Maybe the location of your business opens it up to earthquake damage, or you’re headquartered on the coast and need flood insurance added on.
Whatever you determine your company’s risks are, it’s helpful to talk with a team of experts that can guide you in the right direction. At Apex Risk & Insurance Services, we want you to know and understand your options. We prioritize transparency and provide custom solutions to meet your insurance needs.If you have any questions about commercial property insurance, feel free to contact us today.