Commercial Property Insurance
Commercial property insurance pays to repair or replace the physical things your business depends on: the building if you own it, the improvements you paid for if you lease, and the equipment, furniture, and inventory inside.
The coverage is straightforward. The valuation is not. Construction costs, equipment purchases, and inventory swings all move your real exposure, while the limit on the policy stays where it was set.
What it covers
- Buildings you own, at replacement cost when properly written
- Business personal property: equipment, furniture, inventory, and supplies
- Tenant improvements and betterments you paid for in a leased space
- Business income and extra expense after a covered loss
- Equipment breakdown, when added
What it does not cover
- Earthquake and flood, unless added separately
- Wear and tear, maintenance, and gradual leaks
- Property in transit or at job sites (inland marine)
Who needs it
Any business that owns a building, leases space it has improved, or owns equipment and inventory it could not quickly replace out of pocket.
What drives the price
- Construction type, age, and building updates
- Sprinklers and alarm systems
- Occupancy and what neighboring tenants do
- Replacement cost values
- Deductible choices
Where owners get caught: the coinsurance penalty
Most commercial property forms require you to insure at least 80 or 90 percent of the property's true value. Fall short and the carrier pays only a proportion of every claim, not just the large ones. Agreed value endorsements and honest replacement cost estimates remove that risk, and we update both at renewal.
Commercial Property: common questions
What is the difference between replacement cost and actual cash value?
Replacement cost pays to rebuild or replace with new materials of like kind. Actual cash value subtracts depreciation, which can leave a large gap on older buildings and equipment.
Does commercial property cover my tools at a job site?
Usually only in a limited way. Tools and equipment that move between locations are better covered under an inland marine or contractors equipment policy.
I lease my space. Do I still need property insurance?
Yes. Your landlord's policy covers their building, not your equipment, inventory, or the improvements you paid for. Most leases also require you to carry it.
Commercial Property in practice
Illustrative stories of businesses that needed it, and what else their review turned up.
A Machine Shop Bought a New CNC Mill and Forgot to Tell Its Insurer
A precision machining shop had added nearly a million dollars of equipment over three years. Its property limit hadn't changed, and a coinsurance clause meant that even a small claim would have been cut down.
PropertyGLStop-gapFood and beverageAfter the Kitchen Fire, the Real Question Was How Long the Restaurant Could Survive Closed
A seventy-seat restaurant had its building and equipment insured. The review found a business income limit that would run out long before a serious fire could be repaired, and liquor exposure the policy excluded.
PropertyGLUmbrellaReal estateEight Rentals, Three LLCs, and Insurance Still in the Owner's Personal Name
A couple moved their eight rental properties into LLCs for liability protection, then left the insurance exactly where it was. The review found named insured problems that could have cost them a claim.
PropertyUmbrellaGLFood and beverageThe Bakery Whose Oven Broke on the Busiest Week of the Year
A wholesale bakery supplying grocery stores and cafés had fire coverage on its equipment. The review found that what actually threatened it was a breakdown, a spoiled cooler, and a delivery van no one had insured correctly.
PropertyAutoStop-gapReal estateA Condo Board Voted on a Special Assessment. Then an Owner Sued the Board.
A forty-unit condo association's volunteer board approved an expensive envelope repair. An owner who disagreed filed suit against the board members personally, and the association's D&O limit turned out to be the smallest number in its program.
D&OPropertyUmbrellaFood and beverageA Food Truck Is a Vehicle, a Kitchen, and a Business. Its Insurance Should Be All Three.
A taco truck owner had a commercial auto policy and figured that was the whole program. The review found the kitchen equipment, the customers, and the events all needed coverage the auto policy doesn't provide.
AutoGLPropertyUsually written alongside
Business Owners Policy
Property, liability, and lost income bundled into one policy. The right starting point for most small businesses.
Learn moreGeneral Liability
Injury and property damage claims from customers, clients, and the public. The policy most contracts require.
Learn moreCommercial Umbrella
Extra liability limits above your GL, auto, and employers liability, usually at a lower cost per dollar.
Learn morePart of the programs we build for contractors & trades, restaurants & food and real estate & property owners.
Not sure your commercial property coverage fits?
Send us what you have. We review it line by line against your leases and contracts, and tell you plainly what is missing. Free, and no obligation.