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Property Insurance
Commercial Property Insurance is a type of business insurance that covers physical assets against a wide range of perils, from natural disasters to vandalism. All companies, regardless of size or industry, have valuable physical property that is vulnerable to damage, loss, or theft. Property insurance responds to these incidents, providing essential financial protection to replace or repair what has been lost.
What Is Property Insurance?
Known primarily as Commercial Property Insurance, this coverage protects a company’s physical assets from damage or loss. While both Commercial Property and General Liability insurance safeguard the organization against mishaps, the two policies focus on different aspects of protection.
For example, a Commercial Property policy focuses solely on the physical property of the business, such as the building, equipment, and inventory. This is distinct from General Liability insurance, which covers bodily injury and property damage to third parties. Furthermore, Commercial Property insurance covers a wide range of perils, including but not limited to, fires, windstorms, and vandalism.
Consider a fire in your office building that destroys all of your computers and furniture. Commercial Property insurance would respond to this particular claim, whereas General Liability would not, since the damage was to your own property, not that of a third party.
Property Coverage
Understandably, Commercial Property Insurance benefits every company with physical assets, but especially those with significant inventory or expensive equipment. Accidents and natural disasters can result in substantial financial losses, and property insurance provides a critical layer of financial protection.
Who Needs Property Insurance Coverage?
Any company that owns, leases, or otherwise has valuable physical property—including buildings, equipment, inventory, or furniture—runs the risk that these assets will be damaged or destroyed.
The types of operations that need this coverage to mitigate their risk are almost too many to count:
Retail & E-commerce
Businesses with significant inventory stored on-site or in a warehouse.
Manufacturing & Industrial
Companies with expensive machinery, tools, and raw materials.
Restaurants & Cafes
Businesses with commercial-grade kitchen equipment, dining furniture, and inventory.
Professional
Offices Firms that rely on computers, desks, and other office equipment.
Contractors
Companies that own or are responsible for tools and equipment stored on a job site.
What Does Property Insurance Cover?
You will have to consult your policy documents to confirm exactly what coverage your policy provides, but here are a few scenarios that typically would and would not be covered. You can read more about what Commercial Property insurance covers here.
Building & Structures
Property insurance will often help cover the costs to repair or rebuild your company’s physical buildings and other structures after an covered event.
Business Personal Property
This includes your furniture, equipment, computers, inventory, and other tangible items.
Business Interruption
If a covered event forces you to temporarily close your business, this coverage can help replace lost income during the period of restoration.
Debris Removal
Policies often cover the costs of removing debris after a fire or other disaster.
Fire & Vandalism
This coverage can respond to claims of damage caused by a fire or acts of vandalism.
Natural Perils
Most policies cover damage from wind, hail, and lightning, with options to add coverage for flood and earthquake.
Property Insurance Policy
Commercial Property Insurance covers:
How Can I Manage My Property Policy and Risks?
Before discussing managing this particular policy, let’s explore its foundation more in-depth. Commercial Property Insurance is often purchased as a standalone policy but is sometimes bundled with General Liability as part of a Business Owner’s Policy (BOP).
Understanding that other insurance policies often work hand-in-hand with Property insurance is critical. For example, Property insurance protects your business’s physical assets, while General Liability insurance protects you from third-party claims of injury or property damage. Review these coverage options with a trusted commercial insurance broker to ensure all exposures are covered.
If a covered event, like a fire or a storm, damages your physical property, Commercial Property insurance will step in to protect you from financial loss. The policy does this by paying the costs to repair or replace your building, equipment, and other valuable assets.
What Does a Property Policy Not Cover?
Similar to many other insurance policies, Commercial Property Insurance coverage has exclusions. For example, property insurance doesn’t cover the following claims:
Remember, Commercial Property insurance focuses purely on your business’s physical assets, not liability to third parties, which is covered by general liability and other liability policies.
Property Insurance Cost
As with most commercial insurance policies, the cost of a Property insurance policy depends on several factors: location, claims history, and policy limits, to name a few. However, the following are some other main points insurance carriers will consider when calculating a premium.
Commercial Property Insurance Cost Factors
More often than not, the premium is a function of the total value of your property. Changes in the value of your building, equipment, or inventory will often be the driving factor for increases or decreases in renewal costs.
How carriers determine premiums depends entirely on the industry, for example:
- Restaurants Premiums may be rated based on the square footage of the building and the value of the kitchen equipment.
- E-commerce The total value of inventory stored in a warehouse or office space will be a major factor in determining premiums.
- Manufacturing The value of machinery and other industrial equipment will be a primary driver of cost.
Additionally, many major commercial insurers will customize a Commercial Property policy, which impacts the premium. That said, some of the most prominent enhancements include:
- Expanded coverage for specific perils
- Coverage for newly acquired property
- Replacement cost valuation for personal property
- Extended business interruption coverage
- Coverage for signs, fences, and outdoor property
Property Insurance Claim Examples
A small-town diner, “The Daily Grind,” suffers a grease fire in its kitchen. The fire causes significant damage to the kitchen area, including the stove, fryer, and refrigeration units. The diner’s Commercial Property insurance would cover the costs to repair the building and replace the damaged equipment, as well as lost income while the restaurant is closed for repairs.
A small retail shop, “The Artisan Nook,” is broken into overnight. The thieves steal a large portion of the shop’s unique handmade goods and display furniture. The shop’s Commercial Property insurance would cover the cost to replace the stolen inventory and furniture, helping the business recover quickly.
A powerful windstorm rips a portion of the roof off a manufacturing facility, causing water damage to equipment and products inside. The manufacturer’s Commercial Property insurance would cover the cost of roof repair and replacement of the damaged equipment and inventory.
A small-town diner, “The Daily Grind,” suffers a grease fire in its kitchen. The fire causes significant damage to the kitchen area, including the stove, fryer, and refrigeration units. The diner’s Commercial Property insurance would cover the costs to repair the building and replace the damaged equipment, as well as lost income while the restaurant is closed for repairs.
A small retail shop, “The Artisan Nook,” is broken into overnight. The thieves steal a large portion of the shop’s unique handmade goods and display furniture. The shop’s Commercial Property insurance would cover the cost to replace the stolen inventory and furniture, helping the business recover quickly.
A powerful windstorm rips a portion of the roof off a manufacturing facility, causing water damage to equipment and products inside. The manufacturer’s Commercial Property insurance would cover the cost of roof repair and replacement of the damaged equipment and inventory.
Insurance Brokers For Property Insurance
Founder Shield is a data-driven insurance brokerage serving high-growth, innovative industries. We have a passion for creating and developing innovative risk management products across emerging industries and work hand in hand with clients and underwriters to ensure transparency, efficiency, and reliability every step of the way. Our team has specialized expertise and experience in providing Commercial Property insurance services.
We partner with the leading professional liability insurance carriers to craft tailored risk management programs for public companies and venture-backed companies preparing for funding rounds. With Commercial Property insurance a major budget item, we understand that companies look for new and creative solutions to help manage increasing costs while also securing best-in-class coverage.
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