Top 5 Frequently Asked Questions About Commercial Property Insurance

Top 5 Frequently Asked Questions About Commercial Property Insurance

Commercial property insurance is an insurance policy that protects business property, specifically physical business premises and the contents on the premises. These are generally high-value assets that would cost a significant amount of money to repair or replace in the event of loss or damage. Therefore, carrying adequate commercial property insurance is a good way to protect yourself and your business from major financial losses. Here are common questions asked about commercial property insurance and their answers.

  1. What Does Commercial Property Insurance Cover?

    A standard commercial property insurance policy covers the financial losses associated with damage to business buildings and other properties found in the premises. It covers damaged furniture, stationery, computers, buildings, and equipment. Common perils covered include fire, theft, natural disasters, and vandalism, among others. Remember, commercial property insurance only covers named perils up to the limits stipulated in the policy.

  2. Is Commercial Property Insurance Necessary for a New Business?

    Yes. Regardless of the age of your business, you should have enough commercial property insurance coverage in place. One thing about perils is that they occur unexpectedly. For example, a fire may erupt in your premises on your second day of operation and burn down property worth hundreds of thousands. If you have commercial property insurance, you will have a higher chance of surviving the disaster even if you’ve run out of capital and are still struggling to break even.

    Also Read: What are the effects of being caught driving with an expired license?

  3. Do You Still Need Commercial Property Insurance for a Home Business?

    Yes. Data from the Small Business Administration (SBA) indicates that about 50% of small businesses in the U.S. are home-based. Unfortunately, nearly 60% of these businesses don’t have commercial insurance. While adding a home business insurance rider on your homeowners insurance policy is an option, this coverage will only pay for business losses amounting to $2,500. Therefore, it is prudent to have commercial property insurance, even for a home business. This policy will come in handy if you incur losses exceeding $2,500.

  4. How Can I Lower My Commercial Property Insurance Premiums?

    Commercial property insurance costs typically depend on factors such as the size of risk involved, the value of the property, and the insurance provider. You can lower your premiums by comparing quotes from multiple insurance providers. Another way to keep premiums low is by mitigating risks in your premises in ways such as:

    • Installing smoke alarms, fire detectors, and sprinkler systems to prevent fire damage
    • Installing a security system to prevent burglary
    • Inspecting the electrical, HVAC, and plumbing systems regularly to prevent fires and water damage
    • Sensitizing employees on how to maintain safety at the premises

    While there’s no guarantee, putting these measures into practice will likely earn you discounts on your commercial property insurance policy.

    Related Read: How an Energy Audit Can Help Secure Your Commercial Property?

  5. What Are the Common Commercial Property Insurance Exclusions?

    A standard commercial property insurance policy does not cover the following perils:

    • Flood damage
    • Earthquake damage
    • Accidents involving business automobiles
    • Damage to a third party’s property
    • Equipment breakdown
    • Intentional acts

    It’s worth noting that you can purchase a separate insurance policy for most of the exclusions and avoid underinsurance. For others, you can add riders on your primary commercial insurance policy if the insurance provider allows it.

Consult with 01 Insurance

For more information on commercial property insurance, contact our experts here at 01 Insurance. We are here to help you choose the right insurance coverage for your unique needs.

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