Things to Keep in Mind When Shopping Commercial Property Insurance

Things to Keep in Mind When Shopping Commercial Property Insurance

Do you own a business building or rental office space? Commercial property insurance protects you against financial loss from unexpected disasters. Here’s what you need to know about choosing the right amount and type of coverage for your investment real estate.

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Factors Impacting the Cost of Commercial Property Insurance

Insurers usually consider the following factors when deciding how much to charge for commercial property insurance:

  • Location (your building’s exposure to covered risks like natural disasters and crime)
  • Replacement cost (based on the property size, covered assets, construction material, etc.)
  • Coverage amount (more covered perils means higher premium rates)
  • Deductible (a higher out-of-pocket amount can lower your premiums)
  • Claims history (frequent claims can increase your coverage costs)
  • Policy limits (the lower the limit, the lower the premium, but the higher you’d pay out of pocket if you file a claim)

What Does Commercial Property Insurance Cover?

Standard coverage often includes the following commercial property protections for events like fire, explosions, and vandalism:

  • Physical building restoration or repair costs
  • Building owner’s belongings, such as furniture, appliances, and fixtures attached to the covered property
  • Loss of rental income if tenants leave due to extensive damage to the building, making it uninhabitable

Things not Covered Under Commercial Property Insurance

Basic commercial property coverage doesn’t typically include the following:

  • Temporary business interruption costs due to tenants leaving, such as payroll, profits, day-to-day operational costs
  • Break down of equipment like heating and cooling systems and elevators
  • Debris removal after a covered event like a fire or hurricane
  • Building repair/upgrade in compliance with ordinances or regulations

These commercial property coverages are usually available as standalone endorsements for extra premiums.

What is the Cost of Commercial Property Insurance?

The cost of commercial real estate coverage differs by many factors, including insurance companies. On average, the premium rate is $63/month or $756 annually. It’s always a good idea to compare quotes from multiple insurance companies to ensure you get the best coverage at the right price.

How Much Commercial Property Insurance Do I Need?

Calculating the value of your physical building and assets can help you determine the amount of commercial property coverage to purchase. To get an accurate estimate, consider the potential cost of the following after covered property damages/losses:

  • Restoring your building from the ground up
  • Repairing key building systems and installations
  • Restoring fixtures
  • Temporarily replacing your rental income

You may need to purchase extra coverage if the maximum available limit on your policy needs to be increased. For a limit that’s $500,000 short of your property’s full restoration cost, getting umbrella insurance may be a practical way to cover all potential costs and close the coverage gap.

Secure Your Business with the Right Commercial Property Insurance!

Alongside these considerations, consider your unique risks and circumstances when shopping for commercial property insurance. You can always count on the experts at 01 Insurance if you need help choosing the right coverage for optimal financial protection. Contact us today to learn more!

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