Commercial property insurance coverage protects a business’s physical assets, such as buildings, equipment and computers, from loss due to theft, fire, natural disaster or vandalism. All types of businesses, including manufacturers, retailers, service-industry firms and non-profit agencies, carry commercial property insurance. Businesses can choose from commercial property insurance policies that cover specific threats or comprehensive policies that cover all types of damages. The policies that protect against specific threats are often less expensive, but will not protect the company from damages attributable to other causes.An all-risk commercial property insurance policy covers nearly every type of damage a business can occur with a few notable exceptions, such as an act of war. The all-risk policy helps companies eliminate duplicate coverage while also avoiding potential coverage gaps. The policy also makes the claims process more efficient, as companies file their claims through their original insurer rather than through multiple insurers, and pay a single monthly premium to cover all potential threats.
The commercial property insurance coverage reimburses the company for equipment lost at its current cost, rather than the amount the company originally paid. This clause allows companies to replace outdated equipment and compensates for increases in equipment costs due to inflation. However, companies should be aware of policy limits that may prevent them from obtaining full replacement costs. For instance, if the commercial property insurance policy carries at limit of $750,000, but the costs of replacing the lost equipment is $900,000, the company must make up the difference or upgrade its policy.
Commercial property insurance premiums can vary between companies, industries, locations and any preventive measures the policyholders have in place. While a comprehensive commercial property insurance policy can carry some high premiums, businesses can deduct the costs of these premiums from their income taxes.
