Fire destroys your building. A pipe bursts and floods your warehouse. Someone breaks in and steals your equipment. Commercial property insurance is what keeps these events from ending your business.
What Commercial Property Insurance Covers
- Buildings: The physical structure of buildings you own. Coverage should reflect current replacement cost, not market value.
- Business personal property (BPP): Equipment, inventory, furniture, computers, tools — everything you own or use in your business operations.
- Property of others in your care: Customer property in your custody (a repair shop with customers' items, for example).
- Leasehold improvements: Improvements and buildouts you've made to a rented space.
- Business income/interruption: Lost revenue and ongoing expenses if a covered loss forces you to close temporarily (often added as an endorsement).
How Commercial Property Is Rated
Carriers use several factors to price commercial property:
- Construction type (frame, masonry, fire-resistive)
- Age and condition of the building
- Occupancy (what the building is used for)
- Protection class (distance to fire station, hydrant availability)
- Coverage amount and deductible
Common Coverage Mistakes
- Insuring at market value instead of replacement cost
- Not updating coverage when you acquire new equipment
- Choosing ACV instead of replacement cost to save on premium
- Skipping business income coverage and having no revenue protection after a loss