Unrecoverable losses of business assets can destabilize or even collapse any company, tiny business. This is why it’s essential to have commercial property insurance, even if your business is home-based.
A commercial property policy ensures your physical business location/premises and other tangible assets, such as office equipment. It can pay to replace or repair covered properties if they are stolen, lost, or damaged.
Why Small Businesses Need Commercial Property Insurance
Property coverage is an essential type of business insurance. Your small business may need the policy for reasons such as:
● You own a business building or rent an office
● The owner of your rented workspace or business premises requires all tenants to have property coverage
● Your mortgage lender requires you to have a commercial property policy for the term of the loan
● You keep business assets in your rented workspace (your landlord’s property coverage doesn’t cover these)
● Your business owns tangible properties, including expensive equipment and inventory
Importance of Commercial Property Insurance
If your inventory or office equipment gets stolen or destroyed, you could suffer substantial financial losses if you don’t have property coverage. Having commercial property insurance enables your business to survive significant losses of assets. The policy can also pay to repair or rebuild your physical location if it gets damaged in a covered event.
These policies usually include machine breakdown coverage. They can pay to repair defective mission-critical equipment to keep your business running. Consider purchasing this insurance if:
● Your own a physical business location
● You operate your business in a rented office
● You own or lease expensive business tools/machinery
● You store inventory
Besides a standard commercial property policy, you may need to purchase riders to customize your protection. Your specific risks and type of property will determine the insurance endorsements required.
When you have a standard commercial property policy, you get asset protection against events such as:
Protected assets include:
● Your business building
● Your business personal property stored in the covered building
● Business assets kept at a designated location other than your offices, such as your home or additional storage
You can purchase extra property coverage against risks not covered by a standard policy. Optional endorsements include:
● Natural disasters: You may need riders to cover damage caused by floods, earthquakes, or hurricanes if your business location is prone to these hazards.
● Business interruption: This insurance can replace the loss of business revenue if you’re forced to halt operations after covering property damage temporarily. The payout can cover utility bills and salaries and temporary business relocation costs.
● Mobile property: This coverage is vital for business assets on the move. Consider purchasing inland marine insurance if your products, materials, or machines are transported by road or train. Equipment floater insurance covers items that are shipped from one location to another. Temporarily warehoused items are also covered against theft or damage.
● Commercial auto insurance: In most states, this policy is mandatorily required for companies that own vehicles. A standard commercial property policy doesn’t cover your business fleet.
● Hired and non-owned auto insurance: Get HNOA insurance if you make deliveries or visit your clients in a hired personal car. This policy covers leased or rented personal vehicles you or your employees use to execute business-related duties.
Estimating the Cost of Commercial Property Insurance
Factors that determine your commercial property insurance premiums include:
● Your industry and covered risks
● Your coverage limits
● Your location
● The value of covered assets