A Quick Guide To Business Property Insurance in 2023

Dec 17, 2022 | Business Insurance

Business Property Insurance

To stay protected, every company must have Business Property Insurance in Colorado or any other state. This coverage can protect your business whether the building is yours or you lease it. You can also have this insurance type if you work from home. Due to this pandemic, many workers prefer to build their businesses and choose a stay-at-home setup. This is a safer way to do business and much more comfortable. Moreover, your commercial insurance will be cheaper if you have your business at home than if you have it in a building or rental place. In this article, we made a quick guide to commercial property insurance that all business owners should know about. 

What is Commercial Property Insurance?

Commercial Property Insurance guards your business’s physical assets against explosion, fire, natural disaster, burst pipes, vandalism, and theft. But floods and earthquakes are usually not part of commercial property insurance. 

Different types of businesses carry commercial property insurance. These businesses are retailers, manufacturers, non-profit organizations, and service-oriented businesses. Commercial property insurance comes with other forms of insurance, like commercial general liability insurance. You must ask your insurance provider to add a separate policy for more comprehensive coverage.

Commercial Property Insurance With a Business Owners Policy

Small to medium businesses can buy property insurance as a part of the Business Owners Policy or BOP. A BOP is a combination of different insurance policies a business needs. 

Commercial Property Insurance for My Home-based Business

If you have a small home-based business, your Homeowners Insurance might be sufficient enough to cover that. But if a small to medium business needs more coverage, you need commercial property insurance to secure your investments.

How much does Commercial Property Insurance Cost?

The amount of commercial property Insurance depends on the value of your business assets and the building itself. Its median cost is $63 per month or $756 per year. Some reasons that can contribute to the amount of your insurance are common factors such as:


Like any other type of insurance, the location of your business is one of the significant factors that can affect the amount of your commercial property insurance. If your business is in a flood-prone or congested area, it can tremendously affect the amount and type of insurance you should have. Also, buildings in the cities and towns near fire stations can lower your rate. While if you’re renting a space in a building with multiple tenants, that can cost you a higher premium. Even if your business is not high-risk and the other tenants have restaurants and types of businesses more prone to incidents, you can still have a high premium for your commercial property insurance. 


Your industry type is also a significant factor that can affect the amount of your commercial property insurance. For example, a marketing agency office is less risky than a car wash or repair shop. 

Building Construction

Your business property’s construction is also essential. A fireproof building is cheaper to insure than an old building without any safety features. Moreover, it is a plus factor if the building has a fire alarm, sprinkler system, and theft security system. 

What does commercial property insurance cover?

Commercial Property Insurance covers the building where your business is, everything inside it, and attached features to it such as:

  • Essential Documents
  • Computers
  • Furniture
  • Equipment
  • Exterior Designs
  • Fence
  • Landscaping
  • Inventory

What Commercial Property Insurance Doesn’t Cover?

Like any other type of insurance, commercial property insurance can’t cover everything. There are some perils and incidents that need extra coverage. Here are some crucial instances where commercial property can’t protect your business.

  • Car Accident- If a car accident happens while your driver uses the company car for delivery, that is not part of your commercial property insurance. You need to have Commercial Auto Insurance in your policy for that to be part of it as well. 
  • Damages outside the building- If you accidentally damage a client’s door while visiting for a business meeting. That is not part of your commercial property insurance. 
  • Flood- Flood damage due to severe weather conditions is also not part of the coverage. You need to add a separate policy, like Flood Insurance, if you want to include flood damages in your policy.  

How To Buy Commercial Property Insurance?

You can choose between Replacement Cost or Actual Cost Value for your commercial property insurance. 

Replacement Cost Replacement cost is replacing or fixing the damaged part of the building using the same materials and same quality without deducting the depreciation amount. 

Actual Cash ValueActual cash value is replacing or fixing the damaged part of the 

building using the same quality but after the depreciated amount. 

Why Do I Need Commercial Property Insurance for My Business?

Commercial property insurance can save you the responsibility of paying for the damages to your business. There are lots of incidents that can happen while running a company. We can’t control everything as much as we want to. But having insurance to guard your assets against a loss is a great help to save your business from losing hundreds to thousands of dollars. 

Imagine how much money you might need if a piece of equipment breaks and you need to buy a new one. Moreover, how much will it cost to rebuild the building and buy all the materials and equipment for your business in case of a total loss after a fire? Commercial property insurance can secure your business and give you more peace of mind than you can imagine. 

What Is a Business Owner Policy?

A business owner policy or BOP combines all the leading property and liability risks under one insurance package. This includes all the basic policies that a business needs to have. But generally, BOP is sold at a premium less than the total cost if you purchase it separately. 

How do Business Owner Policies work?

A BOP offers a variety of insurance products under one policy. Its market is generally from small-to-midsized businesses. A BOP usually includes property, liability insurance, and business insurance. However, most of these policies have criteria for eligibility. 

Property Insurance 

The property insurance part of BOP is mainly known as Peril Coverage. It gives protection against damages caused by:  

  • Qualified perils such as wind, explosion, vandalism, and smoke. Moreover, other BOPs offer “ all-risk coverage” or open-peril coverage. This option is only available through special BOP and not on a standard BOP. 
  • Properties covered by standard BOP generally includes owned or rented building and fixed outdoor features of the owned or rented building.
  • BOP also covers most items that the company owns. Also, items are owned by a third party and are temporarily kept under the business owner’s or company’s care or control. However, the business property must be kept or stored in suitable premises. Suitable premises should be within 100 feet away from the business property. 
  • Business Interruption Insurance is a valuable part of the BOP. It can cover the loss of income when a business needs to close temporarily due to damages from a natural disaster. 
  • BOP also has Liability Protection. This can protect your business against legal responsibility from damages like copyright infringement, advertising harm, property damage, reputational harm, and bodily injuries. However, this should be caused by faults from a regular course during the business to be qualified. For example, errors during standard service and faulty products.

BOP Special Considerations 

It was suggested by the U.S. Small Business Administration or SBA that a risk assessment should be performed before you shop for a BOP. 

Some BOP also includes vehicle coverage, crime insurance, and flood insurance. But it still depends on the kind of business and the situation on what additional coverage needs to be added. Most of this additional coverage is spoilage of merchandise, crimes, forgery, fidelity bond, and even crimes. 

BOP Does Not Cover

But, not all businesses can qualify to get a BOP. The requirements needed are different for each state and insurance company. The factors that can affect the decision usually depend on the location, the size of the location, the type of business, and the revenue. 


Your business is one of your most significant investments. Hence you must secure it as much as you can. You should look for the insurance package that best fits your needs. 

Let us help you secure your Business Property Insurance in Denver, CO, or any other US state! Call Us! and sign up with us!  Advantage Insurance Solutions has expert agents that can guide you with what you need. Let our team be your business’s advantage!

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