A Quick Guide To Business Property Insurance in 2022

Nov 30, 2021 | Business Insurance

Business Property Insurance

Having Business Property Insurance in Colorado, or any other state is something that every company needs to have to stay protected. This coverage can protect your business whether the building is yours or you just lease it. You can also have this type of insurance if you are working from home. Due to this pandemic, many workers prefer to build their businesses and choose a stay-at-home set-up. 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. 

There are different types of businesses that 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. If you want more comprehensive coverage, you need to talk to your insurance provider to add a separate policy.

Commercial Property Insurance With a Business Owners Policy

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

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 you have a small to medium business that needs more coverage, you need to have 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:

Location

Just like any other type of insurance, the location where your business is located in one of the big factors that can affect the amount of your commercial property insurance. If your business is in a flood-prone area or congested area, it can tremendously affect the amount and the type of insurance that you should have. Also, buildings located in the cities and towns near fire stations can lower down 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 if the other tenants have restaurants and types of business that are more prone to incidents. Then you can still have a high premium for your commercial property insurance. 

Industry

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

Building Construction

Your business property’s construction is also important. 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, and 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

Just 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 important instances where commercial property can’t protect your business.

  • Car Accident- If a car accident happens while your driver is using 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 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 not part of the coverage too. 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 Value – Actual 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?

Having 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 got broken and you need to buy a new one. Moreover, how many dollars it will cost to rebuild the building and buy all the materials and types of equipment for your business in case of a total loss after a fire. Having commercial property insurance can secure your business and can give you more peace of mind than you can imagine. 

What Is a Business Owner Policy

A business owner policy or BOP is a combination of all the main 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 which is less than the total cost if you purchase it separately. 

How does a Business Owner Policies works

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 mostly 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 that are 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 are owned by the company. Also, items are owned by a third party and are temporarily kept under the care or control of the business owner or company. However, the business property must be kept or stored in qualified premises. Qualified premises should be within 100 feet away from the business property. 
  • Business Interruption Insurance is a part of the BOP that is very helpful. 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 is legal responsibility from damages like copyright infringement, advertising harm, property damage, reputational harm, and bodily injuries. However, to be qualified, this should be caused by faults from a normal course during the business. For example, errors during normal 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 will be the additional coverage needed 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 from each state and insurance company. The factors that can affect the decision usually depend on the location of the business, the size of the location, the type of business, and the revenue. 

Conclusion

Your business is one of your biggest 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 Colorado or any other US state! Call Us!  Advantage Insurance Solutions has expert agents that can guide you with what you need. Let our team be your business’s advantage!