Commercial Property Insurance for Your Small Business: Why Do You Need It?

Dec 15, 2021

Commercial Insurance

Commercial Property Insurance for Your Small Business: Why Do You Need It?

Any theft or damage to your tangible commercial assets like physical office spaces, inventory, or equipment could jeopardize your business. Some damage can be extensive enough to force closure of operations, exposing you to significant losses. Commercial property insurance can cover your company against such unforeseeable events. Read on to learn more about the types of coverages you may need to protect your business entirely.

The Basics of Commercial Property Insurance

Commercial property insurance covers your building and other assets in the event of damage, loss, or theft. You may need a commercial property insurance policy for your small business in the following scenarios:

  • You operate from your business building or rented office
  • Your landlord requires business tenants to have this coverage
  • Your lender requires it to issue a commercial property mortgage
  • You need to replace or repair your business property, including inventory and mission-critical equipment

Types of Commercial Property Insurance for Small Business

A standard commercial property policy provides basic coverages. Sometimes, you may need to expand your coverage with riders or additional policies to cover all your business's risks.

What a Standard Policy Covers

At the minimum, your commercial property policy will protect your small business against specific risks in a fixed location. It will cover common perils, including theft, vandalism, and storm. Covered properties may include:

  • Your business building
  • Business property that's kept in the covered premises
  • Business property in a warehouse or home-based storage

The Need for Extra Commercial Property Coverage

To eliminate coverage exposures, you may need additional protection for perils such as:

●      Natural disaster riders: These can cover any business property kept or installed in locations prone to hazards like flooding, earthquakes, or hurricanes. Standard policies don't include flood coverage.

●      Business interruption: This coverage can pay to replace lost revenue when you're forced to close your business due to a covered event temporarily. You may use the compensation to pay salaries, utility bills, or short-term rentals.

●      Mobile property: You may get this optional coverage for any business assets or equipment on the move. Optional coverages include inland marine or equipment floater insurance.

●      Commercial auto insurance: A general liability policy won't cover your company's fleet. Neither does your personal auto liability policy. It would help if you had a commercial auto insurance policy to cover company-owned vehicles used in business operations.

●      Hired and non-owned auto insurance: HNOA covers leased, rented, or personal cars you or your employees use for business-related activities. 

The Cost of Commercial Property Insurance

On average, small businesses tend to pay about $63 per month for commercial property coverage. However, costs can vary widely based on variables like:

● Industry
● Risk levels associated with your specialty
● Coverage limits
● Business location
● Property/asset value (amount of coverage required)

Differences Between Property Insurance and Liability Insurance Coverages

Property coverage pays to replace or repair assets that your business owns. Conversely, liability policies cover financial expenses associated with claims/lawsuits against your company.
A business liability policy may cover lawsuits/settlements for issues such as:

● General liability due to customer injury, copyright infringement, or advertisement injury
● Errors & omissions insurance for when customers dispute the quality of your product/work
● Cyber liability policies cover cyber incidents like data breaches and denial of service attacks
● Employment practices liability coverages protect against lawsuits by disgruntled employees

Having commercial property insurance can protect your business from various loss-causing events, especially property theft or damage. Contact our team at C.V. Mason Insurance Agency for help reviewing your commercial coverage needs.