UPDATED: Sep 23, 2013
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Many insurance policies are purchased for liability purposes to protect a company from various lawsuits that may be filed against them. In the case of commercial property insurance, however, coverage is purchased to protect the company’s own property from damages caused by inside and outside forces. Commercial property insurance is very similar to a homeowner’s policy; it pays to repair or replace a structure and its contents when damaged by a covered loss.
What Does Commercial Property Insurance Cover?
A policy may protect your company’s property against fires, burst pipes, vandalism, storm damage and other natural disasters. The policy can also offer protection for the company’s land, its structure and the contents of the building, including all of your merchandise, electronics and fixtures.
For example, imagine that your storefront is caught in a hurricane. The commercial property insurance would pay to repair the damaged roof and glass windows (assuming hurricanes were listed as a covered loss). It would also pay for the replacement of the goods inside that were ruined by water, as well as for the outdoor sign that was blown down during the storm.
Like a homeowner’s policy, the specific coverages offered by a commercial property policy may vary. For example, you might purchase a policy that provides protection only against certain named perils, or you might choose a more general policy that will offer a wider protection. Similarly, you might choose a policy that protects only the storefront but not the outdoor sign or interior fixtures. Because so much variance can exist in a commercial property policy, it’s important to review your needs with your insurance company to ensure that you’re getting the policy that best fits your scenario.
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Who Needs It?
In general, any business with a storefront, warehouse, office or other type of commercial property will probably want commercial property insurance. Whether your company’s structure is a small kiosk or a large office space, you still need protection for the building and its contents.
In the case of a sole proprietorship run out of the owner’s home, this type of policy may not be necessary. You can check with your homeowner’s insurance to see whether your commercial property might be covered. Otherwise, all business owners should consider purchasing commercial property insurance to protect their livelihoods from potential disasters.
The cost of a commercial property insurance policy will depend upon several factors: The amount of coverage you purchase, the perils you choose to cover, the cost of your structure, the amount of contents you wish to protect and the risk level of your property. Property insurance can be as low as a few hundred dollars a year, or run into the millions if there are sizable assets that must be protected. Getting a personalized quote from multiple insurance companies is the only way to get a good sense of what your costs might be.