If you own a business, one thing you want to understand is commercial property insurance. Insurance is an important part of our lives that protects our most valuable investments, and there are few things more valuable than a business you’ve worked for years to build. Commercial property insurance is essential for the security of any company’s current and future assets. Here’s a brief overview of the forms it often takes.
Insurance serves a wide variety of purposes. For example, auto insurance can support vehicle owners if they get into accidents. Similarly, homeowners policies insure homes, inhabitants, and personal belongings against damage in the event of crime, fires, or severe weather.
Commercial property insurance is similar in nature. It essentially protects the physical assets owned and operated by a business. Commercial property insurance typically insures your location of business and the items contained within its premises. It primarily safeguards company assets from natural hazards such as storms and fires, as well as other unexpected events like vandalism and theft. Optional coverage may be available for things like floods, earthquakes, explosions, electrical surges, equipment breakdown, and personal property damage.
There are many distinct types of commercial property insurance on the market today. Understanding their distinctions is critical when seeking the best choice for your unique business needs. Below are three major types of policies.
This is perhaps the most common type of commercial property insurance. Replacement cost policies cover the entire cost (within limits) of repairing or replacing items and buildings, minus a deductible.
For example, if a storm damages your roof, this type of policy would help pay for the cost of a replacement roof. It may also cover the repair or replacement cost of any items damaged as a result. Many business owners prefer this type of policy for the peace of mind it provides. These policies are also popular because they don’t account for the devaluation of assets over time.
These policies are also known as replacement cost minus deductible. An actual cash value policy will pay out the current value of property damage up to a limit minus a deductible. The key thing to consider here is depreciation of items and properties.
For instance, if your printer is damaged or destroyed in a property fire, this policy will cover its current value. If the printer was brand-new, this will basically cover the entire cost of replacing it. If the printer is 15 years old, however, you’ll likely receive much less than the cost of a new one. Claims adjusters often figure out the exact amount of payout based on their own assessment of property value.
This is a specialized type of commercial property insurance. It serves to protect businesses from the inflation of costs over time. This primarily deals with the cost of repairing or replacing buildings and major structures.
As you likely know, the cost of many properties tends to increase year after year. If construction costs have gone up, this policy may pay out more than its maximum benefit limit. However, it will typically cap this new benefit at a specific amount such as 25% over the limit.
Owning a business is a major responsibility. While profits and growth opportunities may be inspiring, risk is always close behind, as well. If you’re in need of commercial property insurance, our agents are happy to answer questions and discuss your needs. Our goal is to provide our clients with the perfect policies no matter what their situations look like. We encourage you to contact us for a free quote and to learn how we can help today