Commercial Property Insurance

Commercial property insurance policy pays for direct physical loss or damage to covered property whether it be leased or owned. This policy also covers your business personal property, including tools and equipment, inventory, furniture, supplies and fixtures. In addition, a commercial property insurance policy includes coverage for assets like accounts receivable, computers and lost income when business operations are suspended due to a covered loss, such as a fire. It can also help cover the costs to repair or replace stolen, damaged or destroyed property, including property and equipment that isn’t yours but is in your care and custody. The loss must occur at the premises listed and described on the declarations and must result from a covered cause of loss.

The following types of property are examples of business property:

  • Your buildings, furniture, fixtures, supplies & fittings: including fences, gates, car parks, landscaping, outdoor signs, and underground pipes and cables.
  • Business interruption (or rental income protection): in case your business has to close following a flood, fire, or forced entry, we will make up the shortfall in your business income.
  • Inventory
  • Antiques and artwork
  • computers and other data processing equipment
  • Intangible items such as trademarks, copyrights and other intellectual property
  • Machinery
  • Signs, fences and outdoor property not attached to a building
  • Valuable papers, books and documents

Businesses that typically purchase a Commercial Property Policy:

  • Own an office or building
  • Rent an office or storage space
  • Have valuable items such as computers, tools, or culinary equipment
  • Rely on certain property to run the business
  • Two Types of Commercial Property Coverages Offered:

    Property insurance policies may be purchased stand-alone or as part of a comprehensive Business Owner’s Policy that includes Property and General Liability coverage. T. Hudson can help you customize your coverage to address the specific risks facing your business, including selecting the type of Property insurance coverage you may need.

    There are typically two types of coverage offered by insurance companies: replacement cost or actual cash value.

  • Replacement Cost: Pays to repair or rebuild property with materials of the same or comparable quality.
  • Actual Cash Value: Pays the current value of the damaged property, the cost to rebuild or replace property, generally replacement minus depreciation.
    The following optional coverages may be added.

    • Agreed value coverage waives the coinsurance penalty. However, it requires that the insured provide an annual statement of values at policy inception and at every subsequent renewal so that this provision applies beyond the policy expiration date.
    • Inflation guard protection automatically increases insurance limits throughout the policy year.
    • Replacement cost valuation eliminates applying depreciation to determine the value of buildings and/or personal property after a covered loss occurs. It does not apply to certain listed types of property.
    • Replacement cost for personal property of others allows the insured to extend replacement cost valuation to personal property of others in its care, custody, or control.

    How much does a Commercial Property Policy cost?

    There are several factors that go into determining the cost of your business property insurance, including:

    • The value of the property being covered
    • The location of your business
    • Industry and risk factors
    • The coverage limits and deductible you select

    Additional Commercial Property Insurance Coverages Offered?

    • Boiler and Machinery Insurance – sometimes referred to as “equipment breakdown” or “mechanical breakdown coverage,” provides coverage for the accidental breakdown of boilers, machinery, and equipment. This type of coverage usually will reimburse you for property damage and business interruption losses. For example, this coverage would cover fire damage to computers.
    • Business Interruption Insurance – covers lost income and expenses resulting from property damage or loss. For example, if a fire forces you to close your doors for two months, this insurance would reimburse you for salaries, taxes, rents, and net profits that would have been earned during the two-month period.
    • Debris Removal Insurance – covers the cost of removing debris after a fire, flood, windstorm, etc. For example, a fire burns your building to the ground. Before you can start rebuilding, the remains of the old building have to be removed. Your property insurance will cover the costs of rebuilding, but not of removing the debris.
    • Builder’s Risk Insurance – covers buildings while they are being constructed. For example, a Builder’s risk policy would cover losses if a windstorm takes down your partially constructed condominium complex.
    • Glass Insurance – covers broken store windows and plate glass windows.
    • Inland Marine Insurance – covers property in transit and other people’s property on your premises.
    • Ordinance or Law Insurance – covers the costs associated with having to demolish and rebuild to code when your building has been partially destroyed (usually 50 percent). For example, your three-story building is 100 years old. A flood destroys the basement and first two stories. Because more than 50 percent of your building has to be rebuilt, a local ordinance requires that the building be completely demolished and rebuilt according to current building codes. Property insurance covers only the replacement value, not the upgrade.
    • Tenant’s Insurance – Commercial leases often require tenants to carry a certain amount of insurance. A renter’s commercial policy covers damages to improvements you make to your rental space and damages to the building caused by the negligence of your employees.
    • Crime Insurance – covers property crimes such as theft, burglary, and robbery of money, securities, stock, and fixtures from employees and outsiders.
    • Fidelity Bonds – a bond company covers losses due to a bonded employee’s theft of business property and money.

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