What does commercial property insurance policy cover?
What Does A Commercial Property Insurance Policy Cover?
Commercial property insurance is one of the most confusing types of insurance policies. This is because there are so many different sub-types of coverage and so many ways that the policy can be customized. In this article, we're going to go through each type of commercial property coverage so that you know exactly what your policy covers.
Understanding what a commercial property insurance policy covers can be confusing.
You understand that a property insurance policy covers the physical structure of your building, but what about all the other important aspects of owning a business? A commercial property insurance policy also provides coverage for:
- Business income - you'll be reimbursed for any lost income if your business must close temporarily due to damage from an insured peril
- Building ordinance or law - this protects against legal expenses when you must comply with new building ordinances and laws
- Personal property inventory can be covered up to $100,000 under most policies
There are three types of coverage on a commercial property insurance policy.
These include business income, commercial property, and building ordinances or laws.
- Business income: This coverage reimburses you for your business's operational costs if it has been shut down due to damage caused by fire or smoke, theft, vandalism, or other covered perils.
- Commercial property: This coverage protects against losses if insured properties are damaged or destroyed by covered perils like fire and vandalism.
- Building ordinance or law: It pays for expenses related to rebuilding damaged structures under local laws and ordinances when they're in compliance with those laws at the time of loss.
The first coverage is Commercial Property.
The first coverage is commercial property. Commercial property insurance covers the building and the land on which it sits. It covers you for fire damage or natural disasters, but it also covers your own negligence and vandalism. The policy will also cover losses caused by theft, wind damage, water damage from plumbing issues, or floods caused by weather events like hurricanes or tornadoes. This can be a combination policy that includes separate coverage for each component of your building:
If one part of your building is damaged in an accident or disaster, then that portion will be covered under its own specific policy limit (the amount of money assigned to pay for damages associated with certain types of damages).
The second coverage of the policy is Building Ordinance or Law.
A building ordinance or law coverage on a commercial property insurance policy is required by most cities and counties where you operate your business. It provides protection from liability for any damage that may result from violating local codes. This coverage is also often required by lenders to secure financing.
The third coverage is Business Income for business owners with retail, office, or other types of service space.
If you are a business owner, buying this coverage is highly recommended. Business income coverage protects a business against loss of income due to direct physical damage or interruption of business because of a covered peril. This policy pays the business owner's net operating profit during the period in which their property was damaged, and they could not conduct normal operations.
Business income covers losses that occur during the following time periods:
- From the date of loss to the date when your building is repaired or replaced and ready for normal use
- From the date when it becomes impossible for you to conduct your regular trade or profession because of an insured peril until it becomes possible again
The most confusing type of coverage is Commercial Property because there are so many sub-types of coverage involved.
The most confusing type of coverage is Commercial Property because there are so many sub-types of coverage involved. There are two main categories: fire and water damage, which can be further broken down into several other types of damage. Commercial property insurance is the most confusing because it addresses all the different types of accidents that could happen to your building or property and the things inside it.
At the end of the day, commercial property insurance is an important protection for your business. If something happens to your building or inventory, it’s essential that you have enough coverage to cover any expenses related to repairs or replacement.