What is Commercial Property Insurance?

Businesses that own property have a lot invested in their land and buildings, and those assets should be protected. After all, few businesses could afford to replace their facilities if the facilities were destroyed. Commercial property insurance offers protection against a variety of perils for property that businesses own. 

Commercial property insurance may be likened to homeowners insurance. Just as homeowners policies help protect houses that people own, commercial property policies help protect buildings and land that businesses own.

Both policies even frequently offer coverage for items kept inside an insured building. Most homeowners policies include personal property coverage, which often covers furniture, clothes, electronics, and other personal belongings. Similarly, most commercial property policies have business personal property coverage that may insure furniture, electronics, moveable equipment, and other items. (The exact protections that homeowners and commercial property policies provide can vary.) 

Commercial property policies, however, do differ from homeowners in a significant way. While most homeowners policies include liability coverage, commercial property policies generally don’t. They usually only offer property coverages. Businesses usually purchase liability protection through other insurance policies.

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What Businesses is Commercial Property Coverage For?

Any business that owns a building or land can likely benefit from the protections that a commercial property policy affords. Businesses that have outstanding loans against their property may be required by the terms of their loan to purchase coverage. Businesses that own property outright might not be required to purchase coverage, but it’s still often wise to have a policy in place -- just in case something happens.

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Do Businesses That Lease Space Need Commercial Property Coverage?

Businesses that lease space typically don’t need commercial property coverage. Although they still may need coverage for supplies, inventory, and equipment, coverage for a building usually isn’t necessary since they don’t own the building they’re in. Coverage for supplies, inventory, and equipment can often be obtained through another type of insurance that doesn’t include any building coverage -- and, as a result, usually costs less.

What Kinds of Risks Does Business Property Insurance Offer Protection Against?

The exact perils that business property insurance guards against can vary, as they depend on a policy’s specific terms, conditions and exclusions. Some common perils that many policies offer coverage for include:

  • Wind
  • Hail
  • Burglary
  • Vandalism
  • Fire 

Some policies may also offer coverage for freezing pipes and sewer system backups. 

As is generally the case with homeowners policies, few business property policies offer protection against floods and earthquakes. Businesses that need or want coverage against these perils typically have to purchase them as optional coverages or via separate policies.

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How Can Businesses Obtain Commercial Property Insurance?

There are several ways businesses may acquire commercial property coverage. In most situations, a standalone commercial property policy can be purchased, or commercial property coverage can be included as part of a business owners policy or commercial package policy. Which of these three options is the best way to procure commercial property coverage usually depends on what other insurance protections a business needs. 

For help deciding which way to purchase commercial property insurance, businesses should contact an independent insurance agent who specializes in commercial policies. Such an agent will be able to help a business select the coverages that it needs, and then the agent can request quotes for stand-alone policies, business owners policies, and commercial package policies. After reviewing all available options with the agent, business owners will be able to confidently select the business property insurance solution that’s best for their business. 

Meet Your Industry Specialist

Jeff Kroeger

Principal, Senior Vice President, and Head of Commercial Lines, Mr. Kroeger also manages the company's hospitality book of business and is that unit's primary producer. He is a graduate of Montclair State University and was named a 2015 Young Gun Insurance Business America.

Jeff has been providing exceptional insurance for restaurants, bars, nightclubs, and more for many years. He understands the unique challenges this industry faces and delivers the right coverage at an affordable price.

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