Commercial property insurance
Inland marine covers property that moves. Commercial property covers what stays put: your shop, office, warehouse and the contents inside, plus lost income after a covered loss.
What it covers
- Buildings you own, or improvements you made to a leased space
- Business personal property: furniture, inventory, stock and fixtures
- Business income and extra expense after a covered loss
- Equipment breakdown, when added
Apply online
The online application asks the questions underwriters need for this coverage. Business owners fill it out directly, and insurance agents can complete it for a client or send it to them. Insurance agents can also request an appointment.
Main policy choices
Causes of loss
Basic and broad forms list the perils they cover, such as fire, lightning and windstorm. A special form covers direct physical loss unless it is excluded. Ask which form your quote uses.
Replacement cost or actual cash value
Replacement cost pays to repair or rebuild with new materials of like kind and quality. Actual cash value subtracts depreciation, which can leave a large gap on an older building or equipment.
Coinsurance and agreed value
Many property policies have a coinsurance clause, often 80 or 90 percent, that reduces a claim if the building is insured for less than that share of its value. An agreed value option can waive coinsurance when you document values up front.
Who buys it
Contractors with a shop, yard or office. Equipment dealers and rental companies with a showroom and service bay. Warehouses, light manufacturers and offices. Anyone who owns a building or has invested in improvements to a leased space. Lenders on a mortgaged building will require it, often with specific mortgagee wording.
Where property and inland marine meet
Equipment in your shop is often covered by both a property policy and an equipment floater. Decide which policy covers it so you are not paying twice, and make sure equipment away from the shop is on the floater.
Property policies usually give only limited coverage for property away from the listed premises, and they may exclude contractors' equipment and vehicles entirely. Tools in a truck, machines at a job site and materials in transit belong on inland marine.
Common exclusions and gaps
Flood and earthquake are usually excluded and need separate coverage or an endorsement. Water damage from sewer backup may need to be added. Wear, rust, mold and gradual leaks are excluded. Equipment breakdown, such as a burnt-out compressor or electrical panel, is not covered unless the endorsement is added. Business income often has a waiting period before it starts paying, and the limit should reflect how long a rebuild could take.
What underwriters ask
- Building address, construction type, year built, square footage and number of stories
- Roof age and type, plus updates to wiring, plumbing and HVAC
- Sprinklers, fire and burglar alarms, and distance to a fire hydrant and station
- Occupancy: what goes on in the building and any hazardous operations
- Values for the building, contents and annual business income
- Loss history for the past five years
How to get a property quote
- Gather building details: address, construction, year built, square footage and roof age.
- Estimate the cost to rebuild the building, not its market value.
- Total the contents, inventory and fixtures, separating them from mobile equipment that belongs on a floater.
- Estimate business income for a year and how long a rebuild would realistically take.
- Collect the lease or mortgage insurance requirements, including mortgagee or landlord wording.
- Pull five years of loss runs from your current insurer.
Common questions
Do I need property insurance if I rent my shop?
Your landlord insures the building. You still need coverage for your contents, any improvements you made, and lost income if the space becomes unusable.
Does commercial property cover my equipment at a job site?
Usually not, or only for a small amount. Property policies are built for a fixed location. Equipment at job sites and in transit belongs on an equipment floater.
What is a coinsurance penalty?
If your policy requires insuring to 80 percent of value and you insure for less, a partial loss is reduced in proportion. Keeping building values current, or choosing agreed value, helps avoid it.
Is flood damage covered?
Flood is usually excluded from commercial property policies. It can be bought separately or, on some policies, added by endorsement with its own limit and deductible.
Ready for a quote?
One online application. Owners and agents both welcome.
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