Owning commercial property can be a great investment and a dream for a small business owner. However, with the success of the commercial property, there are also risks you should consider. No matter what type of property you own, you may have to deal with unforeseen events and natural disasters, such as a fire or flood that can quickly damage the building and contents of your renters, along with natural disasters that may also cause significant property damage. Protecting your commercial property is essential by obtaining the right kind of insurance, and help to keep you from suffering financially as a result of these catastrophic events.
What is Commercial Property Insurance?
Whether you own the property where you conduct business, or rent offices or retail space to other businesses, you need commercial property insurance. Often referred to as business property insurance, commercial property insurance provides coverage for the building and contents in the case of an unexpected event like a natural disaster, accident, fire, or flood. If one of these events occurs, you are left to contend with the results after the fact. Repairing the building and replacing inventory can be extremely expensive, and without commercial property insurance, you would have to cover the costs from your own pocket or business account.
How Does Commercial Property Insurance Protect Your Business?
If one of the aforementioned events occurs in your commercial property, how are you going to pay for the damages? Without a proper business insurance policy for your property, you’ll have to pay for the repairs and replacements yourself. Office furniture, merchandise and inventory, computers, electrical equipment, and damages caused to your buildings can equal thousands of dollars up to millions depending on the extent of the damage. To avoid bankrupting your company, you can get commercial property insurance to help protect your assets. Most commercial property insurance policies will cover damages to the building, any outdoor signage, office furniture or equipment, merchandise and inventory, and landscaping items on the land you own.
Types of Commercial Property Insurance
When shopping for a commercial property insurance policy, you have two main policies to choose from: a replacement cost policy and an actual cash value policy. As you will see below, each policy has its own perks and disadvantages, and one may be better suited for you than the other:
- Replacement Cost Policy – Rather than covering only for depreciated value of your items and equipment, the replacement cost policy covers the market value. While it may have a higher premium, in the long run it may be more beneficial to you as it covers more than the Actual Cash Value Policy (ACV), which is described below.
- Actual Cash Value Policy (ACV) – An actual cash value policy is a commercial property policy that covers goods up until their depreciated value through reimbursement. The premium is lower, so it may be a better choice if you are on a tight budget and looking for coverage.
No matter which type you decide on, choosing a commercial property insurance policy is a vital step in protecting your business and commercial property. Being insured with insurance for your commercial property can be what stands in the way of you maintaining your successful business after a catastrophic event.