Obtaining insurance for commercial property insurance coverage for buildings is a critical aspect of protecting the financial well-being of your business. Sometimes referred to as commercial building insurance, commercial real estate insurance, or business property insurance, commercial property insurance protects your company’s physical assets like owned or rented buildings, tools, equipment, machinery, and more. It helps business owners mitigate financial losses arising from damage, destruction, theft, or other perils that can affect your property.
In this post, we’ll cover the basics of commercial property insurance, what your policy will and won’t cover, the factors that affect cost, and a few of the options available through ICW Group, a top-tier insurance company that has been helping policyholders protect their most valued assets for over 50 years.
What is commercial property insurance?
Commercial property insurance pays to repair or replace stolen, lost, or damaged property associated with your business. It covers loss to your physical building as well as other assets that are essential to your operation.
The purpose of insurance for commercial buildings is to protect your company against the risk of owning or renting commercial property. If your equipment is damaged by a fire, for example, or if a pipe bursts and floods your office, a commercial property policy will cover the expenses related to the damage. It not only protects your building but also covers its contents, which can include everything from furniture and fixtures to office supplies, personal property, and even inventory.
What does commercial property insurance cover?
When damage occurs, your commercial insurance policy will pay for losses based on the cost of replacing the item itself, or its actual cash value. Replacement Cost (RC) refers to the average costs associated with repairing, replacing, or rebuilding the property on the same premises with comparable materials without deducting fees for depreciation. Actual Cash Value (ACV) represents the expense of replacing your assets with new property of similar style and quality, considering depreciation.
Your policy may include business interruption insurance and loss of use coverage to safeguard your income in case you can’t operate because of property damage. If your business is forced to close temporarily due to a covered claim, business interruption insurance will cover the cost of day-to-day expenses, lost revenue, and even relocation while you get back on your feet.
If you rent a commercial space, it’s likely that your landlord will require proof of commercial liability coverage. They may carry a policy for their buildings, but it won’t cover any assets you keep in the space. If you’re operating out of your home, you should still consider obtaining a policy—homeowner’s insurance doesn’t typically cover the cost of lost or damaged business equipment so you will need additional coverage.
Your coverage will vary depending on your business property insurance plan and the type of property. Even when it’s not required, obtaining a commercial property insurance policy is important for any small business.
How much does commercial property insurance cost?
When it comes to cost, there is no one-size-fits-all answer since all businesses are different. Typically, the cost of your policy will vary depending on the industry you’re in, the level of protection you want, and other factors based on the details of your business.
If your business is located in a popular area with a higher risk of crime, you will likely pay a higher rate. Businesses with many employees working on the premises will also pay a higher cost. A realtor’s office, for example, generally carries less risk than a restaurant, and will pay a lower rate as a result.
The materials used in the construction of your building may impact cost too. You’ll pay a lower rate if your building is made from fire-resistant materials, or has new or upgraded electrical, wiring, plumbing, or HVAC system. You can work to lower your rate by installing safety features like smoke detectors and burglar alarms.
A common acronym you will hear around property risk quoting is COPE, which stands for Construction, Occupancy, Protection, and Exposure. These are the four core property risk characteristics that underwriters evaluate to assess hazard levels and determine premium pricing.
- Construction
- Building materials: What type of construction and materials have been used, such as wood-frame, brick, masonry, or fire-resistive construction
- Age and condition: How old is the structure and what is its overall physical condition, including any signs of deterioration or necessary repairs
- Size and configuration: What is the building’s total square footage, how many stories is it
- Occupancy
- Use of the building: How is the property is used, such as office space, retail, manufacturing, or other commercial purposes
- Internal hazards: What about specific hazards associated with occupancy, including chemicals, cooking equipment, machinery, or other high-risk operations
- Occupancy status: Is the building is owner-occupied, tenant-occupied, partially occupied, or vacant
- Protection
- Internal protection systems: Are there safety and fire-protection measures within the building, including fire alarm systems, smoke detectors, and automatic sprinkler systems
- External protection: Are there factors outside the building that can affect loss severity, including the quality and response capabilities of the local fire department, adequacy of the water supply, and proximity to the nearest fire station
- Exposure
- Environmental risks: What external hazards exist that may affect the property, such as flood zones, severe weather risks, or areas with elevated wildfire exposure
- Surrounding properties: Are there hazards presented by adjacent or neighboring buildings, including their construction, occupancy, and proximity to the insured property
Contact your insurance agent today to get a quote for your unique commercial property insurance policy with ICW Group.
Selecting the right partner
ICW Group is a national, top-tier, multi-line insurer quoting over $3 billion annually. They are new to the Liability and Property markets, and as a result, aren’t burdened by legacy claims. They offer fewer restrictions on limitations and have the flexibility to assess each submission for both risk and opportunity.
ICW brings a lot to the table—an A.M. Best “A” rating, award-winning services, and a premier network of independent agents and brokers. They have offices nationwide and offer a convenient, streamlined quote process and customized coverage options for the needs of every business. Their underwriters and risk management teams are entirely in-house, allowing for more control over risk and a better insurance experience overall.
ICW Group offers monoline or combined protection for the following products.
Commercial Property policies protect your commercial buildings and Business Personal Property (BPP).
General Liability policies protect your business from claims involving injuries and property damage.
Insurance products can be bundled in some instances. ICW’s Group, for example, offers bundled protection that includes Commercial General Liability insurance and Commercial Property Insurance.
Another advantage to working with ICW Group is that they are often able to accept industries that other carriers can’t accommodate. Covered industries include manufacturing, industrial, commercial, retail, wholesale, service, contractors, and habitational.
As a leading provider of commercial insurance property solutions with comprehensive coverage across various industries, ICW Group is a safe bet for insuring the longevity of your business.
Once you’ve selected the right partner and obtained a policy, be sure to review your coverage annually. Business property insurance needs can change over time due to growth or changes in the business environment. It’s smart to conduct an annual review to ensure your coverage remains adequate.
Is your business protected?
There are over 33 million small businesses in the U.S., and they all have one thing in common: without proper coverage they could be wiped out by a single unexpected event. Having the right type of coverage for your property and physical assets provides a crucial financial safety net in case things go wrong. It can be the difference between a minor disruption to operations and a significant financial loss.
