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Commercial Property Insurance Quotes For Small BusinessSmall business insurance buyers typically purchase Property Insurance as part of a package policy called a Business Owners Policy (BOP). A Business Owners Policy provides the advantage of broader coverages at a discounted price when the Property Policy is combined with a General Liability policy. Property insurance is also referred to in lease agreements and other contracts as Commercial Property Insurance, Business Property Insurance, or Fire And Extended Coverage. "Extended Coverage" or EC refers to perils other than fire such as lightning, windstorm, hail, theft, vandalism, vehicle collision, etc. Even the smallest home business should consider purchasing property insurance to cover essential business equipment such as office equipment and computers. Many Homeowners policies do not cover such equipment owned by a business or they only provide a small sublimit of coverage. In addition, small businesses that lease space from a landlord must purchase commercial property insurance to protect their contents, machinery, equipment, and improvements and betterments against property loss. Furthermore, small business owners may be required to carry this coverage under the terms of their lease agreement. Some leases require tenants to carry insurance to protect parts of the leased building such as glass, HVAC equipment against mechanical breakdown, and signs. Types Of Covered Property That Can Be Insured Property insurance responds to covered losses to owned or leased property at specified locations listed on the declarations page of the policy. Covered property may include buildings, machinery, equipment, inventory, contents, office supplies, furniture, fixtures, tenant's improvements and betterments, etc. Special Perils Coverage Form The recommended commercial property insurance coverage form is the Special Perils Coverage Form which protects covered property against all perils except those that are specifically excluded. The Special Perils Coverage Form is superior to the less frequently used Broad Perils Coverage Form or Basic Perils Coverage Form. Replacement Cost Valuation Property should be insured on a Replacement Cost (RC) Basis with adequate limits reported on the business property insurance policy equal to the true replacement cost value to avoid a coinsurance or similar penalty. Replacement cost coverage allows for older, depreciated property to be replaced with new property upon the adjustment of the claim. Lesser used valuation options are also available such as Actual Cash Value (ACV) and Functional Replacement Cost (FRC). Actual Cash Value is defined as replacement cost minus depreciation. Functional Replacement Cost can be used when Replacement Cost valuation is not affordable and when the intent is to replace a damaged building or piece of machinery with one that performs the same function but that is less expensive. Business Income Insurance Business Income insurance is a critical commercial property insurance coverage. While regular Property Insurance covers direct damage to buildings, machinery and contents, it does not adequately address the damage to the profit and loss statement of a business resulting from a partial or total shutdown of operations caused by a covered claim. Business Income Insurance fills this critical need by reimbursing a business for lost profits and continuing operating expenses that are incurred during the period of restoration. Business Income insurance is also commonly known as Business Interruption Insurance. It is important to note that a study of businesses that have experienced significant property losses indicated that 50% of all such businesses without Business Income insurance did not survive. Deductibles On Property Insurance Deductibles on Commercial Property Insurance Policies commonly range from $500 to $5,000. The most significant and cost effective discounts are seen at the $1000 deductible and $2500 deductible levels for small businesses. Deductibles higher than $2500 don't usually result in significant savings. Deductibles under $500 are not recommended as turning in smaller claims can raise a red flag at renewal time to the underwriters who determine if a renewal will even be offered and if so, what rate changes are necessary. Special Peril Coverage Form Exclusions: Notable exclusions under the Special Perils Coverage Form Are As Follows:
You should inform your insurance agent in writing if you are interested in a "buyback" for any of these excluded perils. Additional Coverages That Can Be Added To A Property Policy: The following additional types of property or coverages may automatically be included under some Commercial Property Insurance policies by special endorsement (if so, verify that limits are adequate) or may be added by request:
What Are Property Insurance Premiums Based On? The cost of Business Property Insurance is based on the following factors: location of building, building age, date of last construction updates (for wiring, plumbing, roof, electrical), construction type of building (frame, concrete, steel, etc.), distance to a fire hydrant and fire department, value to be insured, occupancy type of building, security features (fire alarm, burglar alarm, sprinklers, etc.), past loss history, financial stability of applicant, and other discounts (package, dispersion, management, etc.) All of these factors are part of a complicated rating structure for each carrier. The rates can vary significantly from one carrier to the next. |
