Business Property Insurance Questions (And Answers!)

By Hanson & Ryan, Inc.

saleswoman standing in front of colleagues

Your business is essential to your livelihood. It not only puts food on your table and keeps a roof over your head, but it does the same for your family, your employees, and their families. What if the unexpected happens that causes a minor or even major business interruption? What if a fire breaks out in your warehouse, and all your products to sell are damaged or destroyed? What if a pipe freezes and bursts, flooding your office and destroying important documents, computers, and office equipment? What if you experience so much property damage that you must use all your business income to repair or replace key components of your operation and cannot pay your employees? No matter the size of your business, property insurance can be the difference between rebuilding or going out of business entirely.

What is Property Insurance for Business?

Business property insurance is a commercial insurance policy that protects the place where you do business as well as the assets in and around it. Also referred to as commercial property insurance, it provides covered loss protection to your business property, whether you rent or own it.

The costs associated with your business property insurance policy vary by state and industry. In addition, an insurance agent considers the following characteristics of a building when determining the cost of a commercial property insurance policy:

  • Construction – the materials a building is built with
  • Occupancy – how the property is used, i.e., retail, manufacturing, or rental
  • Protection – how the building is safeguarded from fire
  • Exposure – external hazards that exist primarily due to location

Do I Need Commercial Property Insurance?

Simply put, responsible business owners invest in business property insurance. Property insurance is an important part of your commercial insurance portfolio, which should also include general liability insurance, and may include things like commercial auto and workers’ compensation insurance.

Why is Business Property Insurance Important?

The coverages provided by commercial property insurance protect your business and prevent you from having to cover the costs of damages out of pocket, putting your business at risk. Your existing insurance policies, like your homeowners’ insurance, likely do not provide enough protection to cover your business, even if you run your business out of your home.

What Does Business Property Insurance Cover?

Before settling on your policy, it is important to have a comprehensive list of your business property to ensure you have enough coverage in the case of an unforeseen event. Property insurance for commercial businesses doesn’t just protect the physical space of your operations, but also the physical assets inside and around it, including:

  • Buildings and other structures owned or rented
  • Inventory
  • Money or securities
  • Furniture, equipment, and supplies
  • Records, files, and other important documents
  • Machinery and equipment
  • Leasehold improvements and betterments
  • Mobile property like construction equipment
  • Computers
  • Satellite dishes
  • Property in transit
  • Cargo
  • Signage, fencing, and other outdoor property not attached to the building
  • Intangible property like trademarks, etc.
  • Business contingency for suppliers
  • Ordinary payroll
  • Other expenses because of loss

Hanson & Ryan offers a wide range of property insurance types with a variety of additional coverages including:

  • Business property – to cover the physical assets of your space and what is inside and around it, including what is listed above and more. Basic policies cover losses due to fire or lightning, including the cost of removing property to protect it from further damage. Standard policies provide coverage for extended perils, such as floods, windstorms, hail, earthquakes, acts of terrorism, explosion, riots, smoke, civil commotions, and vehicles that damage your property. You can also add additional coverages for vandalism and malicious mischief.
  • Business interruption/business income – to protect your business if an incident temporarily disrupts your work and prevents you from paying your employees.
  • Tenants’ improvement and betterments – to safeguard your business if your rented space is damaged during renovation or other improvements. If you are renting commercial space, it is likely you will desire to make upgrades to the property over time. In that case, it is often unclear who is responsible, the tenant or landlord, if the building is damaged or destroyed during the process.
  • Equipment breakdown – to cover costs in case your equipment breaks down, including repairs and replacements, service and income disruptions, loss of perishable goods, data restoration, and the cleanup of hazardous materials released in a covered loss.
  • Inland marine – to cover losses to equipment suffered during transport. Contrary to the use of the word “marine,” this protects you against losses during transport on land including vandalism, theft, breakage, and other transit-related property damage.
  • Ocean marine – to protect the cargo and vessels used by companies that ship goods at sea. It also covers against third-party liabilities like property damage, bodily injury, and cleanup and removal in the event of a wreck.
  • Jewelers’ block – to cover a jeweler’s inventory of raw materials, precious metals, jewelry, and other valuables. It also protects against other risks of the jewelry industry, including customers’ property while it is in your care, inventory transported to trade shows, and inventory being shipped through air freight or armored services.

A typical policy will provide the “replacement cost” value, the amount needed to repair, replace, and rebuild your building with similar materials, and the “actual cash” value, which is the value of your property when it is damaged or destroyed accounting for depreciation. Business property insurance policies often include a coinsurance clause that requires you, the policyholder, to share the cost of covered services up to a moderate percentage of the “actual cash” value of the property. This ensures full coverage for your losses. If your policy provides inadequate coverage for your property, you may be responsible for a percentage of all losses, even if they are included in the policy.

Your Local Business Property Insurance Agents

Insurance for your business property is critical to protecting your business and supporting its long-term viability. You should only trust the best to help you choose the policy that is right for you. Hanson & Ryan has been protecting businesses with insurance since 1876. We pride ourselves in our ability to develop a thorough understanding of your business and create a comprehensive policy that fulfills your unique needs. Please contact Hanson & Ryan today so we can assist you.