As the name implies, commercial property insurance is designed to protect you in the event property owned by your company is lost, damaged or stolen. In most instances, it covers the cost to repair damaged property and to replace what you've lost.
Different types of property insurance policies protect against different risks or perils, and they are often tailored to fit the needs of a particular business. However, there are two general types of policies: named-peril policies and all-risk policies.
- Named-peril policies protect against losses resulting from only those perils the policy names.
- All-risk policies protects against all perils expect those specifically named. Most businesses are better off with an all-risk policy, as it offers broad coverage, rather than item-by-item coverage that may require separate policies for each class of property.
Coverage can and does vary from one provider to the next, however, it often falls into one of three categories: basicform, broad form, or special form
- Basic form usually covers common perils, such as damage caused by fire, lightning, windstorm, vehicles, aircraft and civil commotion.
- Broad form may cover these basic perils while adding others, such as water damage, collapse, glass breakage, weight of snow, ice or sleet, and sprinkler leakage.
- Special form will cover any cause of loss expect those specifically excluded, such as flood, earth movement, war, wear and tear, insects and vermin.
How you are reimbursed for your loss is another way that policies differ. A policy that offers replacement cost reimbursement will pay you for the actual cost of replacing your property. If it offers actual cash value reimbursement, your reimbursement will be based on the replacement cost minus the physical depreciation of the property. Although actual cash value premiums are often lower, they usually pay out less and could fall short of what you need to replace your property.You can buy separate policies to protect your property against perils that might be excluded from your commercial property insurance, or for those items for which you need specific coverage. Specialized coverage includes the following:
- Flood -- Most general policies exclude coverage for flood damage. If your business is located in a flood zone, you should consider a flood insurance policy.
- Crime -- Though it can be expensive, crime insurance protects you against on-premise burglary, off-premise robbery, embezzlement, employee theft and more.
- Inland Marine -- In contrast to most commercial property policies, this protects items of value in transit, such as valuable tools, artwork or jewelry.
- Automobile -- This can protect your business's vehicle against collision damage as well as from perils such as fire, wind, hail or vandalism.
- Cargo -- This covers losses to inventory or goods on board a company truck.
- Fire -- Standardized in the U.S., these policies cover losses from fire and lightning.
Protection for general commercial property is often combined with other policies, such as liability insurance, to form a single policy for business owners. Two examples include:
- Commercial multi-peril -- These combine several different types of coverage in a single policy. They often include liability and business coverage as well as commercial property insurance. Other types of coverage may be added to the policy.
- Business owner programs -- These combine property and liability coverage in one policy.