Property insurance is necessary for most businesses that operate out of a building or own equipment. This type of insurance may cover the building, equipment, inventory, and other contents. Sometimes, these policies are even available to protect signage and other structures. It is often necessary to select a commercial property insurance policy even if the business does not own the property but rents or leases it. At Keslar Insurance, we walk you through the options so you get the right type of property coverage for your specific needs.
Commercial Property Insurance – Frequently Asked Questions
- What is commercial property insurance, and who needs it?
Commercial property insurance protects your business’s physical assets—like buildings, equipment, inventory, and furnishings—against risks such as fire, theft, vandalism, and certain weather-related events. It’s essential for any business that owns or leases space or valuable business property. - What does a standard commercial property policy cover?
It generally includes:
- Buildings you own
- Business personal property (equipment, furniture, inventory)
- Fixtures and improvements
- Optional coverage like equipment breakdown, business interruption, or debris removal
- What is business personal property?
Business personal property refers to movable items your business owns—such as desks, computers, tools, shelving, inventory, and machinery—that are not permanently affixed to the building. - What’s the difference between replacement cost and actual cash value?
- Replacement cost pays to repair or replace damaged property with new items, without deducting for depreciation.
- Actual cash value (ACV) deducts depreciation, resulting in a lower payout. Replacement cost coverage generally provides stronger protection.
- Does commercial property insurance include business interruption coverage?
Not automatically. Business interruption—also called business income insurance—is often an optional add-on. It helps replace lost income and covers ongoing expenses if a covered loss temporarily shuts down your operations. - Is flood or earthquake damage covered?
No. Most standard commercial property policies exclude flood and earthquake damage. If your business is in a high-risk area, you’ll need to purchase separate flood or earthquake insurance. - Do I need commercial property insurance if I lease my space?
Yes. Even if you don’t own the building, you are responsible for insuring your business contents, equipment, and any improvements you make (like built-in counters or lighting). Leases often require tenants to carry their own coverage. - What are common exclusions in commercial property insurance?
Typical exclusions include:
- Flood and earthquake damage
- Wear and tear
- Insect or rodent damage
- Employee theft (covered under a crime policy)
- Intentional damage or neglect
- How much commercial property insurance do I need?
You should carry enough to rebuild or replace your business property at today’s construction and replacement costs. An experienced agent can help calculate the right limits based on building features, equipment value, and risk factors. - How can I lower my commercial property insurance premium?
- Install fire alarms, sprinklers, and security systems
- Update plumbing, wiring, and roofing
- Maintain a clean claims history
- Raise your deductible
- Bundle with other commercial policies (like liability or auto) to unlock package discounts
