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Does Your Business Need Commercial Property Insurance?

For those who achieve their dream of owning their own business, it is important to protect that dream. Purchasing the needed forms of insurance may seem like an extra expense but could save the business in case something goes wrong. A business owner is responsible for their own livelihood and that of any employees they may have. All it takes is one problem to wipe out a lifetime of work. Commercial property insurance can protect businesses from financial disasters.

What is Commercial Property Insurance?

Commercial property insurance for businesses is a special insurance business owners purchase for protection against theft of, damage to, or other loss of a businesses’ assets. It covers a businesses’ buildings, equipment, and supplies. It is somewhat like personal property insurance in some ways and different in others. Commercial property insurance is geared to offering protection for buildings that are not residential in addition to commercial inventories and equipment. When theft or damage happens, the insurance company will help pay for the damages.

Which California Businesses Are Most in Need of Commercial Property Insurance?

Any California business that has property and physical assets should take steps to protect them. This will include businesses where land, buildings, supplies, inventory, and equipment are owned. Many business lenders require their clients to carry business property insurance.

Available Business Property Insurance Coverages

There are different degrees and types of business insurance to consider depending on the type of business and the business assets that need protecting.

  • Building Coverage protects the business structure.
  • Tenants Betterment Coverage protects the improvements in a leased space a business occupies.
  • Contents Coverage protects the equipment, supplies, and inventory located on the property.

These insurances have limitations including flood and earthquake damage. Standard commercial property policies exclude earthquakes and floods. This coverage must be obtained separately from the NFIP or earthquake-specific insurance policies.

But, things like fires, burst pipes, storm damage, theft, or malicious damage are covered, depending on the terms of the commercial insurance policy. The property of others on the business site may also be covered. Check to see if the policy is a named perils or open perils policy because it makes a difference in coverage.

  • A Named-Perils Policy only covers costs from specifically named problems and damages on the policy. Damages most often covered include those from fire, theft, wind, and vandalism.
  • An Open-Perils Policy gives the insured business a broader range of protection. This gives more protection except for named exclusions. This is better insurance but will cost more.

Should a Business Owner Have Property Insurance?

Commercial property coverage can be the difference between surviving an event causing damages or being forced to go out of business. If your business is in leased space, leases equipment, manages inventory from different sources, or has borrowed money to operate the business, insurance might be required by the lender or owners of the property. Even if the business property and equipment are owned by the business, a loss due to fire or other causes can be very hard to survive without insurance coverage.

It is always best to protect business assets with insurance in case the dreaded catastrophe happens. Insurance is a small investment against losses of everything needed to run the business if disaster strikes. It is well worth talking to a few business insurance agents to see what type of policies they have to offer and the cost of those policies. 

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Written by Robert James

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