Commercial Property Insurance

Commercial properties need to be covered by a policy specifically designed for commercial risks, a "Business Owner's Policy" for relatively small risks, or a Commercial Package Policy for larger ones.

A commercial property contains a business on the premises, such as an office or retail store, and may or may not also contain habitational units, or apartments. Essentially, if a building has more than four dwelling units, or has a business enterprise such as an office or retail store, it is considered to be a commercial insurance risk.

Commercial property policies are different in structure than personal home and landlord policies, and often do not have all of the extras one finds on homeowner’s or other personal lines property policies.

• Building coverage – Covers the building for damage incurred suddenly and accidentally, whether on a "basic", "broad" or "special" basis.
  • Basic covers against Fire, lightning, wind hail, riot, civil commotion, aircraft, and explosions.
  • Broad covers the same perils as basic, plus smoke, water from plumbing and frozen pipe issues, falling objects, weight of snow ice and sleet.
  • Special is "all-risk" with exceptions.

Theft can be added on separately to these policies, as can vandalism.

Check with your agent, as different companies may amend this list slightly and coverage may vary.

• Business Personal Property, or contents, can be added on to provide coverage for inventory, appliances furnished for tenant use, and office furniture, etc.
• Loss of income can be added to cover if a tenant cannot live in or occupy their rental space because of an issue covered under the policy. Additional expenses can be added to this to cover extra costs incurred, as well.
• Liability coverage will cover lawsuits that occur from injuries sustained or property damaged on the covered premises. This protects on a per incident basis with an aggregate limit, or cap, for the year. Typically $500,000 or $1,000,000 per incident and $1,000,000 or $2,000,000 annual aggregate is customary.
• Medical expenses to others are normally included on a commercial property policy, as well, for any issues that occur on premises.

Lessor's risk type policies are utilized when the owner does not occupy a commercial property in any way, and are typically more money than owner-occupied policies, as it is assumed that tenant's will not have the same level of care that a landlord does regarding day-to-day maintenance.

Masonry buildings are less expensive to insure than frame ones, for the obvious reason that they are more likely to resist a fire. Sprinklers, central alarms, and other safety features can help to reduce the cost of you insurance.

Some types of tenants, such as restaurants or heavy manufacturing concerns can be much more difficult to insure and hence, more expensive, as fire and other problems are more common.