Commercial Property Insurance: What It Covers & Who Needs It? 

Thang Truong
Thang Truong
Updated on:

Commercial property is one of the most common business insurance types, but it’s also one of the least understood. In this article, we’ll answer common questions about the coverage so you understand how to get the right commercial property protection for your business. Plus, we’ll reveal the top four commercial property insurance companies in the United States and explain what makes each one best in class.

What is commercial property insurance?

Commercial property is a fundamental insurance coverage for most businesses. It helps protect the property you operate your business out of and its contents, including:

  • Your building
  • Equipment
  • Tools
  • Inventory
  • Furniture
  • Personal property.

For businesses run out of a home, commercial property insurance provides an additional level of protection above homeowners insurance. A homeowners policy won’t cover business related property, such as computers, paperwork, samples and inventory, if they’re damaged by a fire or other covered event. You need commercial insurance to protect these types of business assets.

Commercial property insurance often seems confusing because the same coverage is referred to by different names:

  • Commercial building insurance
  • Commercial real estate insurance
  • Business property insurance 
  • Non-residential building insurance.

All of these are the same insurance, offering the same protection. 

What does commercial property insurance cover?

It helps protect the physical assets used to operate your business. This can include owned or rented buildings and equipment. It helps your company if:

  • A fire damages or destroys your inventory
  • Lightning strikes your building, which causes damage to your computers
  • Someone breaks into your office and steals your equipment.

Commercial property insurance typically includes business interruption protection, which will replace lost income if your company is unable to operate for a covered reason, for example, if your office building is damaged by a fire.

Commercial property insurance can be enhanced with many types of coverages, depending on the unique needs of the organization. This could include coverage to:

  • Reproduce important company documents
  • Pay for temporary storage
  • Move documents to avoid further damage after a fire or other covered incident.

Consult with an experienced business insurance agent or representative at your insurer to figure out which commercial property coverages make sense for your business.

What doesn’t commercial property insurance cover?

Business property insurance covers a lot, but it doesn’t protect everything. This coverage won’t pay for things like:

  • An employee breaks an expensive lamp in your client’s home. General business liability insurance will pay to replace it.
  • You get into an accident while making a business delivery and you damage your vehicle. You need commercial vehicle coverage for that.
  • A stream near your business overflows and damages the fabric in your custom dress shop. Floods are typically not covered by commercial property insurance. You would need special flood coverage for that.
  • An employee becomes angry and damages business property. Intentional harm or destruction isn’t covered.
  • An employee falls off a ladder while stocking a shelf in your warehouse, breaks her leg and is unable to work. Workers’ compensation insurance would provide benefits to the employee including paying for medical costs, physical therapy and a portion of lost wages.

Is there an easy way to get commercial property insurance?

A Business Owners Policy (BOP) comes with three key types of insurance most businesses need:

  • Commercial property insurance
  • General liability insurance, which covers claims that you or an employee caused bodily injury or property damage to someone else
  • Business interruption insurance, which helps replace lost income if your company can’t operate because of a covered event.

A BOP makes it easy to add specialized coverages to your policy. If your business generates less than $1M in annual revenue and has less than 10 employees, you might consider a BOP policy, instead of getting general liability insurance, commercial property, and business income interruption insurance policies separately.

>>MORE: Best BOP Insurance Companies

Is insurance the only way to control risk?

There are things you can do to reduce your company’s exposure to risk. Examples include:

  • Creating a plan to regularly examine and test your company’s alarm and sprinkler systems
  • Supporting a demonstrably safe work environment
  • Taking steps to prevent thefts and losses.

Not only are doing these things right for your business and employees, they could also help reduce your premiums.

Who needs commercial property insurance?

If you own business property of any kind, then you likely need commercial property insurance. Even though it’s not required by law, it’s something you should seriously consider. If you don’t have it, you’re responsible for paying the costs to fix or replace damaged business property out of pocket. This can be expensive and could put your company at financial risk. Many small operations without property insurance go out of business after a fire or other catastrophic event.

If you rent an office, a warehouse, or any physical property to operate your business, it is very likely that your landlord requires you to have a commercial property insurance policy. You will be required to have a commercial property insurance policy by the lender if you buy a building or a warehouse with a mortgage.

What is evidence of commercial property insurance?

In certain situations you may need to provide evidence of commercial property insurance. This could be the case if you take out a loan on your business property and your loan provider requires it. It’s a certificate you get from your insurer to prove you have the coverage.

What other types of business coverage should I consider?

There are countless types of commercial insurance including:

  • Commercial auto which covers you and your employees when you’re driving for business purposes and get into an accident. Learn more at the best commercial auto insurance companies
  • Umbrella insurance which provides additional coverage if your business faces exceptionally high levels of risk. Learn more at the best commercial umbrella insurance companies
  • Errors and omissions insurance which protects you and your employees if you’re sued because you provided inadequate service or incorrect advice to a client and it causes them harm and they sue you over it. Learn more at the best E&O insurance companies
  • Workers’ compensation insurance which provides benefits to your employees, including medical payments and replacement for lost wages, if they’re injured and become ill because of work related reasons. Learn more at the best workers comp insurance companies

What should my commercial property insurance deductible be?

Your deductible is the amount you have to pay out of pocket on a business property loss before your commercial property insurance coverage kicks in. Generally, if you select a higher deductible, your premium costs will be lower. However, you always have to keep enough cash on hand to pay your deductible amount should you experience a covered event. A business insurance professional can advise you on the right deductible for you.

How much does commercial property insurance cost? 

The average cost of commercial property insurance for small businesses is $80 a month or $960 a year. The cost varies depending on many factors, including:

  • The value of your business property
  • Company industry
  • Amount of equipment you need to cover
  • Unique business risks
  • Coverage limits
  • And more.

What’s important is that you get multiple quotes from different providers so you can compare coverages and costs and find the best package for your business.

>>MORE: How Much Does Commercial Property Insurance Cost?

How can I find cheap business property insurance?

Here are some tips to help you get the coverage you need at a fair price:

  • Shop around for the best value. Get quotes from a few companies and compare them to find the right coverage for you at a reasonable cost.
  • Don’t stop shopping around. Make sure you get new quotes before you renew your policy.
  • Take advantage of discounts. If they’re not offered to you when getting a quote, ask about them, whether you’re buying online or through an agent.

Taking these steps will help ensure you’re not paying too much for your commercial property coverage.

Top 4 commercial property insurers 

  • biBerk: Best for low-cost commercial property coverage
  • THREE: Tops for single source business insurance with solid commercial property coverage
  • Travelers: Best commercial business property insurer overall
  • Hiscox: Best for small businesses with unique property insurance needs

biBerk: Best for affordable commercial property coverage

biBerk is a low-cost business insurance provider. Even though you’re saving money on your commercial property insurance, you can rest assured knowing you’re still getting quality protection for your business. biBERK is able to reduce insurance prices by almost 20 percent because it insures small businesses directly, without the higher costs of having to work through a middleman or insurance broker.

You can rest assured knowing biBerk is part of Berkshire Hathaway, a company headed by well-known investor Warren Buffett. It’s a firm that has millions of satisfied customers that’s been insuring people and businesses for more than 75 years.

Here is a sample combined commercial property and general liability quote from biBerk.

THREE: Tops for single source business insurance with solid commercial property coverage

If you prefer getting all your business insurance from one source, THREE could be the solution for you. Like biBerk, THREE is part of the Berkshire Hathaway family of companies. It protects all aspects of a company in a single comprehensive insurance policy that includes solid business property coverage.

THREE makes protecting a business — including it’s property — easy.

Here is a sample business insurance quote that includes commercial property coverage from THREE.

Travelers: Best commercial business property insurer overall

Travelers is a leading provider of small business insurance in the United States. The company has been in business for more than 165 years and is the only property casualty company in the Dow Jones Industrial Average.

Travelers is known for its high level of customer service, flexible solutions, responsive service and cutting-edge innovation. Travelers also uses the extensive experience of its more than 30,000 employees to help businesses reduce risk, which typically results in lower premium costs. 

The Travelers business property coverage can be tailored to fit the needs of most businesses.

Travelers is known for its:

  • Flexible solutions. It has insurance packages tailored to different industries that can be customized for individual businesses.
  • Responsive and reliable service. An experienced professional is always available to answer your questions about business property coverage and other types of insurance or to help you with a claim.
  • Innovation. Even though Travelers has been around for a long time, it’s known as a leading innovator in the insurance industry.

In the end, Travelers offers quality commercial property and other types of protection. You owe it to yourself to see if this industry leader could be the right insurer for your business.

Hiscox: Best for small businesses with unique property insurance needs

Hiscox offers a complete array of business coverages and is a leading insurer that exclusively offers small business insurance. 

Hiscox makes it easy to purchase all types of business protection online, including commercial property insurance. You can also speak with experienced business insurance experts who can help you customize your property coverage to meet your unique company needs. Hiscox also offers top tier service, provides fast quotes, instant coverage and quick claims processing.

If you choose Hiscox for your business property coverage, you can rest assured knowing you’re entrusting your organization to a firm that’s been in operation since 1901. More than 400,000 companies choose Hiscox for their coverage.

>>MORE: Best Commercial Property Insurance Companies

Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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