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Commercial Property Insurance Demystified

Commercial Property Insurance Demystified

As a business owner, you may at times wonder what essential commercial insurance policies you need to have so you are protected against all kinds of risks. If you have employees or third-party partners working out of your physical space, commercial property insurance is a must.

In this article, we will try to give you an overview of commercial property insurance and the kind of risks it can protect you from, including commercial property liability insurance.

Accidents or injuries at workplaces are very common for any kind of business. Hence we have dedicated a separate section to commercial property liability insurance.

What is Property Insurance?

Property insurance is a type of insurance that provides financial protection for physical property, such as buildings and personal belongings.

Property insurance can help cover the cost of repairs or replacement of the property if it is damaged or destroyed by a covered event, such as a fire or storm.

What is Commercial Property Insurance?

Commercial Property Insurance provides financial protection for commercial properties and the assets within them.

Coverage is included for the physical structure of the building, its contents, equipment, inventory, and some types of business interruption. It generally protects against various types of damages caused by events like fire, natural disasters, theft and vandalism, and some types of water damage.

What Are the Benefits of Commercial Property Insurance?

Your commercial property insurance can be a standalone policy or combined with other types of insurance like liability insurance, crime insurance, and equipment breakdown insurance.

There is a trend of rates of commercial property insurance increasing in 2023, according to a recent online article by Business Insurance Holdings. Properties with a low risk of catastrophes will, however, experience only a 5 to 10% increase over existing rates. The properties with prior catastrophe exposure will be affected by rate increases between 15% to 50%. You should check your property’s risk exposure status on priority.

Some of the reasons why a small business might need commercial property insurance include the ones mentioned below.

  • If a covered event, such as a fire or storm, damages or destroys commercial property, commercial property insurance can help cover the cost of repairs or replacement.
  • If a third party is injured on the commercial property and decides to sue the business, commercial property liability insurance can help cover the cost of legal defense and any settlements or judgments.
  • If the business is forced to close or reduce its operations due to a covered event, such as a natural disaster or fire, business interruption insurance can provide coverage for lost income and other expenses.
  • If the equipment in the business is vital to the operations of the business, equipment breakdown insurance can provide coverage for the cost of repairing or replacing the equipment.
  • Crime insurance can provide coverage for property losses due to theft, robbery, and other criminal activities.

The coverage of the policy is customizable depending on the specific needs of the business, and the insurance company offers options to add on or exclude coverage as needed.

It’s also common to combine various coverage types in a package policy, commonly known as Business Owners’ Policy or Commercial Package Policy.

What is Commercial Property Liability Insurance?

Commercial property liability insurance is a type of insurance that helps protect the owner or operator of commercial property from the financial losses that may result from claims of injury or damage that occur on the property.

This type of insurance can help cover the cost of medical expenses for anyone who is injured on the property, as well as the cost of repairing or replacing any damaged property. In addition, it can provide liability coverage for any legal costs that may be incurred in the event of a lawsuit. We suggest you browse reliable online resources before choosing a provider for commercial property liability insurance.

What are the benefits of Commercial Property Liability Insurance?

There are several reasons why a small business should opt for property liability coverage as part of its property insurance policy. These include the ones mentioned below.

1. Protection Against Accidents

Accidents can happen at any time, and property liability coverage can help protect a small business from the financial losses that may result from injuries or damage that occur on its property.

Accidents in workplaces are common. According to the ILO, globally, 2.3 million people die from accidental injuries or diseases sustained in the workplace. In fact, there are 340 million cases of workplace accidents worldwide.

2. Legal Defense

Property liability coverage can help cover the cost of legal defense if a lawsuit is brought against the business for an accident that occurred on the property.

In the United States, 2.6 million non-fatal workplace injuries and illnesses were reported by employers from the private sector, in 2021, as per the latest estimates by the Bureau of Labor Statistics. Hence, there is considerable risk exposure in the segment for any business if any of these employees sue the company.

3. Meeting Legal Requirements

Some commercial landlords and municipalities may require business tenants to have property liability insurance as a condition of leasing the property or operating the business.

4. Cost-effective

Property liability coverage is typically an inexpensive way to protect a business against a wide range of potential liabilities, which could potentially be financially damaging for small businesses.

Small business owners need to understand the specific coverage and limitations of their property insurance policy and make sure it fits their specific business needs.

Having the right insurance in place can help a small business mitigate the financial impact of potential risks and ensure that it can continue to operate, even if something unexpected happens. Having property liability coverage can provide peace of mind for small business owners, knowing that they are protected in the event of an accident or incident on their property.

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