Commercial property insurance is a type of insurance coverage that covers commercial building’s landlords or businesses occupying a building. While you could learn more about this in our Miller-Hanover New Oxford Office, we have prepared this special feature detailing the best tips for buying commercial property insurance. Before we get to the tips, let’s first understand what this policy covers.
What Does Commercial Property Insurance Cover?
This insurance policy typically works similarly to property insurance for consumers. You should note that this policy does not cover any losses caused by occupants of the commercial property.
Depending on what you need, there is one universal cover under the commercial insurance policy but there are also additional riders that can be added to what is generally offered.
Standard Policy Cover
This policy covers the building itself including the business property listed on the agreement. It covers the property against certain perils like burglaries, vandalism, fires while excluding losses from natural disasters like earthquakes and tornadoes. Similarly, if you do not keep the equipment in a building you own or rent, it can pay for the loss in the specific location you have them.
These are additional protections that are not included in the standard policy cover, they generally vary depending on the commercial property and the pur[pose of your property. They include;
- Natural disasters – This is an add-on that can be purchased by any property owner in areas prone to natural disasters like flooding.
- Unprecedented closure – This covers you in the case where your commercial property or business closes down due to damages that hinder you from earning your income. This cover reimburses you allowing you to continue paying your bills.
- Commercial auto insurance – This policy covers your business’ automobile since it is not covered in the standard policy.
- Damaged business property – This covers all the property that a business has but is always moving by sea, air, or railroads.
Tips for Buying Commercial Property Insurance
As a property owner, you should try to make sure you reduce the amount of money you are spending on insuring your property. These are some tips to help you out.
Improve Your Property’s Security
When you are looking to insure your commercial property, it is important to install security systems into your property to get a low premium. These systems can include fire alarms, security cameras, and water sprinklers. Having these working effectively will allow the insurance company to reduce your premium.
Raise Your Deductible
Increasing your deductible will inversely reduce the amount of premium you pay on each agreed period. Before increasing your deductible, make sure you have saved up an amount that you can sustain this figure whenever you make a claim.
Demand Tenants to Own Their Insurance
It is a daunting experience to pay for a loss caused by your tenant. To prevent your numerous claims on your policy which increases your premium, make sure you include a requirement for the tenants to own their insurance which will cover losses caused by them on your property.
Merge Your Covers into One Policy
Instead of having different separate covers, custom design a single policy to cover all of your insurance needs. This will enable you to enjoy fewer premiums compared to when you spread out risks.
Factors Affecting Commercial Property Insurance Premium
4 main factors are used to determine the amount of premium you will be paying to cover your commercial property. These can be termed as construction, occupancy, protection, and exposure.
This includes the material used for construction, the age of the building, and the size of the property. When determining the cost of your coverage, insurers look to see the type of material and its susceptibility to losses. For example, the property is made of wood, it will require a higher coverage compared to one made with concrete.
The age of the property also is taken into consideration with older property costing more to insure compared to newer and modern ones. Similarly, bigger properties will need more expensive coverage compared to smaller ones.
This refers to the purposes of the commercial property. Let’s say the property is used by a high-powered company with extensive equipment, it will require a more expensive cover compared to the one used by a coffee shop with a few kitchen appliances.
This looks at how well your property is fitted with protection systems. Does it have sprinklers? Does it have fire alarms? These are some of the questions asked to establish the premiums. As you have guessed, property with these functionality installed will get a lower coverage compared to one without any.
This shows the location your property occupies. If your property is located near calamity-prone areas like close to a tornado or wildfire hazards, it will require you to pay more as your property is highly susceptible to these hazards.
Commercial property insurance is diverse and requires a lot of deliberation before purchasing. While it is important and very necessary, it can be extremely expensive if the right measures and techniques are not taken into account.