Whether a start-up or an established small business, commercial property insurance is not a luxury, but a necessity. In the event that the physical assets of your business, such as your building and equipment, are damaged or destroyed, this type of business insurance helps you to recoup your financial losses. Before choosing a policy that is right for your business, it’s helpful to know the basics.
In its most basic sense, commercial property insurance can be dissected in two ways: what’s insured and event type leading to the loss.
What’s Insured
Business property insurance covers a company’s buildings, real and personal property, equipment and property contents. This includes inventory, furniture, computers, records, signs, fences, supplies, property improvements, and even outdoor property detached from a building.
Event Types
Small business commercial property insurance coverage typically extends to fire, windstorm, hail, lightening strike, explosion, vandalism, civil commotion or riot, and vehicle/aircraft damage. Earthquakes, floods, volcanoes, equipment breakdown, business income, and building collapse can be covered through endorsements.
What’s Not Included
While most basic commercial property insurance is comprehensive, there are some other areas that are not covered as a part of this type of business insurance that the small business owner should be aware of. Health, disability, life, and workers compensation is not included as part of commercial property insurance, but they are insurable, just written separately. Similarly, the business owner needs to get separate business automobile insurance to cover company owned (and non-owned) vehicles that are used for the business.
That said, there are certain potential instances or events that are typically not insured by any policy. For instance, normal wear and tear, otherwise known as depreciation, is not insurable. A general failure of computer software or hardware is also not insurable. Unless damage is caused to a computer, loss of digital data results, or other property damage, power failure damage is not insurable. When there is no evidence to what transpired to missing property, the loss is not insured. Lastly, war or nuclear reaction is not insurable.
