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Commercial property insurance is one of broadest categories of Business Insurance. With this coverage, you can insure:
This includes the structure and anything permanently attached to the building.
Contents are called Business Personal Property (BPP) on a business insurance policy. Contents includes anything not a part of the building but that is regularly kept on the premises.
Building verses Contents
We are often asked by clients to differentiate whether certain items should be insured as Building or Contents on their commercial property insurance. Insurance companies understand gray areas exist and, as long as the coverage is somewhere, they are usually satisfied. For example, we had a seafood processor ask about their processing equipment and freezers. The processing equipment, though bolted to the floor, could be removed and generally weren’t considered in the value of the building. So we insured their value under Contents – BPP. The freezers, however, were large walk-in types and a more permanent part of the structure. Thus the freezers and all supporting equipment were insured under Building.
Contents Away from Premises
Coverage for contents usually extends 100 to 1,000 feet from the premises. So if your business has items that are frequently carried off premises, an Inland Marine insurance policy is meant to cover such items. Alternatively, some commercial property insurance policies offer a limited amount of coverage for items while away from the premises. Here are some contents our clients frequently carry off-premises. If you have any, reference your policy or ask your insurance agent how to insure them.
- Tools and equipment in vehicles.
- Items while a trade shows.
- Equipment to be installed elsewhere. For example, HVAC contractors often carry expensive equipment to be installed at one of their client’s sites.
- Product being shipped (depending upon your shipping terms).
Personal Property of Others
If you have clients that visit your building or drop off their items for you to work on, or for your safekeeping, consider insuring them under Personal Property of Others. You don’t own these items, so they are generally not covered by your commercial property insurance policy. However, if you are responsible for them, insuring them in this manner is the best way to do it.
Improvements or Betterments
One of our clients recently moved locations. They rent the new place of business and put $50,000 into renovations to suit their needs. If there were to be a fire, the landlord’s policy would pay the landlord for damages, but our client would still be out their $50,000 investment. By simply listing $50,000 on their commercial property insurance policy under Improvements and Betterments, their interests were protected.
3. Business Income and Extra Expense
Business Income and Extra Expense is another form of commercial property insurance coverage. Statistics show many businesses that lose a building never open back up, even if their building was insured. Why? They simply cannot afford the down time until the building is rebuilt and restocked. Many times they lose 6, 12, or even 24 months of income and incur large new expenses such as rental of temporary space or storage. Without income, they can’t pay the debt payments on vehicles, buildings, or equipment that was lost. They could even lose key employees since they can’t afford to keep them working in the meantime. Further, if your businesses income depends upon specific equipment that has a long lead time to replace, such as manufacturing equipment or specialized vehicles, your business income can be affected if they are damaged.
Business Income and Extra Expense covers this risk exposure. It is considered a type of commercial property insurance since it is triggered by loss to a Building. It can also be written to be triggered by loss to key equipment or Contents. Business Income and Extra Expense Insurance is one of the most valuable coverages available. It can be arranged in several different ways, but the basis is simple. It covers:
- Lost net income,
- Continuing operating expenses (mortgage, key employees, etc.), and
- Additional expenses the would not have normally incurred (rental of temporary storage space, cleanup bills, expediting delivery of replacement parts, etc.)
Simply put, Building insurance puts your building back up, but Business Income insurance puts your business back up.
Reference our Business Income Coverage Calculator, a simple Microsoft Excel spreadsheet, to determine how much and what type of business income coverage is needed.