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  • Writer's picturejoseph retcho

What Is Commercial Property Insurance?

Updated: May 12, 2023

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No business owner can prevent the unexpected, such as bad weather, but they can guarantee their company's belongings and property are insured and safeguarded. Business property insurance is vital when it comes to owning and operating a business since it provides peace of mind when the unthinkable occurs.

What is commercial property insurance?

Commercial property insurance is a type of business insurance that provides coverage for repairs and replaces damaged, stolen or lost property due to incidents such as a fire, theft and more. Commercial property insurance covers:

  • Building

  • Equipment

  • Tools

  • Inventory

  • Furniture

  • Personal property

It also includes business interruption insurance. So, if you can’t operate your business because of covered property damage, your business coverage can help replace your lost income.

Here are a few scenarios where your business property insurance would cover your business:

  • A fire damages or destroys office furniture and equipment inside the building

  • A business falls victim to theft and property is stolen

  • The signage outside of the building has been vandalized and needs to be replaced

Flooding and earthquakes are usually not covered under business property insurance, so if your business is at risk of these types of natural disasters, talk with your insurance agent about adding additional business coverage to your business property insurance policy.

What Doesn’t Commercial Property Insurance Cover?

Be aware that your commercial property insurance policy doesn’t cover every type of property damage. This business coverage can’t help you if:

  • Your customer drops their laptop when they trip over a box in your office

  • One of your employees puts a hole in your client’s wall

  • You get into an accident while making a delivery to a customer and damage your vehicle

  • A nearby brook overflows after a heavy rainfall causes flooding near your building and damages your inventory

  • You or your employees intentionally damage property

Who needs commercial property insurance?

Companies that own or rent property, such as a building or equipment, should obtain commercial property insurance to protect the structure and its contents.

This type of coverage is particularly critical for small business owners who may lack the cash to replace damaged or stolen property.

How much is commercial property insurance for a small business?

The cost of commercial property insurance depends on several factors including:

Construction: How and when the building was built and its condition. Features like fire-retardant materials and upgraded HVAC systems may lower rates.

Occupancy: Who occupies the building during office hours influences the rates. Companies with many customers or employees may pay more for commercial property insurance due to the higher risk.

Risk: Your insurance agency will review the overall risk for the business and building before determining the cost of insurance.

Exposure: Your insurance agency will look at the business's location to determine if there are issues. For instance, if the business is located in an area with above average crime, rates may be higher

Loss Control Measures: Things like alarms, sprinkler systems and other loss prevention measures may reduce the cost of commercial property insurance.

Contact your insurance agent to get an accurate business coverage quote.

What kinds of commercial property insurance are there?

Commercial property insurance is classified into three types:

  • Business personal property insurance

  • Personal property of others

  • Inland marine insurance

Owners may require one or more types of business property insurance depending on the type of business; if you are unsure what precise types of insurance your business requires, contact your commercial insurance agent.

Business personal property insurance (BPP)

The most frequent type of personal property coverage is business personal property insurance. Every organization relies on equipment, computers, tools, and other resources to get the job done, however, during and even after hours of operation, this tangible property is subject to getting lost, stolen or damaged. That’s where BPP insurance comes in.

What exactly is business personal property insurance?

BPP insurance protects transportable property owned by your company for day-to-day operations, such as equipment and supplies. One prevalent misperception concerning company personal property insurance is that it is the same as homeowner's insurance. This is not the case. Especially if you operate a small business from a home office or work from home, a home policy does not cover office equipment, IT gear, or files associated with business operations.

Commercial business personal property insurance includes all property used for business operations, labor, materials or services furnished including, but not limited to:

  • Furniture: couches, desks, office chairs, boardroom tables

  • Fixtures: pictures, shelves, curtains, paintings

  • Electronics: printer, computers, servers

  • Tools: power tools, vacuums, cleaning supplies, lawnmowers

  • Stock: office supplies, business inventory

This type of business coverage also includes leased personal property that an owner has a contractual responsibility to insure.

Personal Property of Others Insurance

Personal property of others coverage provides protection for businesses who ordinarily hold property for another party, such as dry cleaners or processing firms. This type of coverage is for property that belongs to someone else but is in the custody of a business for a period of time.

A business is not required to insure property of others, so this type of coverage is in addition to basic business personal property insurance.

What is covered by personal property of others insurance?

Personal property of others insurance protects the business if the personal property of others is damaged or destroyed while in the business’s possession. This includes property that belongs to someone else but isn't subject to a lease and property you lease under a contract that doesn't obligate you to insure the item.

Inland Marine Insurance Coverage

Businesses that use land or air transportation to ship or transport goods should consider adding inland marine insurance coverage to their business property insurance. Inland marine insurance policies are often referred to as floaters because the property covered moves from one location to another.

What does inland marine insurance cover?

If products, materials or equipment are damaged or destroyed while in transit, the inland marine policy protects the business from financial loss. This insurance coverage is meant to safeguard business property that is mobile or used for transportation and communication purposes.

Inland marine policies cover damage caused by:

  • Fire

  • Storm damage such as hail or wind damage

  • Water damage

  • Theft

  • And more

Always speak to your trusted insurance agent to get what fits you most.

Need help? Contact Retcho Agency and get your business coverage quote.

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