What Is Commercial Property Insurance?

Commercial Building

Commercial Property Insurance, also known as Business Property Insurance, is something every company needs to protect its property – whether owned or leased. It is designed to protect a company’s property from such dangers as theft, fire, natural disasters, and more. 

The main benefits of commercial property insurance are it protects your building and its contents, as well as exterior fixtures, such as a fence or outdoor advertisements. 

How Much Does Commercial Property Insurance Cost?

Each company must determine how much it can afford to pay for a commercial insurance policy. The company should consider the value of their assets. Before a business owner meets with an insurance professional about purchasing commercial insurance, they need to conduct a detailed inventory of their company’s physical assets. It can be used to determine the precise replacement value of a company’s assets and the level of coverage necessary.

Other factors that determine your premium are based on risk, including:


In recent years, there has been a rise in the number of natural disasters occurring. The yearly weather in a specific area where a company is located could be an essential factor in determining the cost of a commercial property insurance policy. The rates for this type of policy is usually more for a company located in an area that has a history of serious weather-related disasters. Areas that are more prone to experiencing a tornado are more expensive than areas that are not.

Building Construction

Should a company operate out of a building made from potentially combustible materials, they can expect to have higher insurance premiums than a company operating out of a building made from fire-resistant materials. Should a company be considering remodeling, they should speak with an insurance agent. Internal elements can impact a building’s fire rating. A building with doors, interior walls, and floors that are fire-resistant will have an excellent fire rating.


How a building is utilized will impact its fire rating. An office building will have a better fire rating when compared to an auto mechanic repair shop or a restaurant. Should a building have a single hazardous occupant, it will have a negative impact on the fire rating for the entire structure.

What Does Commercial Property Insurance Cover?

There is certain property used by a business that will need insurance coverage.

  • The building where a business is located, no matter if it is being rented or owned
  •  Landscaping and fences
  •  All office equipment, no matter if leased or owned
  •  Inventory maintained in stock
  •  Important accounting records
  •  All processing or manufacturing equipment

Final Takeaway

Commercial property insurance is an extremely important investment for any business. It will protect a company from experiencing serious financial loss. It often is the difference between a company going out of business or being able to quickly recover from a difficult situation. It is always best to work with an experienced insurance representative to choose the right type and amount of coverage.

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