Commercial Property Insurance: Options and Savings for Medium and Small Business

New businesses with capital investments need the protection of commercial property insurance. This basic form of insurance

p-image-3213″ title=”property insurance” src=”” alt=”” width=”390″ height=”260″ />protects against losses that could damage earnings or otherwise harm the venture. Unlike liability insurance, commercial property policies are not required by law. However, they may be required by leasers, clients and vendors, or other parties with a financial stake in the business.

Many businesses will never file a claim for property losses, but property insurance is an accepted part of business expenses. Loss of a backhoe due to lightning or vandalism, for instance, could be catastrophic for a small plumbing company without property insurance. Learn more about covered losses, types of insurance, and potential discounts below.

Capital Protection

Commercial property insurance protects all real property, including buildings, documents, software and hardware, inventory, and equipment. Special types of insurance must be purchased for protection against lost information or intellectual work. Property policies generally cover the expenses of replacing or

repairing lost or damaged equipment, but some types also provide compensation for irreplaceable items. Covered losses include fire, storms, vandalism, and theft depending on the specific policy.

Replacement Costs Versus Depreciated Value

Two basic types of compensation determine the price of premiums. It is important to base the choice off your business needs versus cost of premiums. With replacement costs, you and the insurance company come to an agreement regarding any loss on the expected cost of replacing the item(s). Retail stores and warehouses usually employ replacement cost insurance. Since claims for replacement

value are typically higher, so are the premiums.

A claim for compensation based on the depreciated value of items is called the actual cash value. This is a good choice for protecting vehicles and other items that may be bought in similar condition to the lost item(s). The lower premiums associated with ACV policies results from the usually lower value of claims.

Policy Customization

It is often difficult for an owner to decide on the best policy for both protection and the lowest premiums. Most businesses have a mix of needs, such as an inventory best covered by replacement cost policies and equipment best covered by ACV policies. A customized policy is offered by some insurers. This will require significant consultation with an agent, but you will receive better coverage for your specific business needs.

Bundling for Discount

Most national insurers provide a significant discount for bundled policies. This is the best choice for most businesses. Commercial liability is a legal requirement, and other types of insurance protect your business from losses.

You should first decide on the types of insurance needed before comparison shopping with three providers. This is more time-consuming for owners seeking a customized policy, but it is well worth the effort. If you have a policy, such as home or auto, with a company offering business insurance, this may lead to further discounts.


Business property insurance saves the business in case of losses due to natural disasters and other causes. This protection is a standard cost of business that should be based on your specific needs. Bundling and customization are the best money-saving techniques.

About the Author

Ken Jacobson, an insurance adjuster and writer, recommends checking to see if you have the proper amount of coverage to handle any situation.