Commercial Property Insurance is a line of Business Insurance policies that provide coverage to commercial properties against a number of risks such as fire, natural disasters like floods and earthquakes, theft, malicious damage, etc. These are some of the most vital policies that every small, medium, or large sized business should have.
These insurance policies are applicable for multiple businesses such as service providers, manufacturers, retail shops, not-for-profit organizations, and many more. Policies like Fire and Allied Perils Insurance, Machinery Breakdown Insurance, Electronic Equipment Insurance, etc, can help companies protect their physical assets like plant and machinery, buildings, stock, etc. from any damage, loss or destruction caused by covered risks.
Commercial Property Insurance policies provide financial coverage to your commercial buildings, their contents, and assets adjacent to them. The properties insured under these policies can be owned, leased, or rented by your business, as long as you have an insurable interest in them.
Here’s a list of assets which are generally covered by Commercial Property Insurance:
- Your commercial building along with any fixtures or permanently installed equipment
- Plant and Machinery
- All office contents including computers, furniture, fixtures, etc.
- Stock and inventory
- Manufacturing or processing equipment
- Other structures inside the building premises, such as fences, signs, satellite dishes, and landscaping
Some policies like Fire and Allied Perils Insurance also cover the personal effects of directors, officers, and visitors up to a certain limit.
Commercial Property Insurance policies can carry hefty premiums depending on a number of factors like location, susceptibility to risk, value of property, etc. However, given the recent rise in the occurrence of misfortunes like floods, cyclones, terrorist attacks, riots, etc. that have upended some businesses, there is a critical need for it.
Let’s look at some factors that influence the price and the sum insured of Commercial Property Insurance policies:
- Reinstatement or replacement value of the property being insured- This is one of the most primary factors considered while calculating the sum insured and the premium for a Property Insurance policy. This cost represents the value of the commercial property at the time of policy commencement. Some policies also raise the sum raised periodically to account for inflation
- Security protection- The kind of security measures established at your building, such as sprinkler systems, fire alarms, fire extinguishers, adequate locking systems, etc. will also be considered. If your building is not adequately protected against major property damage due to perils like fire, theft, etc., then the premium you'll have to pay will also be higher on account of the high risk
- Location- If your business is located in hilly areas or regions prone to natural disasters like floods, earthquakes, cyclones, lightning, or civil unrest like riots and terrorist attacks, etc, your premium will be valued higher. On the other hand, businesses located within city limits where the likelihood of such risks is lower, will have to pay lower premiums for the same coverage
- Structure of the commercial property- Things like the flammability and fire-resistance of building material, its contents and any additional structures or alterations made to the building will also be taken into account by the insurance company
Interested in learning more? Learn what Burglary and Theft Insurance covers and does not cover here