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What is commercial property insurance?

Commercial property insurance is an insurance policy that insures against damage to the organization’s buildings and contents that is due to a covered incident, such as a flood or fire. Commercial property insurance is a necessity for every company, regardless of whether the company owns a building, leases a property, or operates out of the home. This policy protects the physical property of a company, from exterior fixtures such as the outdoor sign or fence, to the interior contents and building itself. This coverage addresses the financial costs associated with repairing or replacing a company’s physical assets when loss or damage has occurred due to a covered incident. Theft, vandalism, explosions, fire, and storms are the most commonly included covered incidents, though policies can be written to incorporate other risks.


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When do I need to be aware of commercial property insurance?

The commercial property insurance policy works in similar ways to a homeowners policy, with financial resources being issued if the claim is under a covered incident. Earthquakes and floods aren’t generally included unless specifically added to the policy. There are some other important items you should know about commercial property insurance:

  • Insurance underwriters review a set of risks called the Construction Occupancy Protection Exposure (COPE) when determining whether to offer a commercial property insurance policy, which allows evaluation of the risks associated with insuring a piece of real estate.
  • Theft is covered under a commercial property policy, but usually only if the asset was physically located on company property at the time of the theft.
  • Premiums are determined based on risk, with factors that include location, industry, building construction, and protective systems or measures already in place.
  • Coverage is generally extended to any property of others, such as equipment left in your custody.
  • If an asset that a carrier has insured is deemed a constructive or total loss, the maximum amount that an insurer will pay is based upon the Total Insurable Value (TIV), which is the value of the covered property, inventory, equipment, and business income covered in an insurance policy.