Insurance Policies: a Useful Guide

A Guide On Commercial Property Insurance

If you own a business, you may be worried about how to safeguard your property from perils such as fire and theft. Well, commercial property insurance is an instant solution. Below is a comprehensive guide on commercial property insurance and compelling reasons why this cover is a must-have for businesses. 

What is Commercial Property Insurance?

Commercial property insurance is a unique cover that safeguards your business assets such as physical buildings and machines. It is vital to note that the policy only covers your business assets. Therefore, if you accidentally damage a client's property, the cover cannot compensate you for the losses incurred. 

What Should You Consider When Buying Commercial Property Insurance? 

Look out for the following when taking a commercial property insurance policy: 

Perils Covered

One of your concerns would be the risks that the policy covers. In most cases, the policy covers fire, theft and storms. However, it might not cover flood damage and business interruption as a result of the covered peril. If this is the case, you should consider adding these risks to the cover. 


You will also need to establish the amount of coverage you need. Before taking the policy, ask a professional to appraise your business assets. Remember, this policy does not cover vehicles. If you conduct business on leased property, check your lease agreement to establish if the amount paid covers insurance. If not, you should include the premises to the cover. Most insurers will ask to decide you to choose between replacement cost and actual cash value coverage. Replacement cost coverage will replace the damaged assets, while actual cash value coverage will pay the current market value of the damaged assets. As such, it will consider depreciation, wear and tear. 


The insurer will assess your premises to establish your risk profile. Typically, they will check if the building meets the required construction standards and the incorporation of fire safety measures. Expect higher premiums if the building has structural issues or does not have fire prevention and response equipment. The location of your business will also affect the premiums. For instance, if the area is susceptible to the covered risks, you will pay a higher premium. The building's occupancy can also affect the premiums. For example, if you are the sole tenant, the building will have lower susceptibility to fires. However, if the building has other tenants, their negligence could cause a fire that could damage your property. 

The rule of thumb is that you should take the cover from an accredited and reputable insurer. Your mortgage broker will guide you through the ropes and help you conduct a comparative analysis of the various products on the market.