Commercial Property Insurance

While a commercial property insurance policy is not usually mandated at the Federal or state level, there are many cases in which coverage could be required for business owners. Some of these include:

1. To lease a commercial building. If you want to rent a space for your business, such as an office, a storefront, a warehouse, workshop or storage facility, most commercial landlords will want you to show proof of commercial property insurance coverage before you can sign a lease.
2. To get financing to buy a business property. If you want to own the space where you do business, and you seek out financing or a bank loan to help you, commercial property insurance is often required.
3. To start a franchise business. Property insurance coverage can be a requirement to buy into a franchise business.
4. To work some government contracts. To win some projects with public agencies and municipalities, you may need to share proof of commercial property insurance.

If property coverage is required for your business, like if it’s a mandate of your loan or a lease, and you fail to have adequate protection, the consequences could be severe. Loan defaults and lease violations could result in legal action against you, eviction or worse.

For business owners without the protection of commercial property coverage to cushion financial losses to their building and its business contents, they could be fully responsible for all costs out-of-pocket.

After an event that can bring your business to a halt — like a fire, a break-in, a fierce winter storm, equipment breakdown, a power outage and more — business owners could stand alone to clean up, pay for repairs and replace lost products and inventory. They could also lose 100% of their business income until they could open their doors again.

Whether you lease or own a space for your business, commercial property insurance coverage could help protect your essential business assets — laptops, furniture, shelving, business equipment, HVAC units and more. This type of business insurance coverage could also help to protect the building itself.

The amount of commercial property insurance best for your business depends on many variables, such as:

• The value of the property.
• Property location and its use.
• The number of employees and customers you have.
• Your building structure and stability.
• Preventive measures like fire-retardant materials, sprinklers and alarms.

Knowing the value of your building, inventory and equipment can help you decide on the amount of coverage you require — and not overpay for your insurance.

Commercial real estate insurance policies may be based on the actual cash value of your business assets, or what it would cost to replace your property in its current condition. Note that this is different than a business property’s replacement value, which is the cost to replace or repair your property if it’s damaged or destroyed.

Learn more about actual cash value and replacement value.

Yes, a commercial property insurance policy can cover both the contents of your business and the building that houses your business.

Business Personal Property coverage (BPP) could help cover the contents of your business space, including business equipment like computers, products and inventory, furniture, flooring, lighting, fixtures and more.

Building coverage, another aspect of your commercial property policy, could help protect the building structure itself, including things like HVAC systems, sprinklers, broken windows or doors, or damage from a fallen tree.

Commercial property insurance coverage also includes a third leg of coverage: Business Income Insurance (BII). Also called business interruption insurance, this is the coverage that could help cover your lost business income if you’re forced to close temporarily after a covered event, such as a fire, burglary or storm damage.

Commercial building insurance can include protection against theft of your business property at your business location.

If you’re in construction or cleaning and you often carry work gear between job sites, tool and equipment insurance (also known as Inland Marine insurance coverage) could help cover your gear in transit or on a job site if someone steals your tools.

Yes, small business property insurance could help cover you if you suffer damages to your business property inside the building space you use for work, as well as some damages from fire to the building itself. Your policy may also cover costs of property damage caused by firefighters to fight a blaze, or damage to some neighboring properties from fire.

Read your policy documents to learn exactly what could be covered under the terms of your commercial property insurance policy.

In some cases, yes, your business’s property insurance may help cover damage from water

Water damage coverage usually includes sudden and accidental water-related events like plumbing leaks, burst pipes or storm-caused water damage. It could provide coverage for repairing or replacing damaged property, including building elements, business equipment, and products and inventory. It may also cover the costs of drying out and fixing the damaged spaces of your building.

Property coverage usually excludes other types of water damage, including floods, slow leaks from poor maintenance or wear and tear, or mold. Be sure to review your policy to see what’s covered.

Insurance for your commercial property can do a lot to protect the building structure of your business and its contents (including a home office), but it doesn’t cover every risk that a business can face.

Here’s what’s usually excluded from commercial premises insurance coverage:

Damage you cause to other people’s property

While commercial property coverage could help cover the gear owned by your business, it won’t usually help if you or your employees cause damage to the belongings of others. General liability insurance is the type of business insurance that could help cover costs if your business damages property that doesn’t belong to you.

Injury costs and medical bills

If a non-employee gets hurt at your place of business or job site, general liability could help cover the medical costs. But to cover your employees or yourself in the event of a work-related illness or injury, you’d want workers’ compensation insurance. Note that workers’ comp is required coverage for businesses that have employees in most states.

Legal costs for professional mistakes

If you’re a professional who sells your services — such as a consultant, financial advisor, engineer or real estate professional — professional liability insurance (also called errors and omissions insurance, or E&O) could help. This coverage could help cover costs if a professional error, miscalculation or missed deadline costs a client money.

Car, truck, trailer, or other vehicle accidents during business driving

Commercial auto insurance could help protect your business from the unexpected cost of vehicle repair, replacement or rental if you or your employees are involved in a covered accident or incident.

Computer system hacks and cyber attacks

Cyber protection coverage could help cover financial losses to your business from cyber attacks, phishing schemes, data breaches or ransomware. At ERGO NEXT Insurance, cyber liability insurance is an optional add-on to your general liability coverage or professional liability insurance.

False advertising

Commercial property coverage won’t cover you If your marketing materials inadvertently contain misleading information about your product or services and you’re sued for false advertising. This could be covered by general liability.

Intentional wrongdoing and illegal activity

If you or one of your employees intentionally takes a shortcut that results in damages, neglects to comply with regulations or engages in bad behavior, it’s unlikely that it will be covered by your business insurance.

BOP insurance, also called a Business Owner’s Policy, combines commercial property insurance with general liability insurance. When both are combined in one package, it can be less expensive than buying two separate policies.

A BOP can cover business goods included with commercial property insurance as well as general liability risks, such as slip-and-fall accidents and damage to other people’s property.

It takes about 10 minutes to get a quote, buy coverage and get access to policy documents and your certificate of insurance (COI).

You can access your documents and COI 24/7 online or in the ERGO NEXT app for iPhone or Android.

You can file a claim anytime online or in the ERGO NEXT app.

You’ll be asked to share the details of what happened and to provide relevant photos and documentation. We strive to make claims decisions as quickly as possible so that you can get back to work.

Learn how to file a claim.