I Opened Up Shop! Do I Need Commercial Property Insurance?

Fran
Fran Majidi
July 18, 2019

Does that retail space for lease look like the perfect spot to sell your wares? Or, does the commercial office space for rent smell like success? Business owners often overlook the very real cost of commercial property insurance when they are trying to take a good look at their expenses. If you are looking for a new commercial office space or retail space, you need to first begin working on a budget for renting a business space. Manufacturers, retailers, even non-profits need to carry some form of this insurance. 

Commercial property insurance is used to cover all kinds of commercial property, and it is a very big expense for businesses that house expensive equipment. Much like home insurance, the cost of this required expense depends on what you’re trying to protect. If you’re renting out a real estate office space with minimal computer equipment you’re paying a lot less than if you run a printing press with several presses. 

Regardless of what you have to pay, insurance coverage is not something you should overlook, especially if you own the building or unit(s) you are using for commercial purposes. You don’t have to overpay either. Just as you should with home insurance and car insurance, commercial space insurance is competitively priced so you should shop around before buying a policy. 

For multiple commercial office space insurance quotes, visit SmartFinancial.com, where you’ll supply some information to get accurate commercial property insurance quotes that you can choose from. Below, we answer some FAQ about commercial property insurance. 

What Is Commercial Property Insurance?

Just like home insurance, commercial property insurance covers certain perils but not others. Covered perils include fire, theft, (some types of) water damage, explosions, vandalism and natural disasters. It not only covers the space in the building but also the contents inside the space, other people’s property, signs and marquees. Like home insurance, flood and earthquakes are not covered by commercial property insurance.Unlike home insurance hurricanes are not covered with commercial property insurance.

Imagine if you have an office and your employee leaves their expensive Birkin handbag in the bathroom, which gets stolen and with it $100 cash. What if the employee decided to sue you for this $10,000 loss? Technically, they could and even if they don’t stand the chance of winning, you’ll still need to pay for legal expenses to fight the charge(s). Your commercial office space insurance would cover the cost of replacing the handbag and contents would be much cheaper than a fielding a lawsuit. To be covered for a lawsuit, however, you’d need general liability insurance

Imagine you own a coffee shop and there’s a fire next door and the smoke from that adjacent fire damages all the walls, pricey art work and sofas, which are now covered in soot. How much would it cost to clean and repaint those walls? How much to replace the contents? All together the damage may cost thousands of dollars. Your commercial property insurance would cover these costs. 

Who Needs Commercial Property Insurance?

All business owners with a physical location need commercial office space insurance that covers the building. If you own your own business but work from home, you’ll still need commercial property insurance. If you own a building you need this coverage for your mortgage just as you would need home insurance to qualify for a mortgage. If you’re done with your mortgage term, this is still an important coverage to have because paying for damages will be overwhelming.

If you rent commercial property, the property owner transfers risk to you based on the lease’s square footage. You must provide a certificate of commercial insurance showing coverage amounts. Real estate investors need this if they are protecting structures (vacant or occupied) and so do people who flip houses. Commercial space insurance is designed for retail space for lease or owned.

How Much Does Commercial Property Cost?

Your business property insurance is determined by several factors, including the value of the assets (equipment, computers, furniture, signs, fencing, etc.) in it and associated with it. Other factors that will affect your rate include the location of the building and how prone it is to storms and natural disasters. Whether or not the building is constructed with fireproof materials and is close to a fire station will also be factored in, as will the type of business you run. Naturally, a shop that sells waterbeds will be more of a risk than an insurance agency). 

Most small business owners can expect to pay about $500 to $1,000 a year. Like home insurance, commercial property insurance rates are set based on what it would cost to replace the building and its contents. The larger your business and the property is, the higher the cost.

What’s Lessors Risk Insurance?

Lessors risk insurance is for building owners who occupy less than 75% of the property and lease the space to tenants who have their own commercial insurance policies. Lessors risk policies are generally less expensive and an insure business properties and contents.

SmartFinancial will shop commercial property insurance quotes for you. Commercial property insurance rates are competitively priced with their insurance partners. Get multiple commercial property insurance quotes today!

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