Commercial property insurance covers physical loss or damage to business-owned buildings, equipment, inventory, and business personal property. Coverage extends to damage from fire, wind, hail, lightning, theft, vandalism, and other covered perils. Policies can be written on a named-peril or special (all-risk) basis, with the latter covering all causes of loss not specifically excluded. Additional coverage extensions include debris removal, ordinance or law, and equipment breakdown.
Every business that owns or leases physical space, equipment, or inventory. This includes manufacturers with significant machinery and raw materials, retailers with inventory, real estate operators with building portfolios, and office-based businesses with technology and furnishings. Businesses in high-value or hard-to-replace facilities have the greatest need for properly structured property coverage.
Commercial property policies provide coverage on either a replacement cost or actual cash value basis. Replacement cost policies pay to rebuild or replace with materials of like kind and quality without deduction for depreciation. Policies include per-occurrence deductibles and may include separate deductibles for wind/hail and flood. Coinsurance provisions require the insured to insure to a stated percentage (typically 80-100%) of the property's value or face a penalty at claim time.
Property limits should equal the full replacement cost of the insured property. Deductibles range from $2,500 to $100K+ depending on property value. Wind/hail deductibles in coastal areas may be 2-5% of the building value. Blanket coverage allows a single limit to cover multiple locations, providing flexibility if a loss exceeds one location's scheduled value.
A manufacturing facility experienced an electrical fire that damaged production equipment and inventory. The commercial property policy covered $2.8M in equipment replacement, $1.4M in inventory loss, and $420K in debris removal and temporary relocation costs — allowing the business to resume operations within 90 days.