Month: September 2011

Article by Laura Bacho, CPCU

Commercial building insurance is insurance designed for businesses which own or rent a building. Coverage can be obtained for buildings intended for commercial use or apartment buildings or commercial condominiums. All buildings face the possibility of damage from a number of causes such as fire, theft or natural disasters such as hurricane. The building insurance protects the business from having to bear the financial burden of such losses.

Commercial building insurance can be written as a stand alone policy which only covers the building or as part of a commercial package insurance policy which can offer additional coverage for business contents insurance and business liability insurance. Which type of insurance policy is written for a commercial building depends on the needs of the insured and the willingness of an insurer to offer additional insurance for contents or liability.

What Types of Losses are Insured in Commercial Building Insurance

Commercial property insurance is usually written on either an “all risk” policy form or a “named perils” coverage form. Most insurance brokers recommend the all risk policy because the coverage is more broad. Also called the “special form”, the all risks policy will cover all losses to a commercial building unless a specific cause of loss is excluded in the insurance contract. One common exclusion would be flood. There are other exclusions which are standard and others which may be excluded by a policy change imposed by the insurance company.

The named perils form only provides coverage for causes of loss which are specifically named in the policy. Standard insured causes of loss are fire, lightning, explosion, and collapse (with some conditions). The named peril policy is broad enough for most commercial buildings; nevertheless, the coverage is limited. As a result, it is not recommended unless the all risks form is unavailable to the commercial building owner for some reason.

Does Commercial Building Insurance Cover Business Contents?

Even landlord businesses have some personal property. Business contents or business personal property are assets of the business as well. It is recommended that a business to insure business contents in conjunction with the building with the all risks form, if possible.

Does Commercial Building Insurance cover Business Liability?

It is highly recommended that commercial building owners carry commercial liability insurance. Without liability insurance, a business would have no protection or defense cost reimbursement if the business was sued for something that happened at the building. There are benefits from a premium standpoint to get the liability insurance issued in conjunction with the property insurance. Called the “package discount”, the premiums for both policies might be lower than having separate policies.

The cost of insurance is a fraction of the cost of replacing or repairing a business building alone. Protecting real assets and tangible property from loss should be a primary goal of all business owners. Premiums for commercial building insurance run the gamut; so business owners should be careful to get a number of quotes at least 90 days ahead of the renewal date. With this information in hand, getting a great rate on great commercial building insurance can be one less thing for a business owner to worry about.

About the Author

Commercial Building Insurance is essential for most businesses. Visit The Coverage Geek to learn what questions to ask your agent and what to demand. Take back control of your commercial insurance program.