Commercial Property Insurance may be purchased by business owners who either own or lease their buildings. For a tenant business, it's important to understand that the building owner's insurance policy will generally only cover the building or structure, not the contents of the building belonging to the tenant.
In order to insure their on-premises property, tenants should purchase their own policies, such as machinery, furniture, and merchandise. To determine the likelihood of a property loss, an insurance company will assess factors such as a structure's location and construction materials.
Since the policy will only apply to the leaseholder's on-premises property and not the building, the cost of tenant coverage will be significantly less than the owned property coverage.
Typically, by means of single policies, businesses operating on multiple premises are covered. In certain instances, separate policies may be needed for instance when two business locations serve different functions and have different risk profiles. For example, when a business insures both an office location and a factory, this may be the case.
Depending on either the actual cash value or replacement value of a loss, a commercial property policy may be paid. An actual cash value policy will pay only the amount of the property's worth at the time of the loss Worth is determined by the value of the property minus depreciation because of age and normal wear and tear.
Replacement value policies are typically more expensive than actual cash value coverage since the policy limits should reflect the cost to replace damaged property with new property.
After a loss, a replacement value policy will pay to purchase new property of like kind and quality. In general, after a significant loss, a replacement value policy better ensures that a business can fully recover.
Commercial property insurance is insurance primarily targeted for commercial properties such as businesses, farms, and ranches. Commercial property insurance protects people who own such types of properties from damage to their buildings and contents.
Types of Commercial Property Insurance Policies
Generally, commercial property policies in Texas fall into one of three categories:
- Basic Form Commercial Property Insurance
- Broad Form Commercial Property Insurance
- Special Form Commercial Property Insurance
Basic Commercial Property Insurance Form
The basic commercial property insurance form covers common perils like
- Fire damage
- Lighting
- Windstorm
- Vehicles
- Aircraft
- Civil Commotion
Perhaps, in every commercial property insurance company, this type of commercial property insurance is available. An example of a basic form of commercial property insurance is the standard dwelling fire policy.
Broad Commercial Property Insurance
The second type of commercial property insurance is the Broad Commercial Property Insurance form. Most of the basic perils included in the basic form are covered by the broad commercial property insurance. Besides that, the broad commercial property insurance also offers coverage for water damage, collapse, glass breakage, weight of snow, ice or sleet, and sprinkler leakage.
One commercial property insurance company that provides coverage for broad form is, FM Global. Their policy, called the FM Global Advantage is all-risk commercial property insurance coverage that includes all the built-in features of basic insurance form in addition to other coverage for special damages.
Zurich North America is another group that offers the broad form of commercial property insurance. This commercial property insurance company offers, among others, broad form coverage for cold weather, snow loading roof collapse, and snow and ice removal.
Special Commercial Property Insurance
The special form of commercial property insurance offers protection for business owners from all causes of loss except those that are specifically excluded in the contract.
The special commercial property insurance offers coverage for natural disasters such as floods, earth movements or earthquakes and manmade catastrophes, like war, terrorism, and nuclear disaster.
In addition, the special commercial property insurance also covers wear and tear, and damages caused by insects or vermin.
AIG International is an example of a commercial property insurance company that offers safety from damages arising terrorist attacks. For any business with global locations, particularly high profile American-based organizations with operations in developing nations, this company provides special commercial property insurance coverage.
The potential buyers of this special type of commercial property insurance are financial institutions, manufacturers, agricultural suppliers, and retail distributors.
Additional coverage
Many business owners buy additional coverage. Some are available as separate policies, and others are available as endorsements, or "riders," that enhance or amend a policy's base coverage. Generally, adding endorsements to a policy will increase your premium. Ask your agent about this additional coverage:
- Property off premises
- Personal property of employees while at insured premises
- Valuable papers coverage
- Ordinance or law coverage
- Boiler and machinery coverage
- Liability insurance
- Business interruption coverage
- Extra expense coverage
- Newly acquired or constructed buildings
For more information on commercial property insurance, visit the website at the URL http://www.tdi.state.tx.us/.
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