Commercial Property Insurance

What it covers

Commercial property insurance covers the physical things your business owns or is responsible for:

• The building, if you own it, or the leasehold improvements you paid for if you rent (the flooring, walls, fixtures and build-out).
• Contents: equipment, machinery, furniture, computers and tools.
• Stock: inventory, raw materials and finished goods.
• Business interruption: the income you lose, and the bills you still have to pay, while you’re closed after an insured loss.

Most policies are written on a replacement cost basis, which means they pay what it costs to replace the item with something similar today, not what it was worth after depreciation. That’s worth confirming on your own policy.

Commercial property is often sold in a package with general liability, which covers injury and damage you cause to others. They do different jobs, and both matter.

What it doesn’t cover, and common gaps

• Flood and sewer backup. Many policies exclude or limit water from outside the building or from drains. It can often be added, but it needs to be asked for.
• Equipment breakdown. A burnt-out motor, compressor or electrical panel isn’t usually a “property” loss. It’s covered under a separate equipment breakdown form.
• Property off premises. Tools at a job site, stock at a trade show, or equipment in a vehicle may need their own coverage.
• Underinsurance. Building values and contents values get stale. If you’re insured for less than the policy expects, a co-insurance clause can cut what you’re paid, even on a partial loss.
• Business interruption that runs out too soon. If your limit or the length of the coverage period doesn’t match how long it would really take to rebuild and get customers back, the money can stop before the business is back on its feet.
• Vacancy. An empty building, or one where a tenant has moved out, can have coverage restricted after a set number of days.

Where your business and family policies overlap

Property is where the business and the family most often get tangled up.

• Equipment and inventory at home. Say you run a small e-commerce business and keep stock in the basement, or a contractor keeps tools in the garage. A home policy usually covers business property only to a small limit, if at all. A fire or break-in can leave most of it uninsured.
• A building owned through a holding company. Many owners hold the building in a holdco and lease it to the operating company. The property policy needs to reflect that: the holdco as owner, the operating company as tenant, rental income for the holdco, and contents and lost income for the operating company. When everything is just in one company’s name, a claim can get complicated quickly.
• A business run from home. Clients visiting, staff working in the house, or a dedicated workshop can all change how your home insurer sees the property. They need to know.
• A cottage or rental used for the business. Storing equipment at the cottage, or hosting clients there, is another place the home and business policies can both assume the other one has it covered.

Steve asks where your business property actually lives, who owns each building, and how the companies are set up, then checks the business, home and any holdco policies against each other.

How Steve works on this

Steve starts by understanding what you own, where it is and what it would take to replace it. He looks at your values with you rather than just rolling last year’s numbers forward. He walks you through the policy, explains what it doesn’t cover, gives you options for the gaps (flood, equipment breakdown, longer business interruption) and tells you what he’d do in your place. Each renewal, he calls to check values and changes: new equipment, a move, a new tenant, a renovation.

If you’d like a second set of eyes on your current property coverage, book a review.