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Does My Building Have Enough Coverage?


Your building is a major asset of your business. As a business owner, it makes sense to have adequate commercial property insurance to protect your investment. No two buildings are alike, and properties may have a higher risk for different perils. Our experienced agent can help ensure you have the business insurance you need.

How Much Commercial Property Insurance Is Enough?

The term “full value” means the cost of rebuilding from the ground up at current prices. If you have your building insured for the cost of the building or the amount you are carrying on your books, it is probably not enough coverage. You should ensure you have enough insurance to cover the real replacement costs in case your building burns to the ground or is a total loss due to a natural disaster. If your goal is to lower your premiums, this can be accomplished by choosing a higher deductible, while maintaining full value coverage.

What Does Commercial Property Insurance Cover?

Commercial property insurance can protect your business property from a range of perils, including fire, theft, vandalism, and natural disasters, such as windstorms. Generally, it protects commercial property in the same way that homeowners insurance protects private dwellings. However, the premiums for commercial property insurance are typically deductible as a business expense.

This type of policy should cover your:

  • Building
  • Inventory
  • Equipment
  • Furniture
  • Satellite dishes
  • Accounting records and essential documents
  • Outdoor signage
  • Fencing
  • Landscaping
  • Damage to property of others

Your policy may provide protection against loss of income in case of loss of business property. You will also want to ensure you have third-party liability coverage in case another person is injured on your property.

What Factors Determine Business Insurance Rates?

Several factors can impact your rates for the building coverage you need. They include:

  • Occupancy: The type of business occupying a building can affect its fire rating, commercial property insurance rates, and the amount of coverage needed. For example, a restaurant has a higher risk of fire than an office building.
  • Construction: If your building is constructed out of fire-resistant materials, you could pay less for business insurance. This is something to consider, if you are adding on or remodeling. Using wood floors, stairways, or partitions can increase your rates.
  • Location: If your business is in an extreme weather area, you are at higher risk for damage, which means your premiums are likely to be higher. As cities and towns have fire protection, it could also affect your rates for a building located outside the city.
  • Protection: Does your business have a security system, a fire alarm, and a sprinkler system? How far away are the nearest fire station and the nearest fire hydrant? These may be factors in the cost of commercial property insurance.

The best way to determine if your business has adequate building coverage is to sit down with an experienced professional and discuss all the factors involved. Our friendly agent can help ensure you have the commercial property insurance you need at the best available rates.

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