Commercial property insurance - Different types (2024)

Commercial property insurance helps protect your company’s physical property in the event of an accident that causes loss or damage, be it from fire, theft, an explosion, vandalism, or a burst water pipe.

This essential first-party coverage can protect your building, and everything inside, by paying for the costs of repairing or replacing your possessions. Typically, commercial property insurance covers damage to the building’s exterior, its contents, and signs on the premises.

However, if you’re a business owner with outstanding liabilities (looking at you, cupcake delivery entrepreneurs), you may need more specific coverage. We have your back and can cover your assets— this guide breaks down types of business property insurance that you can buy in addition to a standard commercial building policy including:

1. Business owners policy
2. Business interruption insurance
3. Ordinance or law insurance
4. Glass insurance
5. Inland marine insurance
   • Accounts receivable insurance
   • Builder’s risk insurance
6. Auto physical damage insurance
7. Boiler and machinery insurance
8. Commercial crime insurance
9. Farmowners insurance
10. First-party cyber insurance

What are the types of commercial property insurance?

Basic commercial property insurance will ease the burden of paying to fix damaged or stolen property. For example, a standard policy will include commercial fire insurance, which can reimburse you for fire damage to buildings you own or rent.

But property policies don’t protect against every peril, like damage to vehicles or loss of cyber data. Other types of commercial property insurance provide specific coverage for certain items, situations, or hazards unique to your small business.

One instance is getting covered for secondary costs that arise after an accident. You can’t rely on your standard commercial property policy for that, but you can get this coverage with a Business Owners’ Policy.

Business owners policy

A Business Owners Policy (BOP) combines commercial property insurance and general liability insurance in one policy. It offers broad protection with options to get additional property coverage, including business interruption protection. Essentially, a BOP policy combines liability coverage with different types of property coverage, including coverage for extra expenses incurred after a loss. If you just want to cover your own business property, you need commercial property insurance or inland marine insurance.

Business interruption protection

If your property is damaged, lost, or stolen and you have to close shop while waiting for their repair or replacement, then business interruption insurance can help you make up for lost revenue and help pay bills.

This broad coverage includes ancillary expenses that your main commercial property plan doesn’t cover. If you have it, your insurance company can reimburse your salary expenses, taxes, rental income, and net business profits while your business is out of commission.

Ordinance or law insurance

Suppose your property policy already covered a loss. If you still have to undertake significant renovations to bring a building up to code after that, you may have to foot the bill. Ordinance or law insurance helps cover expenses related to major repair projects. These include the demolition and rebuilding of a half-destroyed (or more) property if local regulations say that you need to tear down the entire structure. Commercial property insurance can help compensate you for the additional costs in these cases.

Glass insurance

Glass insurance covers the expense of replacing store windows and plate glass windows, which can be an expensive fix. Most commercial property insurance policies do cover glass repair, but they often come with a steep deductible. Some rental agreements require commercial tenants to have a glass insurance policy, given how expensive these repairs can be.

Inland marine insurance

Inland marine insurance protects policy owners from having to pay for property that’s damaged, lost, or stolen while in transit.

Say that a furniture shipment is destroyed during shipment. Your inland marine insurance policy could help cover the cost of repairs or replacement, which a commercial property policy wouldn’t cover.

This type of insurance is also helpful for people who work on-site for their customers, such as cleaning companies that move specialized equipment from place to place. If you are a small business owner or freelancer who is often on the move, you need coverage for the tools and equipment that you take with you. For example, if an expensive vacuum were to break while you’re using it to clean a client’s home, your inland marine insurance policy could cover related costs. (For simplicity, Thimble calls this type of insurance Business Equipment Protection.)

It can also cover you for repair or replacement of rented equipment or borrowed equipment that’s in your care while you work on it, or borrowed tools.

There are many types of inland marine coverage (who said insurance is boring?). Some may be included in your BOP or other package policy, but not always. Check with your agent to be sure. And if they are not, be sure to purchase them separately.

Some other types of inland marine insurance include:

• Accounts receivable insurance
• Builder’s risk insurance

Accounts receivable insurance

Accounts receivable insurance can cover you in the event of an accident that destroys payment records. For example, your employee may drop your business’s laptop on the floor and break it. Unfortunately, it stored records of credit receipts.

Accounts receivable insurance may cover the money you can’t retrieve from the broken computer. It can also foot the bill to build a better accounts receivable system, recover lost data, and help you pay back loans if you have to borrow money.

Builder’s risk insurance

Builder’s risk insurance provides coverage for buildings while they’re being constructed. Your policy could reimburse you for costs associated with damage to the facility or the equipment used to build it.

These policies are essential for property owners, contractors, lenders, and architects. Policies may also pay out to cover the cost of materials, supplies, and building equipment associated with the project if they’re damaged. Your policy can even help you pay other related costs, such as real estate taxes or interest payments on loans. You might also hear the term “Installation Floater” or “Installation Form,” which is related to builder’s risk coverage. It is usually used to cover renovations or remodels where items are being installed into a structure.

Auto physical damage insurance

Vehicles don’t fall under a commercial property or BOP policy, but they’re still essential to your work. If your business owns or leases a vehicle, then you almost always need commercial auto liability insurance.¹

Typically, an auto insurance policy includes auto physical damage insurance, which covers damage to your business’s vehicle due to collision, vandalism, fire, and theft. It can offer:²

• Coverage for losses that result from overturning or colliding with an object.
• Comprehensive coverage for losses from any cause except collision and overturn, with a couple of exclusions like wear-and-tear.
• Specified coverage for named perils that the policy lists.

For example, if a tree branch falls on your bakery’s shiny new van, auto physical damage insurance could help pay to fix the dent and paint scratches.

Business owners who have new vehicles, or pricey automobiles with high cash value, should get auto physical damage insurance. Furthermore, auto leasing companies and lenders require the borrower to have it in order to protect the lender’s interests as well as the owner. Check with your auto insurance provider to assess your needs.

Boiler and machinery insurance

Boiler and machinery insurance—also known as equipment breakdown coverage or mechanical breakdown coverage—helps reimburse business owners for losses due to equipment malfunction. This includes computers, motors, electrical equipment, phones, and more.

For example, suppose you run a deli and your refrigerator breaks down. Boiler and machinery insurance could reimburse you for the cost of spoiled food and lost revenue while waiting for repair or replacement.

Commercial crime insurance

A commercial property insurance policy can help pay for stolen or vandalized equipment, but it doesn’t help offset costs related to crimes or fraud. Commercial crime insurance can pay out if your business loses money due to robbery, your business property gets stolen, or someone forges an important signature on a check associated with your company.³

Commercial crime insurance extends to employees who might steal equipment or money from your business. It can even cover you for more mundane issues, such as financial losses incurred if you’re paid with counterfeit bills.

Farmowners insurance

Small and family-owned farming businesses can benefit from farmowners insurance, also known as farm insurance. Because many farms have the characteristics of both businesses and residences, farmowners insurance includes commercial property coverage as well as liability and homeowners coverage.⁴

It can cover property damage to barns, silos, livestock, and equipment, such as tractors and trucks. If you are a small farmer providing locally-grown milk, eggs, and veggies, you can rest easy knowing you’re covered until the cows come home or the rooster crows — whichever comes first.

First-party cyber insurance

Have you heard the phrase “every company is a tech company”? It’s becoming true as businesses rely on technology for everyday tasks, including processing payments online. Unfortunately, cybercrime is also a reality.

First-party cyber insurance covers expenses your business incurs after a data breach on your computer systems, which can compromise sensitive information like passwords, addresses, and credit card numbers. It can also provide coverage if a named peril destroys stored information.

First-party cyber insurance can pay for the cost of forensic investigation, customer notification, and credit monitoring in these situations. They’re considered first-party expenses because they are paid to you, the insured. These payments help get your business back on its feet after a breach.

Comparing types of commercial property

Many things can go wrong when you own or rent your place of business. Although your commercial fire insurance policy can help replace and fix damaged property, it won’t necessarily help you pay for other related expenses.

You can consider purchasing these types of commercial insurance:

• A Business Owners’ Policy is a package of insurance that bundles commercial property insurance and general liability insurance. You can purchase different add-ons to expand the range of coverage.
• Inland marine insurance protects your own equipment in case of accidental loss or damage.
• Auto physical damage insurance covers damage to your business’s vehicle due to an accident or other perils.
• Boiler and machinery insurance offers protection for costs related to equipment breakdown in your building.
• If someone hacks you or steals your business property, you can benefit from commercial crime insurance or cyber liability insurance.
• Everyone loves a farmer’s market, but there are unique risks involved. Farmowners insurance offers commercial property coverage and homeowners coverage in one policy.

There’s a lot to consider. That’s why it’s vital to know if you have the right coverage for your needs. Thimble makes it easier to find the right policies when you need them—be it by the month, day, or hour. You can get a custom-tailored quote in as few as 60 seconds: just click “Get a Quote” or download the Thimble app. Click to buy and we’ll send your policy and Certificate of Insurance to your inbox immediately.

Sources:

1. IRMI. Automobile Physical Damage Insurance.
2. III. Business Vehicle Insurance.
3. Marsh Insights. The Basics of Commercial Crime Insurance.
4. IRMI. Farmowners Insurance.