What does a commercial property insurance policy cover?
Commercial property insurance provides business owners with protection on what is most important to keep their business going. How would your business continue to function if something were to happen to your physical assets, contents and building? From your contents on the inside, to your assets outside including signage, landscaping, and fencing. You are also covered for business interruption which will cover you in the event of income lost due to a claim during the time you need to get back on your feet. Whether you are a small business, retail, professional services or contractor, all business owners should carry commercial property coverage to get you back on your feet quickly in the event of a loss.
Why Buy Commercial Property Coverage?
Costs to Replace
If a piece of your property is damaged beyond repair, your policy will cover you for the cost of replacement. For example if you are a restaurant and you have a fire in your kitchen that damages your ovens beyond repair, a property policy will help cover the costs to replace it in order for you to get back to regular operations as soon as possible.
If your business suffers a loss, the time it would take for your contents to be replaced or repaired could hinder your time frame to getting back to work. The right policy will help to ensure that your business suffers the least amount of downtime to get you back up and running.
Costs to Repair
If your business suffers a covered loss which damages your property, a commercial property policy will help financially to repair the damage to get your business running sooner. For example, if the front door to your building is vandalized, your policy can help to get the necessary repairs done quickly. This helps you and your business get back to what matters most, and not worrying about the cost to repair your property.
The likelihood that you are able to get back to regular business after a loss is unfortunately not as quick as you may think. The proper policy provides business interruption coverage which covers your income, expenses and other important aspects to keeping your business running. Ask yourself, would you be able to continue to pay your employees if you experience a loss which leaves you unable to sell your product for two months? Business interruption coverage mitigates those worries.
How Much Does Commercial Property Insurance Cost?
Although it is difficult to give an estimate for your commercial property insurance without getting some details first, a small business could pay as low as $425 a year while a mid-sized organization could pay between $8,000 and $10,000. Overall, we see an average of about $1800 per year for small to mid-sized businesses, and larger corporations will be much higher as their asset base increases.
There are many factors that contribute to the premium for a commercial property insurance policy.
The type of business you run will influence the cost of insurance. For example a restaurant will rate higher than a lawyer’s office, just because of the type of activity of the business.
Value of the Building
It stands to reason that, just like determining the cost of home insurance, the cost of insuring your commercial building will be based on the amount it would take to rebuild should you suffer a total loss. Size of building and level of finishings will all contribute to the rebuilding cost.
If your building is wood frame construction, it will have a lower fire rating than a concrete building. A wood frame structure will burn more quickly and sustain more damage than a concrete structure. Even the exterior finishings will play a role in the fire rating of your building. Stucco, brick and concrete siding (such as HardieBoard) will be much more fire resistive than wood siding.
Age of Building and Upgrades
A newer building will rate more favourably than an older building. Updates to roof, electrical, plumbing and HVAC systems will influence your premium favourably.
Where your business is located will play a role in rating your insurance. Are you on the edge of the boreal forest? If so, you may be considered to be at a higher risk for fire damage. Being located close to a fire hydrant and a firehall ensures a quick response to protect your building and limit damage so the rate will reflect this.
Monitored Fire and Theft Protection
Monitored fire and theft alarms as well as sprinkler systems will allow for some savings on your policy.
Value of Other Assets
How much furniture and equipment is housed in your building? What about your inventory levels or property of others that you may have on premise? This will be considered in your pricing as well.
As you can see, there are many factors that go into determining the right insurance coverage for you. An inventory of your business property will help you determine limits of coverage required and ensure that you have adequate coverage for your business.
Whether you are starting your business or have been in business for years, it’s so important to have the proper coverage for yourself, the business, employees and customers. The right commercial property coverage will cover your business both inside and out to ensure nothing gets in your way from creating the business you’ve always dreamed of. Talk with an MIG broker today about a commercial property policy for either your new business venture or for a second opinion.