Commercial Property Insurance

You never know what could occur in your business. There could be a fire, a flood, or even a natural disaster. Commercial property insurance protects your financial interests if the unexpected creeps up. Even if your physical business is destroyed, you can still recover with commercial property insurance.

Commercial property insurance covers property damage. Every policy is a little different, and an insurance company utilizes various factors to calculate the costs. An average commercial property insurance coverage will protect you from damage incurred from unexpected weather events, natural disasters, and specific instances of theft and vandalism. Property insurance policies don’t cover war, earthquakes, weather, fire, or smoke. The coverage you receive will determine the premium you pay.

Let’s learn how commercial property insurance rates are determined. By understanding commercial property insurance rates, you can make a more informed decision when purchasing coverage.

Calculating Commercial Property Insurance Rates

An insurance premium is calculated based on a) the value of the premises and its contents, determined by the insurer and b) the property’s level of risk. A high-risk, high-value property necessitates a higher insurance rate, while a low-risk, low-value property doesn’t require as high coverage. The insurer and their metrics determine these values and not the business owner.

How Much Commercial Property Insurance Costs

Commercial property insurance can cost anywhere between $500 annually to as much as $500,000 for a major corporation. The average company can expect to pay between $1,000 and $3,000, calculated according to how many million dollars of coverage is included. There is room to negotiate what’s covered under a policy and what isn’t.

How Well the Property Is Constructed Matters

A major factor in your commercial property insurance will be how the property is constructed. The criteria include what materials were used, how old the building is, and its safety rating. A building with fireproof materials, such as brick and stone, would cost less to insure than a wooden building due to the added protection. If it’s a newer building, these also tend to come with better commercial property insurance as everything’s already up to code.

Upgrading Your Building for a Better Insurance Rate

If you don’t like an insurer’s premium, you may consider upgrading various aspects of a building if it’s deemed a high-risk property. Upgrades to electrical wiring, plumbing, and HVAC systems can lower commercial property insurance. They’re a sign the building will require less maintenance and is less likely to incur damage. You may also want to look into what you can do to weatherproof your building if it’s lacking.

What Property Protection and Security Do You Have?

Like residential home insurance, commercial property insurance rates fall when there’s more safety and security on-site. Some features include proximity to a fire hydrant, an alarm system, and secured on-site personnel. Security and safety are often among the first topics when discussing ways to lower commercial property insurance rates.

What Is Your Business Property Being Used For?

What you’re doing on the premises will impact your insurance rate. For example, a restaurant or woodworking business is more likely to damage property elements than a general office or corporate retailer. The rates may increase if your business shares its space with another company that conducts its operations in a high-risk manner. This will likely increase your insurance rates as it’s a shared commercial property.

What Is Your Property Risk Exposure Profile?

Because of the location, some properties will inherently have higher insurance rates. There is nothing you can do to change that unless you wish to move your business elsewhere. Some risks in this category include things like if there’s a high level of crime, an increased level of flooding, and a higher likelihood of a natural disaster. Similarly, there’s a higher risk if the building is located near a facility that routinely uses flammable materials as an oil refinery.

Does Occupancy Affect Commercial Property Insurance Rates?

Occupancy can have an impact on property insurance rates. A company with lots of foot traffic, such as if you have a high employee count, can expect to pay more compared to a business that has only a small staff. The more employees, the more risk that’s associated with property damage.

How to Lower Your Commercial Property Insurance

There are many ways to lower property insurance premiums. Shopping around to different insurers can sometimes reveal significant differences in price for what you’re offered. You can also opt to bundle your insurance with the same insurer. Paying your premium annually can often net you a better rate. Staying with the same insurer long-term will also allow you to gain a better rate with each passing year.


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