Commercial property insurance

You may need commercial property insurance if you own or rent a building or have other property an unexpected event could damage or destroy. If you run a home-based business, a commercial property policy would provide protection not included in your home policy.

Here are a couple scenarios where a commercial property policy can protect your business:

• Business theft happens more often than any of us would like, but a commercial property policy should have you covered. If someone breaks in and steals inventory or equipment, your policy will cover the cost of replacing it and fixing any damage sustained to your building.
• Wind, hail, and fire cause various types of losses, but the most common claims stem from exterior damage to a building. With a commercial property policy, your building and its contents are covered - and with included business income coverage, you'll be reimbursed for lost income if you have to suspend operations during repairs.
• Home businesses are not immune to commercial property losses. While your home policy may provide some coverage, it probably won't fully cover expensive equipment or replace lost income if a fire destroys your home office.

Determining the value of your small commercial property

The limits on your commercial property policy - and cost of your premiums - correspond to the calculated value of the property it covers.

Insurance companies use two methods to calculate that value:

• Actual cash value represents the property's replacement cost minus any depreciation - in other words, the cost to replace the property with something of a similar age and in a similar condition.
• Replacement cost is what the insurance company believes it would cost to replace the property, without taking into account its age and condition.

An independent agent can help you determine how an insurance company is valuing your commercial property.