August-10-2022

A Commercial Property Insurance Guide | Do You Know What Your Policy Covers?

Most commercial insurance policies include coverages designed to protect businesses, owners, and employees. These insurance policies will most commonly have basic coverages such as property, liability, workers’ compensation, amongst other optional coverages. Because every business is different, business owners have the option to choose which policies best suit their needs. 

Commercial Property Insurance Definition

Commercial property insurance is a policy or plan taken out by a company to protect against damages or losses incurred to the business’ buildings, property, inventory, vehicles, equipment, etc. due to unforeseen circumstances. 

Without insurance, a business can sustain heavy losses at any given time, such as from a tornado or hurricane, with devastating effects on its bottom line. 

So business property insurance coverage is a must, but what type? How much? In this article, we introduce you to the types of commercial property policy coverages and commercial property insurance available to Texas businesses.  

What Is Covered under Commercial Property Insurance?

A wide range of business property can be covered under the different types of commercial property insurance available. This is due to the ability to customize insurance plans to a business’s specific needs. 

In fact, business property insurance coverage can be customized to cover almost any physical asset owned by a business, including any and all combinations of equipment like tools, machines, and computers; fixtures; inventory bought and sold by the company; physical office space whether owned or rented; and even furniture like desks, chairs, and appliances in the breakroom. 

Something not covered in a plan offered by an insurance provider? Not a problem, as many providers allow the addition of schedules to policies, where businesses can add specific items they want to be covered, or riders to policies, where companies can add protection against particular events or occurrences that might damage their property. 

A few common policies of commercial insurance include: 

Property

Property insurance pays for damages or losses to property. For example, it would cover fire damage to your business space. Additional coverages for the property include equipment breakdown, debris removal, builder’s risk, business interruption, glass insurance, etc. 

Errors and Omissions Insurance

Errors and Omissions Insurance protects businesses if they are found liable for negligence concerning a professional service. However, it covers only inadvertent mistakes or failures and cannot protect liability in the case of poor judgment or intentional acts. Businesses can choose from various E&O insurance coverages, such as copyright, legal defense, and negligence. 

Workers’ Compensation Insurance

Workers’ Compensation covers the costs of your employee’s injuries while on the clock. Commonly, worker’s compensation prohibits employees from filing negligence lawsuits against their employer. 

Automobile Insurance

Commercial Automobile Insurance covers all automobiles such as cars, trucks, and trailers your business uses. If an automobile is damaged, stolen, or if the driver injures a person or property, expenses will be covered. 

Liability

Commercial General Liability (CGL) covers customer injury, property damage, and lawsuits. Commercial liability can also help cover the costs of claims made related to reputational harm, advertising errors, medical payments, or damage to rented property. 

Read more about filing commercial property insurance claims.

3 Commercial Property Coverage Options

There are three general commercial property coverage options to be aware of when shopping around for commercial property insurance policies. 

  1. Basic form policies are the type that provides the lowest level of coverage to businesses. These policies usually cover damage caused by fire, smoke, sprinkler breakdowns, collisions from planes and road vehicles, riots, civil unrest, and certain aspects of natural disasters like wind and lighting. 
  2. Broad form policies should be considered the middle level of coverage, covering what is covered under the basic form policies as well as damage from structural collapse, falling objects, leaking appliances, and winter weather damage. 
  3. The most extensive coverage is available in special form policies. These policies usually cover damage from all causes of harm, except for damage from excluded causes. Typically, excluded causes relate to flooding, earth movement, wars, wear and tear, insects, and rodents. 

However, note that riders and additional policies can be taken out if any of these are of particular concern to a business owner, for example, a business owner whose warehouse is on or near a coastline that is a frequent victim of hurricane damage. For these kinds of catastrophes, speak to a professional hail damage attorney or water damage lawyer.

Visit our insurance claim timeline to learn more.

Coverage for Commercial Property Owners vs. Renters

Commercial renters often have the option of taking a commercial property insurance policy out only for their business property located inside the space they rent, much to the relief of many renters! First, you must check your lease to confirm that the landlord does not require coverage of its premises or any other requirements. This is one of the many places where a skilled attorney can serve as a business insurance guide to help you decide the proper scope of business property insurance coverage. 

On the other hand, if you own your commercial space, you will want to purchase a comprehensive policy, possibly a special form policy described above, that leaves nothing on the table as far as coverage. This means the building you own, the inventory and equipment inside, and more should be covered as a best practice. 

How Can a Commercial Insurance Lawyer Help You? 

As professionals who help clients interpret contracts, understand their rights and recover from their losses daily, the attorneys at McClenny Moseley & Associates are well-positioned to serve as business insurance guides for your needs. 

If you are deciding which commercial insurance policy is best for you and your business, or if you believe you have not been correctly compensated by your insurer, contact us today for a free consultation with one of our commercial insurance lawyers.