Commercial property insurance is coverage that protects a business’s real property. This includes commercial buildings and structures, as well as assets like equipment, technology, furniture, and inventory. This guide is meant to explain all of the key concepts that business owners should be familiar with when shopping for commercial property insurance. The following sections will explain how commercial property insurance works, what it does and doesn’t cover, the factors that affect costs, and of course, our recommendations for the best commercial property insurance companies, including these three standouts:
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Understanding Commercial Property Insurance
Commercial property insurance (sometimes referred to as commercial building insurance) is an important tool for protecting your business from a variety of potential harms. To operate your business successfully, you must be able to minimize disruption to the commercial buildings you work in, the equipment and technology you use day to day, and the inventory of products and materials you store, ship, and sell.
Property coverage is only becoming more important: major natural disasters are becoming both more common and more severe throughout the country, and these sorts of events come with a big price tag, resulting in more than $70 billion in losses annually.
But natural disasters are only one of many factors that can endanger a business’s property. A recent study from The Hartford found that 40% of small businesses are likely to experience a claim in the next 10 years, and the most common causes included burglary and theft, damage from water and freezing, and fire.
To minimize the costs that business owners must bear themselves, commercial property insurance is a standard form of business insurance that transfers some of the expense of addressing such incidents to an insurer.
What Is Commercial Property Insurance?
Commercial property insurance is a form of insurance that protects a business’s real property, like commercial buildings, offices, or storage, along with other physical assets including equipment, furniture, and inventory. If property damage or loss arises as a result of events like fire, theft, burst pipes, or other hazards covered under a policy, commercial property insurance policyholders can be compensated for the damage or loss.
As a business owner, having the right type and level of insurance coverage for your property and physical assets provides you with a critical financial safety net when things go wrong. Your choices of coverage may depend on a variety of factors related to your business, including the type and amount of property you need covered, the age and condition of that property, and where your business is located.
The type of business you run may also be a factor in choosing your insurance coverages for commercial property. Insurers sometimes have coverages that are specifically designed for particular types of business. For instance, if you rent or lease your property out to others, you may want to consider a tailored landlord insurance policy, which accounts for the unique property risks facing landlords. Likewise, if you regularly transport expensive property (like tools and equipment) across multiple locations, you will likely need a dedicated inland marine insurance policy. Unlike commercial property insurance, which covers property at a single location, inland marine insurance is designed to cover property that regularly moves from location to location.
In evaluating coverage options, it is also important to understand how commercial property insurance differs from other common forms of insurance that have similar or related purposes. The next few sections will explain some of these distinctions.
Commercial Property Insurance vs. Homeowners Insurance
Commercial property insurance and homeowners insurance both offer protection against property damage, but commercial property insurance policies are specifically designed to address issues that may arise for a business. One of the most important distinctions is that for a business, a covered incident will not only require insurers to pay compensation to repair or replace any damaged property but also potentially any lost income the business experienced. Commercial policies are also more likely to be customizable to insure adequate levels of coverage for particular assets important to your business.
This is especially important to understand for people who operate a business out of their own home. The types of coverage available under a standard homeowners policy may not be sufficient to cover all of the harms or damages that a home-based business might face. And insurers recognize this too: homeowners policies may include clauses that specifically exclude properties used for commercial purposes, so your insurer could deny claims altogether if you rely only on a homeowners policy. For these reasons, you should obtain commercial property coverage if you operate a business from home.
Commercial Property Insurance vs. Hazard Insurance
Hazard insurance and commercial property insurance both offer some degree of protection from property damage to a structure occurring due to certain natural disasters. In fact, hazard insurance coverage is frequently a component of commercial property insurance policies for select incidents.
However, it is important to examine the policy to understand what particular types of events are eligible for coverage and compensation. Disasters like floods and earthquakes are frequently excluded from property insurance policies, but in locations where those events are more common, you may want to obtain additional coverage. In such situations, you can purchase a separate hazard insurance policy specific to those threats.
Commercial Property Insurance vs. General Liability Insurance
Commercial property insurance and general liability insurance are the two most common forms of insurance coverage that a business needs, and the two are frequently combined into a single business owners’ policy or BOP. Commercial property insurance protects the business’s physical property and assets, while liability insurance protects against lawsuits and other claims that another party may bring against the business. Liability insurance can be extended to add coverage where a business may have higher liability risk exposure (e.g. errors and omissions, product liability, etc.), but general liability insurance usually includes basic coverages for property damage, injury, and other claims stemming from your business’s operations, products, and services.
General liability insurance and commercial property insurance can sometimes work in tandem to protect your business. For example, if a fire breaks out in your building, the commercial property coverage will take care of your own costs to repair any damage. But if the fire also damages a neighboring property and that property’s owner files a lawsuit claiming the fire was a result of your negligence, your general liability policy could help cover the costs of the suit.
Commercial Property Insurance vs. Builders Risk Insurance
Builders risk insurance is a form of property insurance coverage specifically designed to protect against damage to buildings that are under construction. In contrast, commercial property insurance covers only completed structures and their contents.
The types of events covered under a builders risk policy are generally similar to the coverages contained in a commercial building insurance policy, but there may be a greater likelihood of incidents like fire, theft, vandalism, and weather damage for a building under construction than for a completed property. As a result, insurers offer builders risk policies as a temporary form of insurance, ending when a completed structure is ready to be sold or occupied. At that point, the owner and/or occupants of the property will need a commercial property insurance policy.
How Does Commercial Property Insurance Work?
By purchasing commercial property insurance, a business transfers the financial risks associated with property loss or damage to an insurer. For instance, if you did not have a commercial property insurance policy and a vandal caused $10,000 of damages to your property, you would need to pay the $10,000 out of pocket. If you did have commercial property coverage, the $10,000 would instead be covered by your insurer, so long as the event qualified for coverage under your policy and the costs were within your coverage limits. Further, your insurer could also potentially compensate you for lost income if the vandalism or the process of repairing any damage interrupts your business.
The specific details of each commercial property insurance policy will be different, but insurers and those shopping for coverage will need to work out the following elements of coverage:
- Coverage – The types of damage, incidents, and expenses that will be covered under the policy. Insurers will not cover every possible cause of property damage or loss, so the policy will establish which incidents are covered or not.
- Monthly premium – The amount of money that the policyholder must pay to retain the policy on a monthly basis. Higher premiums typically come with greater coverage and policy limits.
- Deductible – The amount of money a covered company must pay toward a claim before coverage kicks in. Higher deductibles usually result in lower premiums.
- Coinsurance – A property insurance policy may require the policyholder to have a level of coverage equal to some percentage of the property’s value, commonly 80%. This allows the insurer to know that the policyholder has adequate coverage in the event of a claim. If a policyholder is covered for less than the coinsurance threshold, the insurer could decline to pay full benefits, leaving the policyholder to pay out any difference.
- Policy limit – The defined maximum that the insurer is required to pay toward claims filed on the policy.
What Does Commercial Property Insurance Cover?
Insurers offer a variety of different coverage types and levels to address businesses’ needs. Many of the essential components of commercial property insurance are fairly standard across providers, and this section of the guide will highlight some of the concepts you will come across most frequently. However, you should consult with your chosen insurer to be confident that your policy covers any additional risks you are concerned about and at a level of coverage that gives you reassurance.
Common Coverage Options
Commercial property insurance policies can vary depending on the exact coverage elections that the insured makes. For instance, some businesses may only choose to cover a building structure and decline more comprehensive coverage that includes building contents or lost business income. Generally, however, insurers make the following items commonly available in commercial property insurance coverage:
- Commercial building insurance – The most important component of commercial property insurance is coverage of the business’s property itself. Policies will specifically name the structure that is covered, which can also include some fixtures or equipment that are permanently contained in the structure, like cabinets, electrical systems or plumbing.
- Other buildings and structures – Other related structures that belong to or are used by the commercial property owner, like a garage, shed, or warehouse, can also be included in a policy. However, a policyholder should not assume that just because their main building structure is covered under a policy, other related structures are automatically covered as well. Typically, the policyholder and insurer must agree to name such structures as being eligible for coverage under the policy.
- Personal property (contents) – Damage to a building where a business operates will also usually lead to damage to other property the business uses or stores in that structure. As a result, commercial property insurance policies can include physical assets like equipment and furniture that are kept in a structure covered by the policy. Some policies include this as a standard coverage, but if not, coverage for contents of a structure can be easily purchased as an add-on.
- Business income – If damage under a covered incident prevents a business from conducting its usual operations, some insurers will compensate the business for some share of lost income. This can allow the insured to continue paying operating expenses while repairs take place.
Some incidents will incur costs that go beyond the standard coverages in a commercial property insurance policy and may require additional coverages. For instance, if your building experiences a damaging fire, the standard policy coverage would pay for repairs to the structure or some value of the property and assets that were damaged. However, other expenses related to the fire—for instance, a fire department service charge or the cost of removing glass and debris—may not be part of your coverage, unless you have obtained additional coverages.
Additional coverages can also include endorsements to cover incidents or losses that are usually excluded from coverage. Flood and earthquake are two common examples, but others may include cleanup for pollution or the cost of replacing electronic data lost or damaged in an incident.
Many insurers will make it easy to combine these sorts of additional coverages with the rest of your commercial property insurance coverage. You should work with your insurance provider to understand the full extent of your coverages and identify appropriate additions to your property insurance coverage depending on your business’s risk profile.
Types of Commercial Property Insurance Policies
One of the key factors that distinguishes types of commercial property insurance is which risks or “perils” that can trigger a claim. The insurance industry offers three different types of policies—basic form, broad form, and special form—that differ according to how comprehensive that list of perils is.
- Basic form policies – provide the least coverage. Basic policies are “named perils” policies, meaning that the insurer will only pay claims related to types of incidents that are explicitly listed in the policy. Basic form policies typically cover damage from fire, lightning, explosions, windstorms and hail, smoke, vandalism, sprinkler leakage, sinkholes, aircraft and vehicle collisions, riots and civil commotion, and volcanoes.
- Broad form policies – are also named perils policies, but include all of the incidents listed under basic form policies plus additional coverage for damage from events including accidental water damage, structural collapses, falling objects, weight of ice or snow, and theft or burglary.
- Special form policies – are “open perils” policies, which means that it covers all potential risks except those that are explicitly excluded in the policy. Special form policies typically exclude damage from wear and tear, insects and vermin, flooding, earthquakes, or war.
As coverage becomes more comprehensive, it also typically increases in cost. Premiums for broad form coverage tend to be more expensive than those associated with basic form, and special form policies are the most expensive of all. When shopping for commercial property insurance, businesses must consider the tradeoffs between higher levels of coverage, cost, and their own tolerance for risk.
What Doesn’t Commercial Property Insurance Cover?
Insurers have a vested interest in minimizing their own risk levels, so property policies are often written to exclude particular types of incidents or losses that may be especially hard to predict or that would be difficult for the insurer to compensate. This is why even more comprehensive policies, like special form policies, come with a list of perils that the insurer will decline coverage on. You should carefully review any policy with your insurer to understand the full extent and limitations of your coverage. However, most insurers have similar sets of exclusions, detailed below.
Exclusions in commercial property insurance coverage can extend to both the types of perils that can be insured and the types of property or assets eligible for coverage.
As has been mentioned elsewhere in the guide, some of the events that insurers will not cover include natural disasters like earthquakes, floods, and hurricanes, unusual events like war or acts of terrorism, termite control or other pest treatments, and certain other situations like employee dishonesty. However, you may be able to purchase separate coverages to address these risks if you are concerned that they could affect your business.
While many business assets will be included in commercial property insurance coverage, other assets are harder to value or have different risk levels associated with them. Insurers tend to exclude them from property insurance policies but may have other coverage policies available. Examples of these items include:
- Electronic data
- Business records (electronic and hard copy)
- Money, securities, accounts, and bills
- Vehicles, aircraft, and watercraft
- Paved surfaces (e.g. walkways and roads)
How Much Property Insurance Do You Need?
Gauging the right amount of property insurance to obtain can be challenging. Purchasing too much coverage can leave your business paying unnecessarily high premiums, but being underinsured can leave your business at risk in the event that something does go wrong. The key is to strike a balance between the value of your commercial building(s) and other property, your ability to pay to repair or replace property, and your comfort with the risk of a damaging incident. This section of the guide will explain some key considerations that will affect your assessment of how much coverage to obtain under your commercial property insurance policy.
Commercial Property Insurance Valuation
The first and most important question to answer when obtaining a commercial property insurance policy is the value of the property to be insured. This involves getting estimates for two different categories of property:
- Real property – The permanent structures (including fixtures and some types of equipment) where the business’s operations are conducted. Some businesses will use the tax assessment value or market value of the real property as a starting point for the estimate, but insurers may also provide estimating tools, or you can engage with a contractor or other professional to estimate the property’s value.
- Business personal property – Other physical assets like inventory, furniture, equipment, or technology belonging to the business, its employees, or another party who has entrusted care of that property to the business. Business personal property is more difficult to estimate, but if your business has maintained records of its purchases and you take inventory on a regular basis, you can produce accurate estimates.
The valuation of property itself—which will help establish the amount of coverage to obtain—can be conducted in one of two ways (or in some combination of the two):
- Replacement cost is calculated as the cost to repair or replace your property at current costs. This means that a policy will compensate you in today’s dollars, even if that amount is greater than what you initially paid for the property. Coverage for replacement cost value typically has higher premiums due to the greater payout.
- Actual cash value is calculated as the replacement cost minus depreciation, or the decrease in value attributable to age or wear and tear. Actual cash value policies are less expensive, but in the event of a loss, you may need to pay some amount out of pocket to account for the full cost of a repair or replacement.
Another consideration for determining your coverage levels is the effect of inflation on costs. As prices for building materials and labor increase, you want to be mindful that the amount of coverage you have on your property is keeping pace.
Some insurers will offer you the option to include an inflation guard on your commercial property insurance policy to address this issue. An inflation guard increases your coverage limit by a certain percentage whenever you renew your policy or at some other interval. This can have the effect of raising your premiums as well, but offers additional protection as time moves forward and potential repair and replacement costs increase.
When you are deciding how much coverage to obtain, you should also be aware of your insurer’s requirements for coverage. Coinsurance clauses require the policyholder to maintain a minimum level of coverage equivalent to a percentage of the property’s value. Insurers include coinsurance requirements because they want to know that they are receiving a fair premium for the level of risk they are taking on when insuring property.
If you do not meet a coinsurance requirement because you do not purchase enough coverage or under-report your property’s value, the insurer may penalize you when paying out a claim by only paying a portion of the cost. If you are underinsured, your carrier will use this formula to determine how much of the claim to pay:
(Actual Amount of Insurance / Required Amount of Insurance) * Amount of Loss = Claim Paid
Here’s an example: say you have a property valued at $100,000 and your insurer requires coinsurance at 80%. This means that you must insure your property for at least $80,000 to receive full benefits. But if you only have $40,000 of coverage, the insurer will only pay out half of the value of a claim ($40,000/$80,000). Therefore, if your property had a loss valued at $20,000, the insurer would pay $10,000 and you would be on the hook for the other $10,000.
Commercial Property Insurance for Renters vs. Owners
One other factor to keep in mind is whether you own or rent the building(s) where your business operates. If you are the owner of the property, you will naturally want to protect your assets and should obtain all appropriate coverage for a possible loss. If you are either a commercial landlord or a tenant, however, your coverage needs may differ depending on the specifics of your lease agreements.
For tenants, your lease may stipulate that you maintain some level of property coverage for the space you are leasing. This is a wise decision for managing your business’s risk regardless, but your landlord may encourage—and even require—you to carry a certain amount of coverage to protect their property.
If you own commercial property and rent it out, requiring your tenants to carry property coverage may not be enough to properly insure your property. This is because your tenants are setting coverages based primarily on their own needs, not yours, so their property coverage may only cover a portion of your property’s value and may exclude some types of risks (e.g. deliberate damage to your property done by the tenant). You should make sure that you carry adequate coverage on your own property in addition to any requirements you place on your tenants and lessees.
Commercial Property Insurance Costs & Premiums
Commercial property insurance is one of many expenses that you will run into as a business owner, and you may be wondering how much this coverage will add to your overhead costs. Unfortunately, it’s impossible to know exactly until you have a policy in place, but this section of the guide will help you get a rough sense of what to expect and the main factors driving your commercial property insurance premiums.
How Much Does Commercial Property Insurance Cost?
The cost of commercial property insurance will be different for every business, so it is difficult to say exactly how much your business will pay without talking to an insurance professional. The reason is that every business has different types and amounts of property to insure and different risk exposures based on the type, size, and location of the business. However, some information is available to give you a rough sense of the costs:
Data from The Hartford, which surveyed businesses across eight different industries, found a median annual cost of $662 for commercial policies. These costs scale with the size of your business and the amount of property you need insured. A midsize business may pay somewhere between $1,000 and $5,000 in commercial property insurance premiums each year, while rates for the largest businesses can reach into the tens or even hundreds of thousands of dollars annually. At a minimum, businesses can expect to pay about $1,000 annually per million dollars in coverage.
Factors That Affect Commercial Property Insurance Costs
The exact cost a business pays for commercial building insurance will depend on a number of factors. In general, some of the most important variables insurers will consider are the amount and value of the property to be insured; characteristics of the business like its location and industry; characteristics of the property itself; and, within the policy, the chosen valuation method and the types of hazards covered. These are all explained in more detail below.
Amount/Value of Property Insured
Simply put, if a business has more property to insure, the insurer will charge that business more to do so. If you have a large space for your business or lots of high-value equipment on the premises, you will likely pay more than you would if you just had a small office.
Some businesses recognize the relationship between the value of their property and the costs they pay in insurance and may underreport the value of their property or purposely choose a lower policy limit to contain their insurance costs. This can be risky, however, in the event the business does face an incident that causes property damage. Without adequate insurance, the business could end up facing substantial out-of-pocket costs to repair or replace damaged property.
Business Location & Geography
Insurers will want to know where exactly your business is located because the risk profile for your business will change in different areas. For instance, if your business is in a neighborhood with high levels of crime, your insurer could raise your premiums to account for a greater likelihood of damage or loss from theft or vandalism. Or, if you are located in a part of the country with extreme weather, it may be more expensive to insure your property because of the possible damage from events like lightning, hail, or windstorms. These geographic considerations can significantly impact the cost you pay for coverage.
Business Characteristics & Industry
Property in some industries may be more or less expensive to insure than others for a few different reasons. One is a byproduct of the types of equipment used in that business: for example, an advanced manufacturing plant with many high-tech machines may cost more to insure than an older manufacturing operation with simpler equipment. Another factor is the relative risk level of the business’s industry. An example of this is restaurants, which experience fires more commonly than many other types of businesses. Insurers may also consider the number of employees working at the business or customers coming through the space, under the assumption that a greater number of people interacting with the property increases the chances of some sort of damage.
Property Characteristics & Features
Not all property is created equal, and your insurance carrier will consider unique attributes of the property you wish to insurance when setting your rates. Insurers will be particularly interested in the age and condition of any insured structures, along with factors like the building materials used and any safety or security measures in use on the premises. Older property may be more susceptible to damage, and some types of older building materials or design features can also be associated with greater risks, all of which can raise insurance prices. In contrast, having features like security systems or a well-functioning sprinkler system can give insurers assurance that your real and personal property is better protected from risks and may accordingly reduce your costs.
Property Valuation Method
Because the potential payouts are different, insurers do not charge the same amount for policies based on actual cash value as policies with replacement value coverage. In general, replacement value policies tend to be pricier because they do not adjust for depreciation. Actual cash value policies typically have lower premiums associated with them, but they do come with the possibility that a policyholder will end up needing to pay more out of pocket in case of damage or loss.
Types of Hazards Covered
Basic form, broad form, and special form policies each have different costs associated with them because the types of perils that can set off coverage vary across the policy types. Basic form and broad form are “named perils” policies, meaning that they cover only risks that are spelled out in the policy; broad form has more of these eligible risks than basic form and is accordingly more expensive. Special form is an “open perils” policy, which means that it covers any risk except those explicitly excluded in the policy. Because this structure makes it more likely that claims will be covered, special form policies are more expensive than either basic or broad form.
Commercial Property Insurance Rates by State
Location is a major driver of rates for any type of insurance, and commercial property insurance is no different. Risk exposure, insurance regulations, and other variables specific to a state or locality will impact what sorts of rates a carrier will charge to preserve their profit margins. Even similar businesses with similar amounts of property coverage may pay very different premiums across state lines.
One of the key factors that will affect what you pay for commercial property insurance in your state is the types of natural hazards common in your location. Florida and Texas are two of the most expensive states for exactly this reason. On the Atlantic coast, Florida faces major risks from hurricanes and other tropical storms. Texas has high exposure to tropical weather along the Gulf of Mexico, but the state also faces frequent tornadoes, hailstorms, and other severe weather further inland. And in some locations, these risks are changing—and costs increasing—as extreme weather becomes more common, like in California, where a growing number of severe wildfires is making many parts of the state more expensive to insure.
Another significant factor is market differences that affect property replacement costs. Some areas of the country are more expensive to repair or replace damaged property because labor and material costs are higher. In general, the Northeast is one of the most expensive places for construction, led by states like New York and New Jersey with the costly New York City metro. At the other end of the spectrum, Southern states like Georgia and North Carolina tend to have lower costs. Because insurers set rates based on potential payouts, premiums may tend to be higher in areas where construction costs more and lower in areas where it costs less.
Finding the Best Commercial Property Insurance Carriers
There are many commercial property insurance carriers in the market, and each offers unique strengths, policy options, features for customers, and pricing. While it can be a challenge to sift through all of the options, putting in some work to examine offerings from different insurers can help you find good coverage at a good price.
Guides like this one are a good start for getting familiar with key concepts, knowing what questions to ask when looking at policies, and identifying some of the leading providers on the market. When you are further along in the process of obtaining commercial property coverage, you will likely need to work directly with an insurance agent or broker to design a policy that is suited to your business’s needs. Brokers are individuals or companies who work with multiple insurance providers and are good for helping you easily compare options across different carriers in exchange for a fee. Agents work directly for an insurer and will be able to give you more insight on specific components of that carrier’s coverage and potentially identify discounts or bundles that will help manage the costs you pay for insurance.
Comparing Property Insurance Companies
Because commercial property insurance is such an important protection for your business, you should shop around and compare options from multiple providers to make sure that you have coverages that meet your needs at the best possible price. This section of the guide will detail some of the key criteria you should consider when evaluating providers, including each carrier’s coverage options and policy limits; claims reporting process; premiums and deductibles; company reputation; and financial strength.
Coverage Options & Policy Limits
The coverage available through an insurer will be one of the most important considerations for selecting a commercial property insurance policy. Many property coverages look fairly similar across providers in terms of perils that will or will not be covered in a policy. If you wish to have additional protections from risks that may be relatively likely to affect your business, you should be sure to ask about your options for adding or extending your coverages appropriately.
Policy limits are also a critical consideration for property insurance in particular. Having a limit that does not cover the full value of your property could leave you paying large out-of-pocket sums in the event that something goes wrong. While you should consult with experts on the value of your building and structures and keep good records of your personal property to produce accurate valuations, some insurers offer helpful estimating tools to determine the value of your property and purchase the right amount of insurance. Insurers can also advise you on whether you should obtain a policy that pays out claims on a replacement or actual cash value basis.
Premiums & Deductibles
Premiums and deductibles are the out-of-pocket costs that you will pay for coverage as the policyholder. The premium is the charge you pay to retain the policy, paid out on a regular basis (e.g. monthly, semi-annually, or annually), and the deductible is the out-of-pocket amount you are obligated to pay before coverage kicks in. Insurers will set these levels based on how much coverage you obtain, along with their assessment of the risks associated with your property. This means that exact rates will depend on your business and the insurer, but the general pattern is that your premiums will be higher if you have more coverage and/or a lower deductible and your premiums will be lower if you have less coverage and/or a high deductible.
While it is tempting to minimize the regular costs you pay for insurance coverage, you shouldn’t necessarily just choose the cheapest policy available to you. Failing to purchase enough property insurance could leave you facing tens or hundreds of thousands—potentially even millions—of dollars to repair or replace property. Instead, you should look for policies with premiums and deductibles that offer you the best value for the amount of coverage and the relative level of risk facing your business and property.
When you are dealing with an incident, you want to make sure that you can navigate the process easily to minimize financial losses and disruption to your business. This means that when evaluating commercial property insurance policies, you should take note of each insurer’s process for reporting claims. Your policy may spell out particular rules, procedures, or deadlines for filing claims, and you will want to compare policies to see which processes are easiest to navigate and likely to result in successful claims.
You may also be interested in learning what sort of tools and support an insurer offers for managing and tracking claims. Some insurers have 24/7 support lines and websites or mobile apps that make it easy to initiate claims, provide documentation, and follow the status of your claim. These tools and other customer support resources can speed the process along and give you reassurances while dealing with the challenges associated with a claim.
One of the best data points to consider when comparing commercial property insurance carriers is other customers’ experiences with them. Insurance providers with a good track record that are known for strong customer satisfaction levels and fair business practices will cause you far fewer headaches—especially when you are dealing with the stress or pressure from an incident that leads to a claim. On the flip side, insurance providers with a poor reputation may be worth avoiding even if they have low costs or other attractive terms in their policies.
Two great sources to consult for information on insurers’ reputations are JD Power and the Better Business Bureau. JD Power compiles ratings from customers to provide an overview of a company’s offerings and customers’ level of satisfaction; they release annual reports evaluating insurers’ customer satisfaction for different segments of the insurance market like small business insurance, large business insurance, and property claims. The Better Business Bureau is an organization that compiles information about customer concerns and rates businesses based on the trustworthiness of their business practices.
The core service that insurers provide to policyholders is providing compensation for claims, so as a policyholder, you will want assurances that your insurer has adequate financial strength to pay claims. If insurers are not in good shape financially, the businesses they cover could be left on the hook for property damages in the event that something goes wrong.
Shoppers evaluating insurers’ financial strength can easily find information from a major credit rating agency like AM Best, Moody’s, or Standard and Poor’s, who each evaluate financial health for insurers and many other businesses. Because each agency has a different formula for establishing credit ratings, it is best to compare ratings to get the most accurate overall picture of an insurer’s financial strength.
The Best Commercial Property Insurance for Small Businesses
When it comes to commercial property insurance, small business owners tend to be primarily focused on how to keep costs low and minimize administrative burdens while guaranteeing a good level of coverage. Among major commercial insurance providers, The Hartford is one of the best options available on the market to meet these needs. The Hartford’s commercial property insurance policies are affordable at the entry level and easily scaled up as a business’s needs for property coverage become larger and more complex. The Hartford also brings customized coverages for different industries, along with solid tools for managing claims, so business owners who opt for The Hartford will not sacrifice service quality for the price.
The Best Commercial Property Insurance for Vacant Buildings
Commercial buildings that are left vacant for an extended period of time may have a greater risk of fire, vandalism, and other hazards. As a result, many carriers will include clauses that limit the amount of commercial building insurance coverage after some period of vacancy, frequently 60 days but potentially longer or shorter than that.
If you are concerned that your property will be unoccupied for a long period, the first step you should take is to check with your insurer to confirm how their policies define vacancy and learn how an extended vacancy could affect your coverage. In the event that your building will be considered vacant and you will lose coverage, you may also be able to add an endorsement for vacant building coverage on your existing commercial building insurance policy. Note that the rates for coverage on a vacant building may be slightly higher and your insurer may have additional requirements (e.g. an updated sprinkler or security system) to account for the increased risks.
If you cannot easily obtain coverage from your normal commercial property insurance provider, some insurers offer standalone coverage for vacant properties. One of the best is US Assure, an insurer that specializes in insurance for construction and property. US Assure’s vacant property policies are available in every state except for Alaska and Hawaii, and will cover up to $5 million on a commercial property.
Best Commercial Property Insurance Companies Overall
Nationwide (Best Overall)
Coverage Options & Policy Limits
Nationwide’s commercial property insurance policies are part of a full array of business insurance offerings, and Nationwide works with you to find the right coverages according to your size and industry. Nationwide’s industry-specific coverages are designed for customers as diverse as offices, breweries, real estate developers, and churches. In addition to standard property coverages, these policies may include endorsements for related risks like equipment breakdown, property in transit, employee dishonesty, or contractors equipment.
Premiums & Deductibles
Nationwide allows you to start quotes online or to call and speak directly with an agent to discuss the coverage you need and learn what sorts of rates might be available. With its wide range of other personal and business insurance products, Nationwide’s discounts and bundles can help you save on the cost of commercial property insurance.
Nationwide has one of the most customer-friendly claims processes out of all the major insurers. In addition to a 24/7 phone line, Nationwide offers both a mobile app and a web portal to report and manage claims at your convenience and allows you to initiate claims even if you do not have all the documentation or information needed to process the claim.
Nationwide is the top performer out of the insurers evaluated for this guide on the basis of company reputation. JD Power gives Nationwide a grade of 892 out of 1,000 on its property claims satisfaction survey, which is 5th overall and tops the other carriers in this guide. Additionally, the Better Business Bureau finds that Nationwide is fair and trustworthy in its business practices, earning an A+ rating.
Nationwide is among America’s largest insurers for property insurance of all types, and its commercial lines business writes more than $8 billion in premiums each year. The ratings agencies find that Nationwide backs up its substantial coverage. Both S&P and A.M. Best rate Nationwide at an A+ on their respective scales, while Moody’s gives Nationwide a strong A1 rating.
Nationwide is one of the country’s leading insurers across all lines, and for good reason. Nationwide’s excellent claims management and customer-oriented reputation, along with its variety of property insurance offerings tailored to different industries and business sizes, make it the best all-around choice for commercial property insurance.
Coverage Options & Policy Limits
Travelers provides unique commercial property insurance coverage for at least 24 industry categories and coverage for businesses of all sizes.
For small business owners, Travelers recommends a business owner’s policy that provides broad coverage including commercial property—which includes business income and extra expenses—along with general liability coverage. Bringing together these policies helps keep costs low. However, for businesses with greater needs, these policies can still be supplemented with endorsements for additional coverage or higher limits.
For businesses with more complex needs, the Travelers Deluxe property package integrates additional coverages, like extended business income coverage, electronic data, and personal property in transit, along with other more specific endorsements and coverages.
Premiums & Deductibles
Travelers policies are highly customizable according to business’s needs, and costs will vary with the particular coverages and endorsements you select. To find accurate information about the costs you might face with Travelers, the Travelers website will direct you to a local agent who can provide you with a quote.
Travelers has a forward-thinking, technology-based approach to managing claims. Travelers has innovative digital tools for communication, including an excellent mobile app and website for initiating claims and receiving updates. Travelers also makes it easy to use these tools for uploading documentation or other files related to your claim and finding vendors and service providers who can help you address the damages you are facing.
Travelers performs fairly well on measures of company reputation. The Better Business Bureau gives Travelers its best rating of A+ for fair business practices. In a recent JD Power customer survey of property claims satisfaction, Travelers scored an 881 out of 1,000, which was right around the industry average and good for 12th of all insurers.
Travelers is the nation’s largest commercial insurer, with more than $18 billion in premiums written annually. With such a large position in the market, Travelers also boasts excellent financial ratings from the major credit agencies. AM Best gives Travelers an A++ (Superior) rating, while Moody’s and Standard & Poor’s rate Travelers with excellent Aa2 and AA grades, respectively.
With its strength in the commercial insurance market, its variety of coverage options, and its strong claims management tools, Travelers is one of the best all-around options available for commercial property insurance and our overall runner-up.
The Hartford (Best for Small Business)
Coverage Options & Policy Limits
The Hartford offers commercial property insurance policies for businesses of all sizes, from individual entrepreneurs to large corporations.
The Hartford’s basic coverages for property are in line with industry norms, but The Hartford will work with business owners to add the right endorsements and scale up the level of coverage as needed. The Hartford even has property packages pre-designed for select industries based on the unique risk profiles of those industries.
In recognition that larger businesses have greater property insurance needs, The Hartford offers special coverage for large businesses with greater than $200 million in insurable value. These policies are structured with open-perils coverage and also include access to The Hartford’s risk engineering team to proactively identify risks and help large businesses avoid losses.
Premiums & Deductibles
The Hartford makes it easy to get an insurance quote online and gives you an idea of how much you will pay for property insurance coverage. With some basic information about your business, you can get a quote from The Hartford online in less than 10 minutes. For small businesses, rates can start as low as a few hundred dollars per year.
With customizable coverages for businesses of all sizes, you can also save by bundling together other forms of business insurance through The Hartford. This can include specific endorsements for property coverage or combinations with other commercial insurance policies like general liability coverage.
The Hartford has a strong property claims filing process, with a 24/7 phone line and a convenient online portal to initiate and track claims. For customers covered under The Hartford’s specialized insurance for large businesses, The Hartford offers a dedicated group of claims agents to handle more complex needs.
The Hartford is one of America’s oldest active insurers, having been founded as a fire insurance company more than 200 years ago in 1810. With such a long track record, The Hartford has a great reputation in the insurance industry and is a reliable choice for property coverage. JD Power’s property claims satisfaction survey gives The Hartford a score of 885 out of 1,000, high enough for 7th overall and above the industry average of 881. Further, the Better Business Bureau gives The Hartford an A+ rating.
The Hartford’s financial strength evaluations from the major credit ratings agencies all indicate a healthy company with sufficient resources to meet its obligations and pay out claims. The Hatrford’s ratings are an A+ with S&P, an A+ with A.M. Best, and an A1 with Moody’s.
The Hartford is an affordable, reliable commercial property insurance option for businesses of all sizes, but especially for small businesses. The Hartford makes it easy to add or combine coverages without substantially increasing costs.
Liberty Mutual (Best for Risk Management Services)
Coverage Options & Policy Limits
Liberty Mutual offers tailored policy solutions for small, midsize, and larger businesses. Liberty Mutual makes it easy to obtain commercial property coverage that includes industry-specific property endorsements. Liberty Mutual also offers additional coverages for larger businesses, including enhanced coverage for shipping cargo and equipment breakdowns.
One of Liberty Mutual’s strongest benefits is its risk control services, which are included in many of its property policies. Liberty Mutual has an extensive library of training materials and self-assessments to identify potential property risks to your business and also offers consultations with risk management specialists by phone, email, or—for the most complex coverages—in person.
Premiums & Deductibles
Pricing information about Liberty Mutual is difficult to find without speaking directly to an agent or broker. As with other insurance providers, the exact costs you can expect to pay for commercial property insurance will depend on characteristics of your business and the property you need insured. To get a quote, you will need to call Liberty Mutual and speak to an agent who can help ensure that you have a policy tailored to your needs.
Liberty Mutual stresses its strong customer experience in navigating the claims process. Claims can be filed by phone 24/7, and Liberty Mutual has dedicated lines for small, midsize, and large business customers. When you initiate a claim under your commercial property insurance policy, Liberty is careful to direct the claim to specialized claims handlers based in regional offices around the country, who can support you with local knowledge and any state-specific provisions of your claim.
Liberty Mutual has been rated A+ by the Better Business Bureau and accredited by the BBB for nearly 90 years. This accreditation means they work toward resolving consumer complaints in line with standards set by the BBB. A recent JD Power study of property claims satisfaction offers Liberty Mutual a score of 882 out of 1,000, which places it 11th out of all insurers and 4th out of those examined for this guide.
Liberty Mutual demonstrates good financial strength according to the major credit agencies. Moody’s rates Liberty Mutual at the A2 level, while both AM Best and Standard & Poor’s give Liberty Mutual a rating of A on their respective scales.
Liberty Mutual is a solid option for businesses of many sizes and industries, but it distinguishes itself with services to help businesses minimize risk and proactively prevent damages or loss.
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