Commercial property insurance covers buildings you own, other business property, and inventory against physical loss or damage. Even if you do not own the building or buildings in which your business operates, you need coverage to protect the contents. In most policies, property insurance for business contents covers furniture, fixtures, inventory, office equipment, and other supplies stored at your facility or off-premises. You can choose to insure contents for replacement cost or for actual cash value, which pays only for the depreciated value of the property.
Business Interruption Coverage Business interruption coverage provides important protection if repairs after a property loss slow down or interrupt your business operations, causing complete or partial revenue loss. From the time the loss occurs until your business is running again, business interruption insurance replaces lost profits and provides the funds to pay fixed expenses, such as rent, payroll, and taxes.
Insurance is also available to cover extra expenses to return to normal business operations and profitability. For example, it typically takes time for customers to realize a business has reopened, causing a delay in return to former revenue levels. You can acquire coverage for the difference between "before loss" business income and "after loss" business income for a month or more as your business ramps back up.
Boiler & Machinery/Equipment Breakdown Commercial property policies do not cover explosion of steam boilers and breakdown of machinery. Boiler and Machinery insurance covers direct damage to covered property if the cause of the damage is a covered cause of loss. Covered property is any property that is owned by the named insured or is in the named insured's care, custody, or control and for which the named insured is legally liable. A covered cause of loss is a sudden and accidental breakdown of the insured's boiler and machinery equipment or any part of the equipment described in the policy.
Earthquakes & Flood Earthquake and flood insurance are not included in a basic commercial insurance policy. Both types of coverage are very specialized and are purchased separately. You may not be legally required to purchase earthquake and flood insurance for commercial properties, but both types of coverage provide essential protection from unpredictable and potentially catastrophic natural disasters.
Most earthquake insurance policies have a high deductible and are most cost effective in the event that the entire building is destroyed. Rates for earthquake coverage depend on your location and the probability of an earthquake, and they may be lower for frame and steel buildings, which typically withstand earthquakes better than buildings made of concrete or concrete block.
The primary underwriter for flood insurance is the federal government, which sets certain requirements, caps, and fees.