Commercial Property Insurance
Protect your business buildings, equipment, inventory, and everything that keeps your operations running.
Protect Your Business Investment
Get comprehensive coverage tailored to your property's unique needs.
Property Loss Can Devastate a Business
According to industry research, over 40% of businesses never reopen after a major disaster, and many more fail within the first year. Commercial property insurance is the foundation of business protection—ensuring you can rebuild and recover when disaster strikes, whether from fire, severe weather, theft, or other covered perils.
What Is Commercial Property Insurance?
Commercial property insurance protects your business's physical assets against damage or loss from covered perils. This includes the building you own or lease, the equipment you use to operate, your inventory and supplies, furniture, and other business personal property.
Coverage pays to repair or replace damaged property, helping your business recover quickly from fires, storms, theft, vandalism, and other unexpected events. Most policies also include coverage for debris removal and some business income loss while repairs are made.
Commercial property insurance is often bundled with general liability in a Business Owner's Policy (BOP) for small to medium businesses, or written as a standalone policy for larger operations with complex property exposures.
What's Protected
- •Buildings and structures you own
- •Leasehold improvements you've made
- •Equipment and machinery
- •Inventory and stock
- •Furniture and fixtures
- •Computers and electronics
- •Signs and outdoor property
Covered Perils: Named Perils vs. Open Perils
Commercial property policies can be written on two bases—understanding the difference is critical to ensuring adequate protection:
Named Perils (Basic Form)
Only covers losses specifically listed in the policy. Common named perils include:
- ✓Fire and lightning
- ✓Windstorm and hail
- ✓Explosion
- ✓Smoke damage
- ✓Vandalism and malicious mischief
- ✓Aircraft or vehicle impact
- ✓Riot and civil commotion
- ✓Sprinkler leakage
Lower premium, but gaps in coverage for unlisted perils.
Open Perils (Special Form) - Recommended
Covers all risks of direct physical loss EXCEPT those specifically excluded:
- ✓All named perils PLUS additional coverage
- ✓Theft and burglary
- ✓Water damage (non-flood)
- ✓Falling objects
- ✓Weight of ice/snow/sleet
- ✓Accidental discharge from appliances
- ✓Collapse from covered causes
- ✓Unknown/unexpected causes
Higher premium, but comprehensive protection with fewer gaps.
What's Covered—and Common Exclusions
Typically Covered
- Building Structure
The building itself, including permanently installed fixtures, machinery, and equipment.
- Business Personal Property
Furniture, equipment, inventory, supplies, and other movable property you own.
- Tenant Improvements
Improvements you've made to leased space (build-outs, modifications).
- Loss of Income
Lost revenue and extra expenses while your property is being repaired.
- Debris Removal
Cost to remove debris after a covered loss.
- Fire Department Charges
Fees charged by fire departments responding to save your property.
Common Exclusions
- Flood Damage
Requires separate flood insurance through NFIP or private insurers.
- Earthquake
Earthquake coverage must be purchased as an endorsement or separate policy.
- Wear and Tear
Normal deterioration, maintenance issues, and gradual damage.
- Equipment Breakdown
Mechanical/electrical failure requires separate equipment breakdown coverage.
- Ordinance or Law
Costs to meet current building codes may require additional coverage.
- Employee Theft
Theft by employees typically requires crime/fidelity coverage.
Don't Leave Your Business Unprotected
Get a comprehensive property assessment and ensure you're properly covered.
Understanding Valuation Methods
How your property is valued directly affects your claim payment. Choose the right valuation method for your situation:
Actual Cash Value (ACV)
Pays replacement cost minus depreciation. The older your property, the less you receive.
Example:
10-year-old equipment with replacement cost of $10,000 and 50% depreciation = $5,000 claim payment
Best for: Lower premiums when replacing with newer equipment anyway
Replacement Cost - Recommended
Pays to replace damaged property with new items of similar kind and quality—no depreciation deduction.
Example:
Same 10-year-old equipment = $10,000 claim payment (full replacement)
Best for: Maximum protection; ability to fully recover and replace what you've lost
Other Valuation Options
Agreed Value
You and the insurer agree on property value upfront. No coinsurance penalty applies. Good for unique or hard-to-value property.
Functional Replacement
Pays to replace property with similar functionality, not identical items. Common for buildings with outdated features.
Market Value
Pays based on what the property could sell for. Rarely used for insurance purposes but may apply to certain assets.
Understanding Coinsurance (Don't Get Caught Underinsured)
Coinsurance is one of the most misunderstood—and financially dangerous— aspects of commercial property insurance. Getting it wrong can cost you significantly at claim time.
How Coinsurance Works
Most commercial property policies include an 80% or 90% coinsurance clause. This requires you to insure your property for at least that percentage of its total replacement value.
If you're underinsured when a claim occurs, the insurer reduces your payment proportionally—even for partial losses well under your limit.
Coinsurance Penalty Example
Building Value: $1,000,000
Coinsurance Requirement: 80% ($800,000)
You Insured For: $500,000
Covered Loss: $100,000
Calculation:
($500,000 ÷ $800,000) × $100,000 = $62,500
You'd receive only $62,500 instead of $100,000!
Our Solution: We help you determine accurate property values and can often arrange policies with "agreed value" endorsements that waive the coinsurance penalty, or blanket policies that provide flexibility across multiple locations.
Understanding Commercial Property Insurance Costs
Several factors influence your premium. Understanding them can help you manage costs while maintaining adequate coverage:
Typical Premium Ranges
| Property Type | Annual Premium Range |
|---|---|
| Small office ($100K-$250K value) | $500 - $1,500 |
| Retail store ($250K-$500K value) | $1,000 - $3,000 |
| Restaurant ($500K-$1M value) | $2,500 - $7,500 |
| Warehouse ($1M-$5M value) | $5,000 - $15,000 |
| Manufacturing facility ($5M+ value) | $15,000+ |
*Ranges are estimates. Actual premiums depend on location, construction, occupancy, fire protection, and coverage options. Contact us for an accurate quote.
Factors That Increase Premiums
- ↑Older buildings or poor condition
- ↑Wood frame construction
- ↑No fire sprinklers or alarms
- ↑High-hazard occupancy (restaurants, manufacturing)
- ↑Flood/hurricane-prone location
- ↑Prior claims history
Factors That Reduce Premiums
- ↓Fire-resistant construction (masonry, steel)
- ↓Automatic sprinkler systems
- ↓Monitored fire/burglar alarms
- ↓Close proximity to fire hydrant/station
- ↓Higher deductibles
- ↓Bundling with liability (BOP)
What to Do After Property Damage
Quick action after a loss can prevent additional damage and ensure a smooth claims process:
Ensure Safety First
Evacuate if necessary. Call emergency services for fire, gas leaks, or structural concerns. Don't re-enter until authorities approve.
Mitigate Further Damage
Take reasonable steps to prevent additional damage (board up broken windows, tarp damaged roof, shut off water). Document these expenses.
Document Everything
Take photos and videos of all damage before cleanup. Create an inventory of damaged items with descriptions, purchase dates, and estimated values.
Report the Claim Promptly
Contact us or your carrier as soon as possible. Provide the date, time, and description of the loss. We'll help guide you through the process.
Work with the Adjuster
An adjuster will inspect the damage and estimate repair/replacement costs. Provide access and documentation. Don't sign anything without reviewing carefully.
Frequently Asked Questions About Commercial Property Insurance
What does commercial property insurance cover?
Commercial property insurance covers your business buildings, equipment, inventory, furniture, and other business personal property against covered perils like fire, theft, vandalism, windstorms, and certain water damage. It typically pays to repair or replace damaged property up to your policy limits.
How much does commercial property insurance cost?
Commercial property insurance typically costs between $500 and $3,000+ per year for small businesses, depending on property value, location, construction type, fire protection, and coverage limits. High-value properties or those in high-risk areas may pay significantly more.
What is the difference between replacement cost and actual cash value?
Replacement cost pays to replace damaged property with new items of similar kind and quality, without deducting for depreciation. Actual cash value (ACV) pays replacement cost minus depreciation, resulting in lower claim payments. Replacement cost coverage costs more but provides better protection.
Does commercial property insurance cover flood damage?
No, standard commercial property insurance excludes flood damage. Flood coverage must be purchased separately through the National Flood Insurance Program (NFIP) or private flood insurers. This is especially important for New York businesses in flood-prone areas.
What is coinsurance in commercial property insurance?
Coinsurance requires you to insure your property for a specified percentage of its value (typically 80% or 90%). If you're underinsured at the time of a claim, the insurer reduces your payment proportionally. For example, if you insure for 50% of value but should insure for 80%, you'd only receive 62.5% of your covered loss.
Does commercial property insurance cover equipment breakdown?
Standard commercial property insurance typically excludes mechanical or electrical breakdown of equipment. Equipment breakdown coverage (also called boiler and machinery insurance) can be added as an endorsement to cover sudden and accidental breakdown of HVAC systems, electrical equipment, computers, and production machinery.
Related Business Coverage
Commercial property insurance is the foundation—consider these complementary coverages for comprehensive protection:
Important Information
This information is provided for educational purposes only and does not constitute legal or insurance advice. Property values and coverage needs vary by business. Coverage features, exclusions, and availability may vary by state and insurance carrier.
All coverage is subject to policy terms, conditions, and exclusions. Please review your policy carefully and consult with a licensed insurance professional to determine appropriate coverage for your specific situation.
The Steele Agency is licensed to conduct business in New York State. License information available upon request or at the New York Department of Financial Services website.
Protect Your Business Property Today
Don't wait for a fire, storm, or break-in to discover gaps in your coverage. Get comprehensive commercial property protection with expert guidance from Steele Agency.
Our Property Insurance Services Include:
- ✓ Property value assessment to avoid coinsurance penalties
- ✓ Coverage comparison from multiple A-rated carriers
- ✓ Replacement cost and special form coverage options
- ✓ Claims assistance when you need it most
- ✓ Annual reviews as your property values change
Serving New York businesses since 1969 • Free quotes • Expert guidance
