Navigating Commercial Property Insurance: Key Considerations for Risk Management

Commercial property insurance typically protects the physical assets of your business, including structures, inventory, and equipment. Many commercial property insurance policies let you choose between actual cash value coverage (which is the depreciated value of lost/damaged items) or replacement cost coverage (coverage for the cost of brand-new items, irrespective of depreciation). Typically, while replacement cost coverage is more expensive than actual cash value coverage, it is much preferred, particularly in the event of a large loss.

Business owner’s policies, also known as BOP policies, typically include both general liability insurance (coverage that protects for bodily injury or property damage to third parties) as well as commercial property insurance in a single policy. BOP policies typically work well for small business owners because they protect the insured’s business property, as well as the insured’s business from potential third-party liability.

If an insured suffers a covered loss, such as damage from a fire, property insurance policies also typically provide business income insurance, which typically allow for insureds to recover lost income during the period of time that the property is not operational (subject to the terms of the policy). Typically, such coverage allows the insured to recover for such items as: (1) relocation and equipment rental; (2) cleaning and repairs; (3) payroll and salary for employees; (4) lost net income of the insured.

Working with a qualified insurance professional to identify and obtain proper property coverage is crucial for a business’ survival in the event of a major property loss. Obtaining proper advice when an insurance claim arises is important so that policyholder rights are preserved and maximized. The Insurance Recovery Team at Burke Warren is ready to assist you with any insurance issues that may arise.