Insurance Coverage Considerations for Commercial Property

Ensuring your property is covered in the event of a disaster is vital to any commercial property owner. There are several key pieces to know about your commercial property insurance coverage. Make sure your policy meets your needs and covers your liabilities.

Deductibles

Deductibles vary on each policy. Each deductible could vary for different disasters such as:

• Business interruption
• Flood
• Water or ice dam damage
• “All Peril”
• Per-unit
• Equipment breakdown
• Earthquake
• Named storm/wind/hurricane/hail

Valuation and Limits

Property items are classified to be paid out on an actual cash value (ACV) or replacement basis. ACV deducts the depreciated amount whereas replacement cost covers the value to replace the item.

Non-Covered Areas

Your commercial property insurance coverage should be tailored to the property and your business. Not all exposures may be covered by a standard policy including but not limited to:

• Sewer/water backup
• Leasehold improvements
• Law or ordinance coverage
• Equipment breakdown
• Earthquake
• Flood

Coinsurance

Many insurance agents require coinsurance clauses to ensure property owners report the actual value of items. Property owners are liable to ensure their items meet the 80-90% replacement cost.

Make sure you fully understand your commercial property insurance coverage. A licensed agent can better explain the different aspects of your policy to better prepare you in the event of a disaster.