Commercial Property Insurance

Commercial property (sometimes referred to as business property) insurance covers a business’s first-party property from accidental damage or loss. It is an essential consideration for any business with a physical location — such as a store, office, or studio.

You might be asking yourself if you really need a new type of coverage when you already have general liability insurance. The answer is yes. While general liability insurance covers damage to the property of third parties (your clients’ and other people’s property), commercial property insurance protects against loss of your business’s own physical assets and valuable business resources.

Any small business that rents, leases, or owns a physical location and keeps valuable assets such as equipment and inventory on the premises likely needs commercial property insurance.

Building insurance helps protects the physical facility, while business contents insurance provides coverage for vital equipment 24/7. Together, they help ensure that the assets needed to succeed are protected, even when the business is closed.

Yes. A Business Owners Policy (BOP) bundles general liability insurance and commercial property insurance into a single package. A BOP is designed to help small- to medium-sized businesses protect their company from the daily risks they may face.

With BOP insurance, businesses are covered with:

• General liability insurance: Provides investigation, defense, and settlement for third-party claims stemming from bodily injury, property damage, and personal and advertising injury.
• Commercial property insurance: Provides business building insurance, business contents insurance, or both to help protect business assets inside and nearby the property.

The cost of a commercial property insurance policy depends on the selected coverages, the limits chosen and the location of the property. Factors that affect a property’s safety rating (and therefore, its premium) include:

• Building materials
• Adjacent exposures
• Proximity to a fire station
• The building’s sprinkler system (or lack of)

Through Thimble, businesses can get up to $1,000,000 in building coverage and up to $500,000 in contents coverage. Note: not all businesses need the maximum limit; a lower coverage limit can be selected when requesting a quote.

Choosing the right coverage amount depends on several business-specific factors. Here is a practical framework for making that decision:

• $1M building limit is best suited for businesses that own commercial spaces with significant structural value, and/or those that house expensive equipment. The value of the building should determine the limit you select. Businesses operating out of a single small office or shared workspace may find a lower building limit sufficient.
• Actual cash value vs. replacement cost: Some policies pay out the depreciated (actual cash) value of damaged property, while others cover full replacement cost. Replacement cost coverage costs more upfront but avoids out-of-pocket gaps when replacing items.
• Flexible vs. annual coverage: Many of Thimble’s flexible policy and payment options are particularly well-suited to freelancers, sole traders, and project-based businesses that may not want to pay for an annual policy in one payment and instead would prefer monthly payment options. Whereas established businesses with a permanent office or retail location should purchase an ongoing annual policy.

It is important to select a high enough limit to prevent being underinsured. Start by reviewing available limits and evaluate the estimated value of the building (and its contents). Thimble’s quoting process makes it easy to create and compare quotes quickly.

Commercial property insurance includes exclusions, which are specific risks that fall outside the scope of coverage. Common exclusions include:

• Deliberate property damage caused by the insured
• Business interruptions unrelated to covered property damage (e.g., staffing shortages or pandemic shutdowns)
• Acts of God (flood, tornado, earthquake)
• War
• Wear and tear

Other types of property that are not covered under commercial property insurance:

• Property that is accidentally lost or damaged off-site
• Certain business property types, including:
  • Vehicles
  • Building foundations
  • Cash and bonds
  • Crops
  • Animals (other than livestock)
  • Data

Always read the policy carefully to understand what is and isn’t covered. To reduce risk exposure, keep property in good repair, update equipment regularly, and consider separate coverage for vehicles (auto insurance) and data (cyber insurance).