What You Need to Know About Commercial Property Insurance


Think about your average workday. Does your job rely on special equipment? Is using computers a big part of your day? Do you work in a commercial space?

If you answered “yes” to any of these questions, you’re probably wondering how to protect the property and assets you need to run your business. That’s where commercial property insurance comes in. So what is commercial property insurance coverage? Glad you asked. We’ve made a helpful guide mapping out how this type of policy works, what it typically does and doesn’t cover, and whether your small business could benefit from it. Let’s start with the basics…

What is Commercial Property Insurance?

If you operate your business in a storefront, office, or other commercial space, you might be considering getting a commercial property insurance policy. So what exactly is commercial property insurance? In short: it’s a type of insurance that can cover losses occurring on your business property from theft, building collapse, or damage due to certain weather events. A commercial property insurance claim typically protects your business’s physical assets such as equipment, tools, and product inventory.

Bundled with general liability and business interruption coverage, commercial property insurance is often offered as part of a business owner’s policy (BOP) package. More information on BOP is discussed further down.

Commercial property insurance rates.

The cost of a commercial property insurance policy depends on a few factors. These include but are not limited to:

  • Where your business is located. This will help determine your environmental risks.
  • Your building’s construction. This will include the quality and safety of the building materials, plumbing, and electrical system.
  • The type of work you do. Each industry faces different risks. For example, a restaurateur is more likely to encounter dangerous work situations than someone who conducts business from an office.
  • How prepared the location is for fire and theft. How close you are to the nearest fire station, and whether your fire alarms and security system are up-to-date are important.

What Does Commercial Property Insurance Cover?

As a business owner, it’s important to know what your insurance does and doesn’t cover. When it comes to commercial property coverage, there are some important details to keep in mind.

Commercial property insurance typically covers losses as a result of:

  • Fire
  • Wind, storms, and snow
  • Various forms of water damage, such as sprinkler leakage
  • On-site vandalism or theft
  • Building collapse

Meanwhile, your commercial property insurance policy typically will not cover:

  • Theft or loss occurring off-site
  • Loss as a result of employee dishonesty
  • Cyber fraud
  • Damage resulting from a flood or earthquake
  • Vehicle damage

Important note: If you lose income as a result of property damage, that loss won’t be covered under your commercial property policy. However, if you have this coverage as part of a business owner’s policy, you also may have business interruption insurance, which offers income loss protection under certain circumstances.

Additionally, a commercial property insurance policy will not cover worker injury claims. Those claims would typically be covered under workers’ comp insurance.

Does commercial property insurance cover theft?

One of the most common commercial property insurance coverage questions is whether it includes theft. The answer? Yes — but only in some cases. This type of insurance primarily covers losses occurring on business property. If the theft doesn’t occur on company premises, it won’t be covered under your commercial property insurance policy.

Say your office was broken into and your computer equipment was stolen. This theft may meet the criteria for a commercial property claim. However, if you were taking your work laptop home and it was stolen from your car, it would not be covered.

Commercial property vs. general liability insurance.

General liability and commercial property may both be considered essential coverage (though not generally legally required), that’s about as far as their similarities go. While commercial property insurance is intended to protect your business’s property, general liability typically protects property owned by a third party,,, such as a client. General liability also may cover third-party bodily injury and personal and advertising injury.

What Types of Businesses Should Consider Commercial Property Insurance?

Almost any industry can benefit from having insurance on commercial property. Anyone whose job relies on equipment, carries inventory, or is operated from a commercial location will typically want to protect their assets and location. Regardless of the type of business you run, there are a few options for small business property insurance. If you run your business from home, commercial property coverage may not be right for you, but you can explore home-based business insurance options instead.

Commercial property insurance, however, is considered an essential coverage for business owners who:

  • Own or rent an office or commercial property
  • Own or rent equipment
  • Have computers or office equipment on-site
  • Keep important business records in their workspace
  • Keep products and inventory on-hand

Protect Your Property and More with a Business Owner’s Policy

Interested in commercial property insurance for small business owners but looking for even more essential coverage? A business owner’s policy (BOP) might be a good fit for you. BOP insurance typically rolls three types of insurance into one convenient policy. A business owner’s policy will usually include:

  1. General liability insurance
  2. Commercial property insurance
  3. Business interruption insurance

BOP insurance can be a great option for small business owners who want a broad range of coverage without juggling a bunch of policies. And convenience isn’t the only benefit. The bundle is customizable, with optional add-ons available to help personalize your policy to suit your business’s needs.

Simply Business® makes finding business insurance easy by offering coverage recommendations by trade. Whether you need a workers’ comp policy to meet your state requirements, or want general liability for peace of mind, we’ll help you browse and compare quotes from leading insurance carriers. Get started today using our free online quote comparison tool. We’ll help you with the rest.

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Kristin Vegh

After several years of working in insurance while also freelance writing, I’ve finally found where the two interests intersect. I’m a writer with Simply Business with an insurance processing background and a love of research.

Kristin writes on a number of topics such as small business trends, license reciprocity, and BOP insurance.