Small businesses make up more than 99 percent of all companies operating in the United States. There are currently over 33 million in America, employing more than 61 million people.
Operating a business opens you up to certain risks. These include myriad threats to your building structures, equipment, inventory, and other assets. This is where commercial property insurance comes in.
This article covers the importance of property insurance. Keep reading to find out who needs it, how it works, and what level of coverage you need to protect your business.
What Does Commercial Property Insurance Cover?
Commercial property insurance provides protection in the event that physical assets become damaged or destroyed. This includes harm from natural disasters, theft, and vandalism.
Common examples include tornadoes, hurricanes, strong storms, lightning, rain, and earthquakes. It also extends to fires and water damage from burst pipes.
Property insurance generally pertains to building structures. However, you can find coverage for equipment, workspace belongings, and product inventory.
Some policies cover external structures. This includes signage, lighting, fences, walkways, landscaping, and parking lots.
Who Should Have Business Property Insurance?
In general, if replacing or repairing assets would cause you significant out-of-pocket costs, then you need property insurance. The more difficult question to answer is what level of coverage you need.
That depends on your business assets and level of risk. Building and equipment values are distinct, as can supplies and inventory.
The cost of building materials has skyrocketed recently. This has affected the need for business property insurance.
Consider the age of your assets and what fiscal role they play in your business. Also, think about their vulnerability to particular risks in your geographic area.
You can also do things to mitigate risk. For instance, if your business is in an area susceptible to fires, adding fire-resistant walls and doors could help keep premiums down.
Replacement Value vs. Cash Value
You can also choose between replacement value and cash value when choosing a policy. Replacement value is the out-of-pocket cost of replacing an asset. Cash value pays only the current, depreciated value of the asset.
For instance, if you bought a piece of equipment 20 years ago, the replacement value would pay out what it would cost to replace it today. The cash value would pay out the actual value of the equipment that was lost (as if you were selling it). For this reason, premiums for replacement value
Again, as a business owner, you have to weigh the potential risk associated with any given asset. If replacing items would create considerable hardship, it may be more prudent to have replacement value coverage. For supplies or other purchases, cash value may suffice.
Find Commercial Property Insurance Today
Now that you understand the importance of commercial property insurance for your business, you can find a policy. A real estate professional can further advise you on the appropriate level of coverage based on your risk potential.
PMI Contra Costa provides property management services to Walnut Creek, Alama, Danville, San Ramon, and Diablo. We offer commercial property maintenance, marketing, tenant management, lease management, and insurance. Reach out to us today to speak to one of our commercial property managers.