How Much is Commercial Property Insurance? 5 Variables That Impact Cost

Are you a business owner? Do you have commercial property insurance coverage?

Owning a business comes with risk. And operating a business without insurance coverage is even more of a risk. 

If you are a business owner, a commercial insurance policy is a must. You need the assurance that your company can stay afloat no matter what challenges come your way. This type of protection can save you from many headaches down the road.

While the need for commercial insurance might be apparent, calculating the cost of a policy is a more complicated matter. A quick online search asking the question, how much is commercial property insurance, yields all sorts of answers. Why? 

Commercial property insurance is complex. It’s not like other types of insurance policies where you can get the answers to a few quick questions and be on your way with an active policy. Year, make, and model won’t cut it to get a commercial policy going.

The cost of a commercial policy varies widely from business to business based on a multitude of different components. Let’s discuss what factors impact the answer to this question: how much is commercial property insurance?

Commercial property insurance is not the same as commercial general liability insurance

Before we dive into the makings of commercial property insurance, it is important to know the difference between commercial property insurance and commercial general liability insurance. One type of policy does not replace the other. They serve different purposes and work together to provide separate coverages. 

Commercial Property Insurance

Commercial property insurance is also referred to as commercial building insurance. If you are a business owner that owns a building, this is the policy for you. 

Commercial building insurance extends coverage to the physical structure, building materials, and exterior fixtures on your property in the event damage occur from a storm, water, fire, theft, and/or vandalism.

Damage comes in all shapes, sizes, and severity levels. We’ve seen it all, big and small. Although we hate to jump to the worst-case scenarios, our job is to think of all the possibilities. 

• What if you have to halt business operations due to the severity of the damage? 
• What if your cash flow comes to an abrupt stop because you are forced to shut down your business during renovations due to a claim?
• What if you incur a total loss and do not have enough coverage to rebuild your structure?

When formulating your policy coverage, it is critical to remember these real-life scenarios. Tragic events that result in property damage can do harm to the business. But you can prepare for these events by having the proper coverage in place BEFORE anything happens. 

All policies are not made equal. Coverage varies, so our goal is to identify the right kind of commercial building insurance policy that protects your specific business needs and physical assets. 

Commercial General Liability Insurance

While commercial building insurance covers property, commercial general liability insurance coverage helps you maneuver through a liability lawsuit. For example, if an individual is hurt while on your property and decides to sue your business for bodily injury, a commercial general liability insurance policy would cover that type of claim. 

Business liability coverage also falls under a commercial general liability policy. This sort of coverage protects you against slander, libel, copyright infringement, invasion of privacy, and misappropriation of advertising ideas when it comes to advertising your goods or services. 

How much is commercial property insurance when you own a business

Now that we’ve defined the difference between commercial property insurance and commercial general liability insurance, let’s break down what goes into the price of property insurance. 

Typically, high-risk properties will have higher insurance rates compared to low-risk properties. Your premium amount will be based upon several factors, including:

#1 – CONSTRUCTION TYPE/BUILDING MATERIALS

What is the overall condition of the building? What the building is made of can have a drastic impact on the price of your property insurance policy. Another factor is if the building’s materials are fireproof. What about the interior materials, such as the floors, doors, and walls? Do those consist of fire-retardant materials? If not you may find yourself paying more than you anticipated.

#2 – LOCATION/GEOGRAPHY

Is your building located in a high-crime area known for its criminal activity? What about the chance of natural disasters? If you find yourself in either situation, it could result in a more expensive property insurance policy. If the value of your building is based upon its location, this could also impact the cost of an insurance policy. Surprisingly enough, if a neighboring business is a potential risk to your property that could be another variable capable of raising your price.

#3 – EQUIPMENT/MACHINERY

Will you be operating large or heavy equipment? The type of machinery you rely on for daily tasks is a factor that will certainly play a role in how much you pay for a commercial insurance policy. 

#4 – INDUSTRY/PROPERTY USAGE

The type of work you do in the building you occupy is another important factor when it comes to determining how much a commercial property insurance policy will cost you. For instance, if you do work that deals with hazardous or toxic materials you will likely wind up paying more than someone who occupies an office space with no harmful or dangerous materials present.

#5 – AGE/UPDATES

When was the building constructed? The age and condition of the building are also vitally important when figuring out how much a commercial property insurance policy will cost. That’s because buildings that have been recently updated or renovated are not considered as much of a risk compared to those that aren’t.

#6 – FACILITY SYSTEMS/AMENITIES

Building amenities also have an impact on the price of a commercial property insurance policy. That’s because buildings can have features that add additional safety and security features. These features can include  sprinklers and alarm systems that are likely to reduce the amount of  irreparable damage from circumstances beyond your control. Being located near Fire and Police stations can also be helpful in that regard.

#7 – SIZE/STORAGE

As you can imagine, the size of the building is another factor that will affect how much you pay for a commercial property insurance policy. Larger buildings with extensive warehouses and storage facilities will likely result in more costly policies.

The cost of commercial property insurance coverage varies drastically

To sum it all up, the type of business makes all the difference when trying to determine the cost of a commercial property insurance policy. 

Commercial buildings need insurance coverage, but there is not a simple one-size-fits-all category for business insurance. Deductibles and coverage limits vary based on the needs of a business. 

A small business does not necessarily equate to a small premium. The smallest of businesses can carry the greatest of risks. The level of risk should match the level of coverage. In fact, you reduce your financial risk when you choose to protect your physical assets with a business policy. 

Furthermore, you show the people you employ that they are a priority when you choose to invest in business property insurance. No one wants to be out of a job (and pay) unexpectedly. 

Finding the right kind of coverage for your business needs is critical to your livelihood

Are you wondering how much commercial property insurance will cost for your business? 

We can help!

• We have the expertise and knowledge to help you determine what kind of coverage you need at a price that fits your budget. 
• We pay attention to the little details that end up being significant details in the event of a major disaster. 
• We take the time to answer your questions and address your concerns. 
• We research different coverage options to ensure you receive the best type of policy for your business, yet save money too. 
• We make your business needs our top priority.

The peace of mind that comes with commercial property insurance coverage is irreplaceable. You  won’t regret the decision to protect the livelihood of your company. 

Give us a call at 480-981-6338 to get started. If you want to chat online or meet in person, either way, that works great for us. You can also contact our office by filling out a short online form.

The Insurance Professionals of Arizona look forward to serving you!