Best Commercial Property Insurance for Small Businesses 2024

Understanding Commercial Property Coverage

It’s important to note that most commercial property insurance policies can cover losses associated with theft, vandalism, fire, lightning, and windstorms, but will not cover earthquakes and floods.

Each policy is unique, so it’s important to read and understand the details in your policy so you know if you need additional coverage.

Types of commercial property insurance

Commercial property insurance comes in a variety of forms with varying coverage. The type of coverage you need depends on your business, industry, and the type of property the business owns.

Here is a look at the different types of commercial property insurance and what each can cover:

Standard commercial property insurance:

Most commercial property insurance will cover an owned or leased building as well as the contents of the building. This can include things like supplies, merchandise, stock, equipment, furniture and fixtures. It’s the most comprehensive type of property insurance on the market and is usually available as part of a Business Owners’ Policy (BOP).

There are also specialized types of commercial property insurance available for covering specific types of property or scenarios:

Inland marine insurance:

Standard commercial property insurance usually won’t cover things stored or used off-site. Inland marine insurance is a supplemental type of property insurance that protects your property when it’s away from your business, such as when it’s in transport, used for fieldwork, or stored offsite.

Business personal property insurance:

BPP insurance covers things like furniture, fixtures, merchandise, and equipment, but does not cover the building. If you rent a building and only need coverage for the contents of the building, then business personal property insurance could be a good fit. This is also ideal for home-based businesses as it can pick up where your home insurance leaves off.

Commercial auto insurance:

Most commercial property insurance doesn’t automatically cover vehicles belonging to your business. For this, you’ll need to buy commercial auto insurance as a supplement to property insurance. This can cover losses and damage associated with your business vehicles including theft and damage to the vehicle or its contents.

How much does commercial property insurance cost?

According to data from our partner Insureon, the average small business pays around $67 per month for a basic commercial property insurance policy, but it can be even cheaper when you bundle it as part of a Business Owner Policy.

Get a BOP with commercial property coverage for as low as $27/month*

*Applies to quotes made through Insureon only. Average monthly premium calculations are estimates and may vary by state, insurance provider, and the nature of your business. Where required or allowed by state law, insurance taxes, service fees, and other surcharges may be included and billed separately from the premium.

That said, how much you’ll pay for commercial property insurance depends on various factors, such as:

1. Your industry
2. The value of your property
3. Your location

Insurance companies typically charge more for potentially high-risk industries, therefore your industry greatly impacts the cost of property coverage.

Here is a look at data from Insureon that details the average monthly cost of commercial property insurance by industry, starting with the cheapest:

Insurance costs are also affected by deductibles and policy limits. You’ll pay more for a policy with a lower deductible or a high coverage limit simply because those factors increase the potential financial risk for the insurance company.

Who needs commercial property insurance?

All businesses that have valuable physical assets or a building to protect should consider having commercial property in place. In fact, some mortgage companies or leasing agencies may require you to have property insurance as part of your contract in an effort to mitigate risk.

That said, here are a few trades that typically purchase commercial property insurance:

• Service-oriented businesses:
  Service-oriented businesses usually need commercial insurance coverage for equipment, tools, and items they intend to sell to clients as well as the buildings they own or rent.
• Professionals: 
  Professionals such as lawyers, accountants, or doctors, usually need commercial property insurance to cover their office space or the items in it, such as computers, desks, or specialty equipment needed to provide services.
• Retailers: 
  Online and brick-and-mortar retailers need commercial property insurance to cover their merchandise, inventory, and equipment. Brick-and-mortar retailers may also need to protect their buildings. However, if you specialize in commercially selling products online, you may also need e-commerce insurance.
• Wholesalers:
  Similar to retailers, wholesalers also need this type of coverage to protect inventory in their possession before it ships to retailers and others.
• Home Businesses:
  Home businesses typically need property insurance to cover inventory, equipment, and supplies as these are not usually covered as part of your homeowner insurance plan.

Ultimately, most small businesses can benefit from a business property insurance policy.

How does commercial property insurance reimburse you?

When your property is damaged, stolen, or destroyed, your property insurance will pay to repair or replace the property up to the dollar limits stipulated in your policy. Whether you receive a repair or replacement depends on the reimbursement conditions stipulated in your policy. These can be based on the actual cash value of your property or the replacement cost of your property.

In general, a policy that allows for replacement value will be more expensive than one that provides actual cash value as it doesn’t account for depreciation.

Determining your property’s value

Here is a look at how property can be valued for your insurance plan:

Other types of insurance to combine with property coverage

We recommend opting for a BOP plan that includes both general liability coverage and property insurance. Apart from this, you may want to bind extra coverage for certain scenarios.