Commercial Property.
Rebuilding is the smaller problem. The months with no revenue are what close businesses.
Property insurance is bought around buildings and equipment, and then a fire happens and the real damage turns
out to be the income that stopped. Business interruption is the coverage that decides whether a company reopens,
and it is the one most often under-bought.
The second issue is valuation. Most commercial property
carries a coinsurance clause, so insuring below the required percentage reduces every claim proportionally,
including small ones. Send us your policy and we will check the valuation before we check the price.
What sits inside a property policy
Each of these carries its own limit, and the ones businesses set casually are usually the ones that fall short.
The building
If you own it. Valued on rebuild cost today rather than market value or purchase price, because land is not the thing at risk.
Business personal property
Everything you own inside: equipment, inventory, furniture, computers, tools. On most businesses this is the larger of the two numbers and the one estimated most loosely.
Tenant improvements
If you lease, the fit-out you paid for is yours to insure, not the landlord’s. Kitchens, partitions, flooring, wiring, shopfronts. This is the single most commonly omitted item on a leased-premises policy.
Business interruption
Lost income and continuing expenses while you cannot operate. Priced on a period of restoration, and that period is nearly always longer than owners assume.
Extra expense
The cost of staying open by other means: temporary premises, rented equipment, expedited shipping. Frequently cheaper for the insurer than a long shutdown, and genuinely useful.
Property in transit and off-site
Stock, tools and equipment away from the premises, in vehicles, or at a client site. Standard policies limit this tightly and inland marine coverage handles it properly.
Coinsurance, and why under-insuring costs more than it saves
This is the mechanism that surprises owners most, and it applies to small claims, not just total losses.
How the penalty works
Most commercial property policies require the property to be insured to a stated percentage of its value, usually eighty or ninety percent. It is a condition of the contract, not a suggestion.
Insure below that and the insurer pays claims in the same proportion you were under-insured. Carry three-quarters of what the clause requires and a claim is settled at roughly three-quarters, minus the deductible. That applies to a modest water loss just as it applies to a fire.
The trap is that nothing warns you. The premium is lower, the policy looks fine, and the shortfall only appears in the adjuster's calculation.
Why so many are under-insured now
Construction and equipment costs rose sharply, and most policies simply renewed at last year's figures. A building insured correctly four years ago may be well below the required percentage today without anyone changing anything.
Growth compounds it. Businesses add equipment and inventory continuously and rarely update the limit, so the gap widens every year they succeed.
Two things reduce the risk: valuing the property properly rather than by instinct, and adding agreed value where a carrier offers it, which suspends the coinsurance condition entirely.
Income, not just walls
Rebuilding is a construction problem with a known cost. Losing a year of revenue while keeping rent, loan payments and key staff is what actually ends businesses, and it is the part owners think about last.
The period of restoration
Coverage runs while the property is being repaired, and that period is consistently underestimated. Permits, contractor availability, long-lead equipment and inspections add months beyond the build itself.
Continuing expenses
Rent and loan payments do not pause. Nor does the payroll of staff you cannot afford to lose. This coverage keeps those obligations funded while nothing is coming in.
Extended period of indemnity
Revenue does not return the day the doors reopen. This extension continues coverage while you rebuild the customer base, and it is inexpensive relative to what it does.
Contingent business interruption
If your loss comes from a supplier or a major customer being shut down rather than your own premises, this responds. Supply chain concentration made it far more relevant than it used to be.
What a standard policy leaves out
Flood and earth movement
Excluded, exactly as on a home policy. Commercial flood is available federally and privately, and private carriers frequently offer higher limits and better terms.
Equipment breakdown
Mechanical and electrical failure is not a covered peril. A boiler, compressor, refrigeration unit or electrical panel failing, and the spoilage and downtime that follow, need this endorsement.
Ordinance or law
Older buildings usually cannot be rebuilt as they were. Bringing them to current code costs real money and standard policies do not fund it.
Wear, corrosion and maintenance
Insurance covers sudden accidental loss. Deterioration, rust, and gradual leaks are maintenance, and carriers inspect for them.
Spoilage
Food and temperature-sensitive stock lost to a power failure or refrigeration fault is usually excluded without a specific endorsement. Essential for restaurants, groceries and laboratories.
Cyber-related property loss
Damage triggered by a cyber event is generally excluded from property policies and belongs on a cyber policy. The gap between the two is where disputes happen.
Better valuation, better price
Commercial property is written by a narrower set of carriers than personal lines, and appetite varies sharply by construction type, occupancy, protection class and location. A building one carrier will not write is often competitively priced by another, and from inside a single company that is invisible.
Same coverage, lower cost
A genuine like-for-like comparison first, so you can see whether you are simply overpaying for what you hold.
Correct valuation, no penalty
Frequently the more useful outcome. Setting the limit properly and adding agreed value removes the coinsurance risk, and it does not always cost more.
Package it
General liability and property together as a BOP or a commercial package usually beats buying them separately, and gives you one renewal instead of several.
And we tell you to stay
If the policy is well written and competitively priced, we will say so. That happens, and it matters more to us than a switch you would regret.
Send us your policy, and we will check the coinsurance before the premium.
The declarations page shows your limits, valuation basis, coinsurance percentage and business interruption terms. That is everything needed to tell you whether a claim would actually be paid in full. No cost, no obligation.
Commercial property, answered plainly
Do I need this if I lease my space?+
Yes. Your landlord insures the building shell. Everything you brought into it is yours: equipment, inventory, furniture, computers, and any improvements you made to the space. Tenant improvements are frequently the largest uninsured exposure a leasing business has.
What is coinsurance and why does it matter?+
Most commercial property policies require you to insure the property to a stated percentage of its value, commonly eighty or ninety percent. Insure it for less and the policy pays claims proportionally reduced, including partial ones. Under-insuring by a quarter can cut a modest claim by a quarter, which is why the valuation matters more than the premium.
Replacement cost or actual cash value?+
Replacement cost pays to replace with new property of like kind and quality. Actual cash value deducts depreciation, so a ten-year-old commercial oven or server settles at a fraction of what replacing it costs. On equipment-heavy operations the difference is the whole outcome.
What is business interruption coverage?+
It replaces the income the business would have earned while it is shut down after a covered loss, and pays continuing expenses such as rent, loan payments and payroll. For most businesses the income loss exceeds the physical damage, and this is the coverage that decides whether a company reopens.
Is flood or earthquake included?+
No. Both are excluded from standard commercial property policies and require separate coverage. Commercial flood is available through the federal program and the private market, and for many locations private carriers offer higher limits and better terms.
What is equipment breakdown?+
Coverage for mechanical, electrical and pressure system failure, which standard property policies exclude. A compressor, boiler, HVAC unit, refrigeration system or major electrical panel failing is not a covered peril otherwise, and the resulting spoilage and downtime frequently is not either.
How should I value my building?+
On what it costs to rebuild today, not market value and not the purchase price. Land does not burn, and construction costs rose substantially in recent years. Many commercial buildings are insured at figures set years ago that no longer reflect rebuild cost, which is precisely where coinsurance penalties bite.
What is ordinance or law coverage?+
After a large loss, an older building often cannot legally be rebuilt as it was. Current codes may require sprinklers, accessibility work, or upgraded electrical. Standard policies cover the building as it was; ordinance or law covers the cost of complying with today's code, and on an older property it is essential rather than optional.