Running a business takes a lot of work and has many facets that can make it stressful to operate. Whether a business is new or has been around for decades, new challenges are always coming up every year. From economic challenges to legal situations, businesses have to be able to stay on top of their operations in order to remain effective as a commercial entity.

Commercial property insurance coverage is one way a business can receive help for repairs or replacements of property that has been damaged by various natural disasters (fire, storms, or other events covered in the policy). Commercial property insurance also helps to pay for property that has been stolen or lost.

Ensuring that your business has the right commercial property insurance coverage will help your business to remain effective and help you maintain a peace of mind that your legal matters are squared away.

Types of Commercial Property Policies

In Texas, there are three primary types of policies for commercial property insurance. These policies help to cover disasters or “perils,” most of which are natural disasters and outside of the control of commercial property owners.

Basic Form Policies

Basic Form Policies are commercial property insurance coverage policies that cover the most common form of perils like storms and fires.

Broad Form Policies

Broad Form Policies are another type of commercial property insurance that cover the common perils in addition to structural collapse damage, sprinkler leakage, water damage, and damage from winter storms (like ice, sleet, and weight of snow).

Special Form Policies

Special Form Policies are the final type of commercial property insurance that cover all major types of perils, except for what is specified within the policy. These excluded perils often include damage from insects and vermin, natural wear and tear, nuclear disaster, war and terrorism, floods, earth movement, and more.

When choosing or verifying your existing commercial property insurance policy, always read the entire policy carefully and thoroughly. Depending on where your business is located and the potential disasters or perils that may be common to the area, additional policies may be necessary to protect your business. As perils related to floods, crime, and windstorms may not be covered in the common types of commercial property policies, it helps to have additional coverage to keep your business protected.

In the coastal counties of Texas, most commercial property policies will not cover damage as a result of windstorms. If your business is in one of the designated counties along the coast of Texas, your business will need an additional windstorm-related insurance policy.

In situations where your business rents or leases a building, you will not be able to take advantage of the building owner’s property insurance coverage. If you are looking for commercial property insurance, then you will need to buy additional coverage (such as tenant coverage) to cover any furniture, merchandise, and machinery. Tenant coverage is almost always cheaper than the building coverage as you are only purchasing coverage on the contents within your building or space rather than the entire building itself.

Coverage: Actual Cash Value & Replacement Cost

When your business suffers a loss, many commercial property insurance policies will provide your business with “actual cash value coverage” or “replacement cost coverage,” or a combination of the two.

Actual Cash Value Coverage

This form of coverage will pay your business to replace your property, minus any depreciation (the decrease in value as a result of wear and tear or the building’s age). If you only have actual cash value coverage and your business is entirely destroyed, you may not receive enough funding to cover the entire costs of completely building your business again.

Replacement Cost Coverage

This coverage is based entirely on the construction costs of rebuilding or repairing your property. The cost of replacement will differ from market value and typically does not include the value of the land your business is on. A combination of the two coverages may be enough to cover the costs of a complete loss of your building.

Commercial Property Insurance Coverages

In Texas, the commercial property coverages are not standardized and will differ from company to company and policy to policy. In order to receive the desired coverage for your business, you can increase or buy additional coverage, but doing so may raise your premium.

A few of the most common types of commercial property insurance coverages include the following:

• Inland Marine Coverage
• Boiler and Machinery Coverage
• Valuable Papers Coverage
• Ordinance or Law Coverage
• Business Interruption Coverage
• Extra Expense Coverage
• Newly Acquired / Constructed Buildings Coverage
• Employees’ Personal Property Coverage
• Off-premises Property Coverage
• Building Occupied by the Insured Coverage

Other Common Commercial Property Insurance Coverages

There are many other types of coverage you can select for your business, depending on the needs of the business and likelihood of other commercial losses. A few of these common loss-related coverages include the following and more:

• Crime Coverage – e.g., theft, disappearance, destruction, forgery, alteration, safe burglary, robbery, loss of glass and money.
• Flood Insurance
• Windstorm/Hail Insurance – along the Texas Coast

As you are growing and maintaining your business, it’s important to keep it covered for any form of loss that you may suffer. With commercial property insurance coverage, you can cover the losses from natural disasters and situations that are outside of your control. With numerous commercial property insurance coverages and policies available, analyze the needs of your business and the losses it may face in your area.