The 4 types of commercial property insurance coverage (2024)

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1. Business personal property insurance for goods and gear

Business personal property (BPP) insurance covers almost everything but the building where you do business.

Let’s say you rent a space on Main Street for your boutique or restaurant. If you were to take the building, turn it upside down and shake it, almost everything that falls out would be covered by business personal property insurance (up to your policy limit, and some exclusions apply).

BPP can also provide coverage for fixed items, such as countertops, built-in cabinets, fixtures and flooring.

In the event of a burst pipe or fire, your insurance could help pay the repair or replacement costs for your stuff that is damaged or destroyed.

2. Building insurance coverage for structural damage

If you own the building where your business operates, you will need this type of coverage. If you lease or rent the space from a landlord, you can probably skip it.

You can think of building insurance coverage as the opposite of business personal property coverage. It only covers the building, and not all of the stuff inside.

For example, let’s say you have a coffee shop, and you own the structure where it resides. If a tree crashes through the roof, this type of coverage could help pay to repair or rebuild the damage.

But building insurance would not cover the cost to replace your espresso machine or any other equipment and inventory that was inside. For that, your business would need to have business personal property insurance in place to benefit from its protection.

3. Business income insurance to help cover costs from unexpected closures

Also known as business interruption insurance, business income coverage helps replace lost income if you need to temporarily shut down your business because of a covered event.

Here’s an example of how business income insurance could provide coverage: Let’s say you own the commercial space that houses your clothing boutique, and there’s a fire. The inspector says it’s not safe to occupy the property until it’s repaired, which will take two months.

In this scenario, business income insurance could help you:

• Replace the income you would have earned during the time your business is closed.
• Pay for everyday operating expenses such as utility payments and payroll.
• Cover extra costs you might incur to get your business up and running faster, such as relocating or purchasing new equipment.

It’s particularly important for businesses with physical locations that wouldn’t be able to easily move their operations, such as restaurants, beauty salons, photography studios and florists.

An important note about non-covered events

Business income insurance covers a lot, but it doesn’t cover everything.

If you have to shut down due to a non-covered event, you won’t have financial help. It’s important to read your policy exclusions carefully before you purchase coverage.

Typical exclusions include earthquakes, floods, viruses, government action and other events.

4. Equipment breakdown insurance coverage for mechanical failures

Equipment breakdown insurance is different from other types of property insurance coverage because it covers internal issues, and not external maladies that can impair your business.

This coverage can help protect your business when there’s internal damage to a piece of equipment that causes it to malfunction. It’s designed to cover many types of mechanical failures, such as short circuits, power surges and loss of air pressure.

For example, let’s say you own a restaurant and the motors in your refrigerators and freezers stop working. Equipment breakdown coverage could pay to have them repaired or replaced up to your policy limit.

Not every business requires this type of coverage. But if your business does need it, you’d hate to be caught short.

How NEXT helps protect your small business with commercial property insurance

NEXT makes it fast, easy and affordable to protect your small business — and you can do it all online.

We’ll ask a few questions about your business and give you a quote. You can select your coverage options and purchase your policy — all in about 10 minutes. Your certificate of insurance will be available immediately, and you can access your policy 24/7 via web or mobile app.

If you have questions, our licensed, U.S.-based insurance professionals are available to help.

Start a free quote with NEXT.