Once you understand what needs to be insured by your commercial property insurance, the next step is to find out how much everything is worth. Real property is basically anything that is permanent for example, the land on which your business is located, the buildings your business inhabits, machinery or equipment that is permanent, outdoor fixtures, and so on.īusiness personal property includes things that you can easily move in and out of your business space, such as computers, office equipment, and furniture, for example. Understanding Property Valuationīefore beginning the process of finding the best coverage for your commercial property, two questions need to be asked: what counts as business property and how much is it all worth? The two most typical categories of commercial property are “real property” and “business personal property.” Let’s take a look at what these two property insurance coverage options entail, how they differ from one another, and why knowing the difference between the two is very important. While the processes of buying personal homeowner’s insurance and commercial property insurance can be quite different – simply because the considerations that go into creating your coverage are often very different – one thing is the same: you need to make a decision between “actual cash value” and “replacement costs insurance” when defining the type of coverage that works best for the risk profile of your business or home. For example, if you are running a restaurant in a region of California in which earthquakes and wildfires are a common occurrence, your premiums will obviously be higher than if you are buying insurance for a tech startup in Nebraska. Naturally, the type of business you run and the location of your business are generally the two most important characteristics that will determine how expensive your commercial property insurance will be. Commercial property insurance is a key coverage that no business can do without, but have you heard of replacement costs insurance? Even people who are running a small business from their own homes and rely on homeowner’s insurance to cover potential losses should add business contents insurance at least to their insurance program in order to provide more complete coverage for potential business losses.
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