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Coverage guide
Commercial Property Insurance
Commercial property insurance pays to repair or replace your buildings, equipment and inventory after a covered loss, and business interruption coverage replaces income while you are shut down. This guide explains what it covers, what it leaves out, what drives the price and how to check that your limits are high enough.
The short version
- What it is
- Insurance that pays for physical damage to buildings, equipment and inventory from covered perils such as fire, theft and wind, and for lost income while you recover.
- Who needs it
- Anyone who owns or leases space, equipment or inventory. Lenders and landlords usually require it, and data centers and hardware companies depend on it.
- Biggest pitfall
- Underinsuring. If the limit does not reflect replacement cost, or the valuation or coinsurance terms are wrong, a claim can pay far less than the loss.
- What drives price
- Building construction and age, location and catastrophe exposure, protection such as sprinklers and alarms, values insured and deductibles.
- Typical spend
- Priced as a rate on the values insured, so it scales with what you own and where it sits. Coastal and high-hazard locations cost more.
The basics
What is commercial property insurance, in plain English?
Commercial property insurance covers the physical things your business depends on: the building if you own it, the improvements you made if you rent, and the equipment, inventory and furniture inside. When a covered event damages them, the policy pays to repair or replace them.
The second half of the coverage is the one companies forget. Business interruption pays for the income you lose while a covered loss keeps you from operating, along with extra expenses to get back to work faster. For a company with expensive equipment and thin cash reserves, that income coverage often matters more than the building.
Policies list the events they cover, called perils, or cover all risks except those excluded. Either way, the details that decide a claim sit in the valuation method, the coinsurance clause, the deductibles and the exclusions, so they are worth reading before you need them.
Who needs it
Who needs commercial property insurance, and when?
Short answer: any business that owns or leases space, or holds equipment, inventory or prototypes it could not easily replace, needs property coverage. Lenders, landlords and enterprise customers often make it a condition, so the question is usually when, not whether.
The table below maps common situations to what we would typically recommend. It is general guidance, and your lender, landlord or counsel can confirm what a specific agreement requires.
| Where you are | Do you need it? | Why |
|---|---|---|
| Remote team, no office, little equipment | Often a light version | Company laptops and gear are still business property, and personal home policies commonly limit or exclude business equipment. Ask about a small contents policy. |
| Leasing office or lab space | Yes, usually required by the lease | The lease normally says who insures the building, who insures your contents and improvements, and what the landlord must be named on. Read those clauses before you sign. |
| Hardware company with prototypes, tooling or inventory | Yes, and watch the values | Prototypes and test equipment are hard to price and slow to rebuild. Valuation and business income matter as much as the limit. |
| Owning a building with a mortgage | Yes, lender requirement | Lenders typically require replacement cost cover and a mortgagee clause naming them. Many also specify minimum terms for flood where it applies. |
| Operating a server room, lab or data hall | Yes, with equipment breakdown | Mechanical and electrical failure is the common loss, and basic forms exclude it. See the data center section below. |
| Holding stock in a warehouse or third-party logistics site | Yes, check location and transit terms | Property away from your own premises is often covered only up to a sublimit unless scheduled. |
| Signing enterprise or lender contracts | Often, with named wording | Contracts may require evidence of property cover, additional insured or loss payee status, and waiver of subrogation. Review them before you sign. |
Rule of thumb
Insure what you could not replace out of next month’s cash, and then insure the income you would lose while you rebuild it.
Scope
What commercial property insurance covers, and what it doesn’t
What’s Covered
- Fire, lightning, explosion, smoke and similar named perils
- Windstorm, hail and weight of snow, subject to any wind or hail deductible
- Theft and vandalism of covered property
- Water damage from sudden events such as a burst pipe or sprinkler discharge
- Business interruption: lost net income and continuing expenses during the period of restoration
- Extra expense to keep operating while repairs are made
What’s NOT Covered
Most commercial property insurance policies exclude:
- Flood and earthquake, which are usually excluded and bought separately
- Wear and tear, gradual deterioration, rust and corrosion
- Mechanical or electrical breakdown, unless equipment breakdown coverage is added
- Employee theft and fraud, which belong on crime insurance
- Data loss and cyber events, which belong on cyber insurance
- War, nuclear hazard and intentional damage by the insured
How coverage is triggered
Named perils vs. open perils: which form do you have?
Short answer: a named perils policy covers only the causes of loss it lists, while an open perils policy (often called special form) covers any direct physical loss that is not excluded. Open perils is usually broader, but it is still not unlimited.
With named perils, you must show your loss came from a listed cause such as fire, lightning, windstorm or theft. With open perils, the insurer must point to an exclusion to deny the claim. That reverses the burden in a dispute, which is why many lenders and landlords ask for special form on buildings and equipment.
| Named perils | Open perils (special form) | |
|---|---|---|
| How it works | Covers only the causes listed in the policy | Covers direct physical loss unless an exclusion applies |
| Who carries the burden | You show the cause is on the list | The insurer shows an exclusion applies |
| Typical gaps | Unlisted events, accidental damage, some water events | Exclusions such as flood, earthquake, wear and tear, and mechanical breakdown |
| Where it is common | Lower cost or simple forms, some contents-only covers | Buildings, equipment and most lender-driven programs |
Read the exclusions even on an open perils form. Flood, earthquake, wear and tear, mechanical breakdown and intentional acts are commonly carved out, and some policies add exclusions for specific hazards at your location. See the peril and exclusion definitions for the basics.
Which cover responds?
Which part of a property program responds to what?
Short answer: no single property form pays every loss. Fire is usually covered everywhere, but mechanical failure, flood, earthquake and supplier outages each depend on a specific cover. Pick a scenario to see how it typically maps.
| Scenario | Basic form (named perils) | Special form (open perils) | Equipment breakdown | Business income | Separate flood or earthquake policy |
|---|---|---|---|---|---|
| Fire damages equipment at your leased lab | Covered | Covered | No | Pays lost income | No |
| A pipe bursts overnight and soaks inventory | Often covered | Covered | No | Pays lost income | No |
| Heavy rain pushes water through the loading dock | No | Usually excluded | No | Only if flood is a covered cause | Covered, if bought |
| A cooling unit fails and overheats servers | No | Often excluded | Covered | If the cause is covered | No |
| An earthquake damages the building | No | Usually excluded | No | Only if the cause is covered | Covered, if bought |
| A prototype is dropped or a liquid spills in the lab | Usually not | Often covered, with limits | No | If the loss is covered | No |
| Equipment is stolen from a vehicle while in transit | Often limited | Often limited | No | No | Look at transit or inland marine cover |
| A key supplier’s plant burns down and your production stops | No | No | No | Only with contingent cover | No |
| An employee steals inventory | No | No | No | No | Belongs on crime cover |
How losses are paid
Replacement cost, actual cash value and agreed value
Short answer: replacement cost pays what it costs to repair or replace damaged property with new, while actual cash value deducts depreciation. For anything that wears out quickly, such as computers and tooling, the difference can be large.
Valuation is the term most likely to surprise a policyholder at claim time, because it is rarely discussed at purchase. The same fire can produce very different payments depending on which method the policy uses. See replacement cost and actual cash value for the definitions.
| Method | How it pays | Watch for |
|---|---|---|
| Replacement cost | The cost to repair or replace with similar new property, without a deduction for age | Some policies pay the full amount only after you actually repair or replace, and may pay actual cash value first. |
| Actual cash value | Replacement cost minus depreciation for age and wear | Older equipment can pay out a fraction of the cost to replace it. Often the default if nothing else is chosen. |
| Agreed value | A value you and the insurer settle in advance, which can suspend the coinsurance clause | Usually requires a signed statement of values and periodic updates. Ask what happens if values change mid-term. |
| Functional or limited valuation | Pays to replace with something that does the same job, or caps payment at a stated basis | Common for older buildings and obsolete equipment. Know where your assets sit on it. |
Rule of thumb
Ask your broker one question about every item on the schedule: if it burned tonight, what would the policy pay, and what would a replacement actually cost?
The penalty clause
Coinsurance: the clause that cuts claims
Short answer: a coinsurance clause requires you to insure property to a stated share of its value. If you carry less, the policy pays a proportionally reduced amount even on a partial loss, so underinsuring can cost you far more than the premium you saved.
Say the clause requires insurance to three quarters of the property’s value, and you carry only half. A claim is then paid at roughly two thirds of what it otherwise would be, before the deductible. The size of the shortfall is the penalty, and it applies to small losses as well as large ones. See coinsurance for the formal definition.
| Way to avoid the penalty | How it works | Trade-off |
|---|---|---|
| Insure to the required value | Keep limits at or above the share of value the clause requires | Needs current, honest valuations every renewal. |
| Agreed value | The insurer accepts your stated values in advance and waives coinsurance for the term | Requires a statement of values and may need renewal each year. |
| Blanket limit | One limit spread across locations or classes of property instead of separate limits per item | Often tied to a statement of values and an agreed percentage. Check how it applies per location. |
| Waive or reduce coinsurance | Negotiate the clause away or to a lower share | Usually costs more premium. Often worth it for volatile values. |
Setting limits
How to set property limits step by step
Short answer: start from a list of what you own, price each item at what it would cost to replace today, add the income you would lose while rebuilding, and then check the policy’s sublimits and coinsurance against those numbers. Repeat at every renewal.
List assets
Buildings, improvements, equipment, inventory, furniture, prototypes and anything valuable at other locations.
Step 1Price replacement
Use current quotes, vendor lead times and installation costs, not purchase price or book value.
Step 2Add income
Estimate monthly net income plus continuing expenses, and how long a rebuild would really take.
Step 3Check the policy
Compare limits with sublimits, coinsurance, valuation and deductibles line by line.
Step 4Update yearly
Re-price after growth, new equipment, inflation in construction and equipment costs, or a move.
Step 5Two details catch growing companies. First, replacement cost is not the same as purchase price: lead times, shipping, installation and compliance work can add to the bill. Second, a single limit for the whole schedule may sit far below what you hold at one location. Ask whether limits are per location, blanket or scheduled.
Rule of thumb
Re-price your equipment list whenever you add a major asset or move. A schedule that was right at inception can be too low within a year.
Lost income
Business income and extra expense: how they pay out
Short answer: business income coverage pays lost net income and continuing expenses while a covered loss stops or slows your operations, after a short waiting period and up to the end of the period of restoration. Extra expense pays the added cost of keeping operating, such as renting temporary space.
Coverage starts only if physical damage from a covered cause is what stopped you. A slow customer quarter, a regulator’s order or a cloud outage generally does not qualify, unless the policy specifically extends it. See business interruption for the basics.
Loss happens
A covered event damages your premises or equipment and operations stop or slow.
Day 0Waiting period
A time deductible, typically measured in hours or days, before income cover begins.
EarlyPeriod of restoration
Income and continuing expenses are paid while you repair, rebuild or relocate with reasonable speed.
Main phaseExtended period
Some policies add a tail while customers return and sales recover to normal.
RecoveryWhat counts as business income?
Net income you would have earned, plus normal operating expenses that continue, such as payroll you choose to keep and rent. Policies differ on payroll for ordinary employees.
Why it matters: Companies with high payroll and low revenue should confirm how payroll is treated.
What is extra expense?
The additional cost of keeping operating after a loss, such as temporary space, rented equipment or expedited shipping, up to the limit.
Why it matters: It can shorten the shutdown and reduce the income claim, so it is often worth its own limit.
How long is the waiting period?
It varies by policy and is usually stated in hours or days. A shorter wait typically costs more premium.
Why it matters: Confirm whether it counts from the date of damage or the date operations actually stop.
What is the period of restoration?
The time until the property should be repaired or replaced, or operations resume elsewhere, with reasonable speed.
Why it matters: It is not how long it actually takes you. Long lead times for specialty equipment should be raised early.
Pre-revenue companies often ask whether business income applies to them. It can, but it depends on how the policy measures income and whether continuing expenses are covered. Ask your broker how a company with little revenue and large burn would be treated. Some policies cover continuing expenses even when net income is thin, but wording varies.
Equipment and infrastructure
Equipment breakdown, data rooms and high-value gear
Short answer: equipment breakdown cover pays for sudden mechanical or electrical failure of equipment, which basic property forms commonly exclude. Companies with server rooms, labs, test rigs or data centers usually need it.
The losses most likely at a technology company are rarely fires. They are failed cooling, power surges, burned-out controllers and short circuits. These are the exact events that equipment breakdown is written for, often including spoilage and the extra expense of expediting repairs.
Equipment breakdown
Pays for sudden physical damage to covered equipment from mechanical failure, electrical arcing or pressure events, with repair or replacement.
Why it matters: It is the difference between losing a rack to a failed cooling unit and getting paid for it.
Data and software restoration
Basic property forms usually cover the hardware, not the data or software on it. Some forms add limited restoration cost.
Why it matters: Recreating lost data and configurations can cost more than the machine. Cyber cover often handles data loss, so check how they fit together.
High-value and specialty equipment
Prototypes, lab instruments, GPU clusters and unusual machines may need to be scheduled with agreed values and clear lead times.
Why it matters: Standard limits can undercount the real replacement cost and the time to get a replacement delivered.
Utility service interruption
Covers damage or lost income when power, water or telecom service fails at the source rather than at your site. Often needs to be added.
Why it matters: Data and compute operations depend on power, so ask whether the cover includes off-premises power failure.
Data centers have additional questions: redundancy, uptime commitments to tenants, and values for specialty equipment that can reach into the millions. Our data center insurance guide walks through those, and the data centers industry page covers how we place them.
Rule of thumb
If your business cannot run without a piece of equipment, ask whether its failure is covered, how fast it can be replaced, and whether the policy pays for expediting.
Dependency risk
Contingent business interruption: suppliers, customers and cloud
Short answer: contingent business interruption pays lost income when damage at someone else’s location, usually a named supplier or customer, stops your operations. Your own policy does not do this unless it is extended to do so.
A hardware startup that depends on one contract manufacturer is the classic example. If that plant has a fire, your own premises are untouched and standard business income does not respond. See contingent business interruption for how forms usually work.
| Dependency | What often applies | Question to ask |
|---|---|---|
| Single-source component or contract manufacturer | Contingent business income, usually naming the supplier or a class of suppliers | Is the supplier named or covered by class, and does the cause of loss need to be physical damage? |
| Key customer that buys most of your output | Customer-side contingent cover, if offered | Is there a sublimit and how is loss of sales measured? |
| Cloud or hosting provider | Often not covered by property policies, which generally need physical damage | Cyber or tech cover may respond to some outages. Ask what each policy calls a covered event. |
| Utility or logistics provider | Utility service interruption, and sometimes transit-related extensions | Does it cover off-premises failure and for how long? |
A pure software outage at a cloud provider is typically not physical damage, so property cover is unlikely to respond. Cyber and technology policies sometimes address system failure and dependent business interruption, and wording varies a lot. Read cyber and tech E&O alongside your property policy to see where the gap is.
Natural catastrophe gaps
Flood and earthquake: why they need separate cover
Short answer: standard commercial property policies typically exclude flood and earthquake, so cover for them is bought separately or added by a specific endorsement. Whether you need it depends on where your property sits and what a loss would cost.
The exclusion catches companies that assume “water damage” means all water damage. A burst pipe is a sudden internal event and is usually covered. Rising water from rain, rivers or surge is flood and usually is not. The same split applies to ground movement, such as earthquake and some landslide events.
Flood
Rising surface water from rain, rivers or tides is typically excluded from standard property forms. Separate flood cover is available, often with its own limits and waiting periods.
Why it matters: Lenders may require flood cover on mortgaged property in mapped hazard areas. Check your lender’s terms.
Earthquake
Ground shaking and related movement are typically excluded. Separate earthquake cover usually carries a percentage deductible and its own limit.
Why it matters: Even small shaking can disrupt equipment, so businesses in exposed regions should price it rather than assume.
Wind and hail
Usually covered, but often with a separate or percentage deductible in exposed regions.
Why it matters: Know the deductible dollar amount before storm season so there are no surprises.
Sublimits
Where flood or earthquake is included, it is often sublimited well below the main limit.
Why it matters: Check the sublimit against what you would need to rebuild and reopen.
A broker can help you decide whether the exposure at your locations justifies the premium. For catastrophe-exposed property, the answer is often yes, and for buildings inland on higher ground it may be a closer call. Either way, make the decision on purpose rather than by default.
Renting space
Tenant improvements and leased space requirements
Short answer: if you rent, the landlord insures the building but you usually insure your contents and the improvements you paid for, and the lease often sets minimum requirements. Read the insurance and casualty clauses of the lease before you sign.
Tenant improvements are build-outs such as walls, flooring, cabling, labs and clean rooms that you installed. Whether they are the landlord’s property or yours, and who must insure them, depends on the lease. A fire that destroys a new lab build-out can leave you paying for it if no one insured it.
Improvements and betterments
Cover for the build-out you paid for as a tenant, often as a separate coverage line on the policy.
Why it matters: Without it, you may pay for the lab again while the lease still requires rent.
Additional insured and loss payee
Landlords and lenders often require to be named on your policy for certain interests.
Why it matters: Missing wording can put you in default on the lease, so confirm exact wording with your broker.
Waiver of subrogation
Often required so your insurer cannot pursue the landlord after paying you, and vice versa.
Why it matters: Check it is endorsed on the policy, not just promised in the lease. See waiver of subrogation.
Coverage for landlord property
Some leases make you responsible for damage you cause to the building or its systems.
Why it matters: That is usually a liability question, so review general liability alongside property.
Certificates of insurance are the usual proof. Our guide on what clients and lenders require on a COI explains what they typically look for.
Property that moves
Property in transit and inland marine
Short answer: standard property forms mainly cover property at your premises, with limited cover off site. Property that travels, sits at job sites or trade shows, or is stored with others is usually handled through transit cover or inland marine.
Inland marine is a broad class of cover for movable property and goods in transit by land, despite the name. For technology companies, it often fits portable equipment, demo units, field gear and shipments to customers.
Equipment away from your premises
Laptops, demo units and field equipment carried to customer sites, events or home offices.
Why it matters: Limits for off-premises property under a standard form are usually low, so scheduled equipment may be needed.
Goods in transit
Shipments of inventory or equipment moving by truck, courier or air, sometimes insured by the carrier only up to a limited amount.
Why it matters: Carrier liability is often capped well below the goods’ value, so check whether your policy tops it up.
Installation and job sites
Equipment installed at a customer or construction site before it is accepted.
Why it matters: The question is who bears risk, the customer, a contractor or you. Contracts and builder’s risk can decide it.
Stored with others
Inventory held at a warehouse, fulfillment partner or contract manufacturer.
Why it matters: Confirm the other party’s own insurance and whether your policy covers stock at that address.
Ask for these
Property enhancements worth asking about
Short answer: beyond the base form, the features we raise most often are equipment breakdown, extra expense, utility interruption, ordinance or law, debris removal and valuation terms. Each is usually an endorsement or sublimit, so check what is actually included.
Equipment breakdown
Covers sudden mechanical and electrical failure, which basic forms often exclude.
Why it matters: For labs and server rooms it is often the loss most likely to happen.
Ordinance or law
Pays extra cost to rebuild to current building codes after a covered loss, not just to the old standard.
Why it matters: Older buildings can require upgrades that a standard replacement cost payment does not include.
Debris removal
Pays to clear damaged property from the site after a loss, often with its own limit.
Why it matters: Clean-up can be a large share of a big claim, so check the limit.
Utility service interruption
Covers damage or lost income from off-premises power, water or telecom failure.
Why it matters: Operations that rely on power should confirm it applies beyond a short outage.
Extended period of indemnity
Continues business income after repairs are complete while sales recover.
Why it matters: Customers do not always return the day you reopen.
Valuation and agreed value
Replacement cost valuation, with agreed value where values are stable.
Why it matters: It decides how much you get and whether coinsurance applies.
Property of others
Covers customer or partner property in your care.
Why it matters: Hardware companies often hold others’ equipment for testing or repair.
Loss payee and additional insured wording
Names lenders, landlords or customers where required.
Why it matters: Contracts commonly require it, and wrong wording can breach them.
What changes over time
How property needs change as you grow
Short answer: property exposure grows with every new lease, piece of equipment and inventory build, and replacement values drift with market costs. Review limits at least annually, and again after any move, major purchase or change in what happens inside the building.
| What changes | What to do |
|---|---|
| You add a location or move | Notify your broker before you move. Check that the new address is covered and that catastrophe exposure and lease requirements have been reviewed. |
| You buy major equipment | Add it to the schedule with current replacement cost. Check lead times and whether it needs special wording. |
| Costs of construction or equipment rise | Update replacement values so limits and coinsurance still hold. |
| Your revenue grows or shrinks | Re-run the business income worksheet and the period of indemnity needed. |
| Claims or renewal arrive | Expect underwriters to ask about loss history and what you changed afterward. See loss runs. |
| The market hardens | Expect higher rates or deductibles in catastrophe-exposed regions. Early renewal conversations help. |
If you stop operating or sell a building, coverage ends and so does any lender or landlord requirement. Cancel only after confirming nothing remains insurable, such as stock in storage, equipment awaiting sale or property still in transit.
What claims look like
Three property claims that test the policy
Scenario 01
The fire in the lab
What happenedA fire started in a shared electrical panel at a hardware company’s leased lab, destroying prototypes and test equipment and closing the space for ten weeks.
The claimProperty damage to equipment and inventory, plus lost income during the shutdown.
What respondedProperty coverage paid to replace the equipment, and business interruption paid continuing expenses and lost net income through the restoration period.
Scenario 02
The burst pipe versus the flood
What happenedA pipe burst overnight and damaged inventory in a warehouse. Separately, heavy rain pushed water in through the loading dock in the same month.
The claimTwo water losses with different causes.
What respondedThe burst pipe was covered as a sudden water event. The rain flooding was excluded because flood requires its own policy, which the company had not bought.
Scenario 03
The cooling failure in the server room
What happenedA cooling unit failed in a small data room, overheating servers and switches worth several hundred thousand dollars.
The claimDamage to equipment from a mechanical failure, with no fire or outside cause.
What respondedOnly a policy with equipment breakdown coverage responded. A basic property form would have excluded the loss as mechanical breakdown.
Scenarios are illustrative composites based on common claim patterns, not specific Alton Risk clients. Whether a real claim is covered depends on the policy wording and the facts.
When it happens
How to document a property claim and what to expect
Short answer: report the loss quickly, protect the property from further damage, keep damaged items until the adjuster has seen them, and gather proof of what you owned and what the shutdown cost. Policies usually have notice conditions, so delay can create problems.
Report
Notify your broker and insurer promptly and note the date and time of discovery.
FirstProtect
Take reasonable steps to prevent further damage and keep receipts for them.
NextDocument
Photograph and list damage, gather purchase records and evidence of values.
ThenAdjust
An adjuster inspects, reviews the numbers and issues a position, often in stages.
ReviewEvidence of ownership and value
Invoices, asset registers, serial numbers and photos of equipment and stock.
Why it matters: It speeds the claim and supports replacement cost values.
Business income proof
Financial statements, payroll records, sales history and a record of continuing expenses.
Why it matters: Income claims are paid on numbers you can demonstrate, so tidy records help.
Mitigation
Steps you took to limit damage, such as moving stock or boarding openings.
Why it matters: Policies expect reasonable steps, and costs are often recoverable.
Proof of loss and cooperation
Many policies require a signed statement and cooperation with inspection or examination.
Why it matters: Deadlines apply, so ask your broker what your policy requires.
Your insurer may also pursue whoever caused the loss, which is called subrogation. Do not sign a release with a third party before checking with your broker, as it could affect your own claim. Learn what to expect in first notice of loss.
Rule of thumb
Before a loss, photograph your equipment and keep an up-to-date asset list somewhere that survives a fire at the building. It is the cheapest claim help you can buy.
Pricing
What moves the price of commercial property insurance?
Property is priced as a rate applied to the values you insure, so the same building can cost very differently depending on where it sits and how it is protected.
| Factor | Why it moves your premium |
|---|---|
| Values insured | The more you insure, the higher the premium. Accurate replacement cost values matter, because underinsuring creates a coinsurance penalty at claim time. |
| Construction, age and roof | Fire-resistive construction and recent updates to the roof, wiring and plumbing lower the rate. |
| Location and catastrophe exposure | Wind, hail, wildfire and flood exposure raise price and can add separate deductibles or exclusions. |
| Protection | Sprinklers, monitored fire and burglar alarms and nearby fire protection reduce risk. |
| Occupancy and operations | What happens inside matters. Labs, manufacturing and data halls rate differently from offices. |
| Deductibles | Higher deductibles lower premium, and wind and hail often carry their own percentage deductible. |
| Business interruption period | A longer period of indemnity and a shorter waiting period cost more but protect more. |
Getting covered
How to get property insurance quoted without delay
Short answer: bring a statement of values, building details and your business income figures, and be upfront about location hazards and loss history. Missing details usually lead to conservative terms or a slower quote.
What to have ready
- Addresses and your relationship to each: own, lease or storage.
- A list of equipment and inventory with replacement values, including high-value and specialty items.
- Building details: year built, construction, roof, wiring and plumbing updates.
- Protection: sprinklers, alarms, security and any fire or flood mitigation.
- Business income worksheet: revenue, fixed costs and realistic time to rebuild.
- Lease and lender insurance clauses, including required wording.
- Loss history, plus a summary of any upgrades since.
What delays a quote most often?
Missing values, unclear occupancy, unreported catastrophe exposure and last-minute lease requirements.
Why it matters: Each is avoidable with a short checklist before you go to market.
What mistakes cost companies the most?
Insuring at purchase price, ignoring coinsurance, assuming flood or breakdown is included, and not updating values after growth.
Why it matters: These are typically the reasons a claim pays less than expected.
Can a package policy be enough?
Small, low-value operations may fit a package that combines property and liability, though limits and exclusions need reading.
Why it matters: Check that the package covers equipment breakdown, business income and your lease terms. See quick quotes for GL and workers’ comp.
From the carrier’s side of the table
What underwriters ask before they quote
A property submission needs more than an address. Carriers price the building, the contents and the location separately, and missing details usually lead to conservative terms.
- A statement of values for buildings, contents, equipment and inventory, on a replacement cost basis.
- Construction details: year built, number of stories, construction type and roof age.
- Protection: sprinklers, alarms, security and fire department distance.
- Occupancy: what the space is used for and who else is in the building.
- Business income figures: revenue, fixed costs and how long you would need to rebuild.
- Loss history for the last five years.
- Lease or lender requirements, including loss payee and additional insured wording.
Self-audit
Questions to ask about your current policy
- Are values insured on a replacement cost basis, not actual cash value?
- Do the limits reflect current rebuild and equipment costs, or last year’s?
- What does the coinsurance clause require, and are you meeting it?
- How long is the waiting period and the period of indemnity on business interruption?
- Do you have equipment breakdown, flood and earthquake coverage if you are exposed to them?
- Do wind and hail carry a separate percentage deductible, and could you absorb it?
If you can’t answer yes to all of them, book a short coverage review (opens in a new tab) and we will read the policy with you.
Frequently Asked
Common questions
What does commercial property insurance cover?
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Commercial property covers physical damage to your buildings, equipment, and inventory from perils such as fire, theft, and weather, and typically includes business interruption for lost income while you recover. Builder's risk covers structures under construction.
What is business interruption coverage?
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Business interruption replaces income you lose when a covered event shuts down operations, and can cover the extra expense of keeping the business running. For data centers and capital-intensive operations, structuring BI correctly is critical.
Do data centers need specialized property coverage?
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Yes. Data center property programs must address equipment breakdown, redundancy, uptime obligations to tenants and hyperscalers, and high-value contents, which requires carriers who understand mission-critical infrastructure.
What is builder's risk insurance?
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Builder's risk covers buildings and materials during construction or renovation. It is usually required by lenders and contracts, and we align limits and terms to those requirements.
What is the difference between replacement cost and actual cash value?
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Replacement cost pays what it costs to repair or replace damaged property with new, while actual cash value subtracts depreciation for age and wear. Replacement cost generally costs more in premium but pays more at claim time, and some policies only release the full amount once you actually replace the property.
What is coinsurance and how does the penalty work?
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Coinsurance is a clause that requires you to insure property to a stated share of its value. If you carry less, the insurer typically reduces every covered claim in proportion to the shortfall, even for partial losses, so underinsuring can cost much more than the premium saved. Agreed value or a waiver of the clause can avoid it.
What is the difference between named perils and open perils?
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A named perils policy covers only causes of loss it lists, while an open perils policy covers direct physical loss unless an exclusion applies. Open perils is typically broader and shifts the burden to the insurer to show an exclusion, but it still excludes things such as flood, earthquake and wear and tear.
Does commercial property insurance cover flood or earthquake?
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Typically not. Standard commercial property policies usually exclude flood and earthquake, so they are bought separately or added by endorsement, often with their own limits and deductibles. Whether you need them depends on where your property is and what a loss would cost to repair.
How long is the waiting period on business interruption coverage?
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It varies by policy and is usually stated in hours or days. The waiting period works like a time deductible, so income during that window is typically not paid. A shorter waiting period usually costs more premium, so check how it is measured in your policy.
What is extra expense coverage?
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Extra expense pays the added costs of keeping your business operating after a covered loss, such as temporary space, rented equipment or faster shipping. It can reduce the income lost in a shutdown, and some policies give it its own limit separate from business income.
Does my landlord’s insurance cover my equipment and improvements?
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Usually not. A landlord’s policy generally covers the building, not your contents or the improvements you paid for as a tenant. The lease decides who insures what, so confirm those clauses and consider coverage for your equipment, inventory and build-out.
Do I need property insurance if my team works remotely?
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Often yes, in a lighter form. Company laptops, hardware and inventory kept at homes or storage are still business property, and personal home policies commonly limit or exclude business equipment. A small contents policy or scheduled equipment can address that, depending on the policy wording.
Is equipment in transit or off site covered?
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It depends. Standard property forms mainly cover property at your premises, with limited cover for property elsewhere. Equipment that travels, ships or sits at job sites is typically handled through transit cover or inland marine, and carrier liability for shipped goods is often capped below true value.
What is contingent business interruption?
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Contingent business interruption pays lost income when damage at a supplier’s or customer’s location stops your operations, rather than damage at your own. It is usually added to a policy and may need the supplier named or described by class. Ask how your policy defines a covered event.
Does property insurance cover a cloud or hosting outage?
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Typically not. Property policies generally require direct physical damage, and a pure software or network outage at a provider is not physical damage. Cyber and technology policies sometimes address system failure and dependent outages, but wording varies, so read them together.
What documents do I need to file a property claim?
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Expect to provide proof of ownership and value such as invoices, asset lists, photos and serial numbers, plus business income records like financials and payroll. You may also need a signed proof of loss. Report the loss promptly, protect the property and keep damaged items until the adjuster inspects them.
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Sources and further reading: U.S. Small Business Administration, "Get business insurance" (opens in a new tab); IRMI: Special causes of loss form (opens in a new tab); IRMI: First-party insurance (opens in a new tab); Travelers: Understanding business income coverage (opens in a new tab); Triple-I: Do I need business interruption insurance? (opens in a new tab); NAIC: What's the Difference Between Actual Cash Value Coverage and Replacement Cost Coverage? (opens in a new tab); North Carolina Department of Insurance: Actual Cash Value vs. Replacement Cost Value (opens in a new tab); IRMI: actual cash value (ACV) (opens in a new tab); IRMI: Peril (opens in a new tab). This page is general information, not legal or insurance advice. Coverage terms vary by carrier, policy form and state.