Commercial Property Insurance: What is Commonly Included and Excluded?

What is considered “Commercial Property”?

Are you owning or leasing an office or commercial space? Do you use equipment such as computers, machines or hardware at your business? Do you work remotely and use portable equipment for business purposes? A commercial property policy is necessary if any of these questions apply to you.

If your business is not remote, you will most likely need to rent or purchase a workspace. Whether you need the space for manufacturing, warehousing or simply working in an office, that type of property is considered commercial property.

Commercial property can often be classified as commercial real estate, investment property or income property. The difference between commercial and residential property is that commercial buildings are meant to generate a profit from capital gains or rental income.

Examples of residential buildings include duplexes, mobile homes and condominiums. Meanwhile, the commercial property has offices, retail, industrial, leisure and healthcare facilities.

Let’s say your online floral business is reaching its measurable goals faster than expected. You decide to open up a retail store at the closest shopping centre in your local city. It just so happens that a space opened up and is available to rent. The space you are renting for your flower retail store is considered commercial property.

Other examples of commercial property include hotels, pubs, restaurants, cafes, sporting facilities, medical centres, hospitals and nursing homes.

In every neighbourhood, there is a potential risk for vandalism, theft, damage and stolen goods. This is where your commercial property insurance will come in handy

Commercial Property Insurance

Commercial property insurance provides coverage for physical loss or damage to your property and its contents caused by fire, windstorm, hail, theft, vandalism and other perils. This policy can also be classified as commercial building and commercial rental insurance.

For example, your outdoor neon sign that states the name of your business has been stolen – commercial property insurance can cover that. The computer in your cannabis retail store is destroyed in a fire – commercial property insurance can cover that.

Common Inclusions

Your commercial property insurance policy will vary depending on the type of business, location and condition of your property.

The typical coverage of commercial property insurance allows coverage for the following:

Equipment
Tools and equipment used off-site for business purposes
Fencing and landscaping
Lighting systems
Furniture and fixtures
Supplies
Windows
Personal and customer property
Windows and outdoor signs
Computers
Electronics

Depending on the type of business you own, you may have more of the above items such as tools or computers than what is typically covered under a Commercial Property policy. Adding on an endorsement can give you additional coverage to meet the unique needs of your business.

Commercial property insurance can additionally replace or repair business items such as merchandise, inventory, furnishings, equipment, electronics, food and fixtures if they are damaged in an unforeseen event. If your commercial space needs improvements to its nonstructural elements such as the carpet, lighting and paint, commercial property insurance can cover the cost of these leasehold improvements.

Additionally, we suggest you look into adding Business Interruption Insurance to your property policy to cover the costs associated with having to close your business due to a Commercial Property claim.

Common Exclusions

Pollution

Commercial property insurance does not cover direct or indirect spills, discharge, dispersal, seepage, leakage, migration or release of pollutants, meaning the cost of clean-up is not typically included in your property insurance policy. However, you may consider adding an extension of the Limited Pollution Liability Endorsement in your Commercial General Liability (CGL) insurance policy to increase your coverage.

Fungi and Spores

Commercial property coverage does not insure loss or damage caused by fungi or spores. The expenses for any testing, monitoring, evaluating or assessing of fungi or spores are omitted. We suggest you add an extension of Limited Fungi and Fungal Derivatives Coverage in your insurance policy if fungi or fungal derivatives are present at your commercial property.

Nuclear

Contingent upon The Nuclear Liability and Compensation Act, law or statute or any amending law from a nuclear incident and nuclear explosion is omitted from this insurance policy. Meaning that any loss or damage resulting directly in the fire, contamination by radioactive material and other events concurring from a nuclear incident or explosion is not covered.

War

Commercial property does not insure against loss or damage caused by war, invasion, acts of a foreign enemy, hostilities, civil war, rebellion, revolution, insurrection, bombardment, military or usurped power.

Who Needs Commercial Property Insurance?

Electricians
Construction companies
Landscapers
Carpenters
Contractors
Auto shops
Welders
Bakeries
Clothing stores
Restaurants
Florists
Book stores
Graphic designers
Copywriters
Financial advisors
Accountants
Anyone else who uses a property for business purposes

Need Additional Coverage?

You may need additional coverage to protect your property and business assets. Here are a few common insurance policies you may want to consider adding to your insurance package.

Commercial General Liability (CGL) is essential coverage that protects you from everyday risks in your business such as a customer slipping and falling over equipment resulting in an injury. CGL covers claims of third-party property damage, bodily harm or advertising injury that occur on or around your business premises.

Tools and equipment can be at risk of being stolen or damaged. This policy will provide coverage for the repair or replacement cost if your tools are damaged, lost or stolen. To ensure you have enough coverage, you will need to make an inventory list of what tools and equipment your business owns.

When you are transporting materials to and from job sites, there is room for accidents to happen, which can damage your equipment and slow down your projects. If you are using a vehicle to drive to work, your warehouse or anywhere in between, Commercial Auto Insurance may help cover you for accidents that happen while travelling on the job.

You need Pollution Liability Insurance if you work in an industry that exposes you to specific environmental risks and liabilities corresponding with pollution. This policy is designed to protect businesses from third-party bodily injury, environmental and property damage and the event of pollution on a covered job site.

Installation Floater covers moveable and personal property installed or changed by a contractor. This policy covers property in the course of being installed, including labour, so you’re protected if there is a loss part-way through the job. As a business owner, you can obtain a blanket policy for all work performed with limits set on average and/or maximum installation exposures.

Cyber Security Insurance is often overlooked but it is important to understand the risks of cyber attacks and threats to small and medium enterprises. Cyber security insurance will provide coverage for businesses that rely on technology to minimize the risks associated with cyber-attacks.

Our brokers at Fuse Insurance will work with your business to provide options for combining commercial property with other policies you need in order for your business to be fully covered. Our online quote application is quick and easy and provides the information we need to get your insurance policy in your hands as soon as possible. To start your quote now, fill out our form online or call 1-866-387-FUSE (3873).