Top 5 Tips for Choosing a Commercial Property Insurance Plan

Stephen Robert Morse

If you are one of the many new or existing owners of commercial property in America, now may be a good time to consider purchasing commercial property insurance to protect yourself in the event of a catastrophic event occurring on your property.

The macroeconomic picture of the United States now looks stronger following the Great Recession that began in 2008. Moreover, as a part of this economic recovery, demand for construction services has already started to grow and commercial property purchases have increased. According to a report on the commercial real estate industry by real estate firm CB Richard Ellis in October 2016, the American industrial market has expanded for 26 consecutive quarters. Three cheers for the recovery!

Commercial property insurance has an interesting history. The industry formed in 1666 after the Great Fire of London destroyed 13,000 homes and businesses. As you might imagine, in the many fires since, the majority of insured commercial property owners have fared far better than those whose catastrophes pre-dated the Great Fire of London.

Here are five tips to help you choose a commercial property insurance plan that suits your needs:

  1. Don’t go with the first quote you see. It is possible to be sidetracked by the first commercial property insurance plan you are offered. If you shop around, however, there is a good chance that you will discover a better insurance package. Why? There are many variables to consider. They range from overall price to what will and will not be covered; and, while some firms have stellar reputations, other providers are known for how difficult they make it to get a payout when needed. So, it pays to do your research, which leads us to our second tip.
  2. Know your terminology. While “insurance speak” may seem daunting or complex at first, it really isn’t hard to understand once you master a few key definitions. Take some time to brief yourself on key terms the insurance industry uses. Know the difference, for instance, between terms like excess, premiums, deductibles and more. Investopedia is an excellent free resource where you can brush up on insurance lingo.
  3. Watch out for unexpected costs. Some insurers may not explain all the costs and variables up front. For example, you could end up with a high-deductible insurance plan, meaning that before a payout is made, you will have to spend a significant amount of out-of-pocket money before you can make your insurance claim. Let’s say a major fire severely damages – even destroys – one of your warehouses. Moreover, let’s assume your commercial property insurance covers up to $2 million in repairs but has a $200,000 deductible. This means you must cover the first $200,000 of costs to repair your property before your insurance company pays anything. While deductibles are certainly a standard feature of property insurance policies, their amounts can vary greatly from policy to policy.
  4. Understand the tax implications. You can save a significant amount of money on your taxes by purchasing insurance, as it is tax deductible. When planning your financial models for your commercial property business, be sure to factor in the insurance costs as a write-off.
  5. Consider an insurance bundle. There are many different types of business insurance protections offered by insurance companies, including flood insurance, tornado insurance, fire insurance and many other types of coverage. These can be purchased individually; however, if you bundle your insurance coverages, there is a strong possibility that you will not only save money, but you may also get better protection for your commercial property.

The real estate market is quickly changing. As Deloitte reports, technological advances paired with recent societal changes (e.g., the growth of the sharing economy, including the meteoric rise of Uber and Lyft) can quickly alter which real estate locations are desirable. These changes, as well as anticipated fixes to American infrastructure, present a wealth of opportunities for real estate investors.

Making commercial property investments that take into account ever-present technological changes is smart. Planning for the future, you might even make a pretty penny with the right commercial property. Just make sure it doesn’t go up in smoke before you adequately insure it.

Additional Business Insurance Links

While commercial property insurance is extremely valuable to your business, it is not the only type of insurance you should consider. Learn more about business insurance from The Hartford:

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14 Responses to "Top 5 Tips for Choosing a Commercial Property Insurance Plan"

    • ashleyturns94 | February 7, 2018 at 8:40 pm

      Thanks for letting us know that commercial insurance is tax deductible. The company I work for is planning on buying a new property, and he is wondering if it would be worth it to invest in some commercial insurance for it. I will be sure to tell my boss that by getting some coverage, he can actually deduct it from his taxes.

    • Kyle Wayne | February 13, 2018 at 6:52 pm

      I’m glad you talked about making sure that your deductibles are well within your business’s monthly budget. If my dad were a business owner looking to hire business insurance services I think he would find great value in that tip. I’ll be sure to talk to him about deductibles in case he is ever in need.

    • Callum Palmer | February 22, 2018 at 5:49 pm

      I do like that you recommend against choosing the first property insurance quote you receive. This is especially important if you are looking for property insurance to cover your business. After all, you would make sure you want insurance that includes all of the coverage you need as well as one that doesn’t break your bank.

    • Frank Delaware | February 26, 2018 at 1:23 pm

      I have always been fascinated with how insurance works, and I wanted to know how a business would choose theirs. One thing that I really like is that you say to shop around and find a good insurance policy. It would be nice to know that you are getting the best for your business in the end.

    • Larry Weaver | February 26, 2018 at 5:31 pm

      I appreciate how you mentioned taking some time to brief yourself on key terms that the insurance industry uses. If I was going to look for property insurance, I think that learning about excess, premiums, deductibles and so forth would be a great idea. Working closely with an experienced and reliable insurance agent to settle on a plan would also be something that I would do to find the best insurance possible for a property.

    • Alexandria Martinez | March 5, 2018 at 6:52 pm

      My fiance came home the other day talking about looking into commercial property insurance. He was trying to learn more since he was a little unsure of what to look for. I am sure he would love knowing that there is a bundle option that he can look into.

    • Deb Pearl | April 3, 2018 at 1:31 pm

      My friend wants to open a small shop this year, and they have been wondering about business insurance. Thank you for all your tips on how to choose the right insurance. I really like your tip about doing some research and make sure that you pick the right insurance for the right price.

    • Ryan | May 1, 2018 at 4:05 am

      Thanks for those points, one I would like to mention is to make sure your policy covers you if you expand your business (as we all hope to do). I increased my business and found to my cost that the policy I had did not cover a certain aspect of the expansion and it was a costly mistake I will not make again. Thanks again for the article very informative.

    • Ashley Maxwell | May 17, 2018 at 3:46 pm

      Thanks for mentioning how business insurance should protect your belongings. I also like how you said that they should also use the best terminology. If a company was looking to get business insurance, I would assume that they would keep this post in mind.

    • Bram | August 8, 2018 at 6:02 pm

      Comparing and contrasting quotes are important. Finding the best deal means more money in the business’s pocket. And, the benefits of having an insurance go beyond just having a good deal on it.

    • Duncan Lance | September 24, 2018 at 6:45 pm

      Picking the right commercial insurance can be one of the most important things that you do for your business, so you’ll want to make sure that you get it right. The article makes a pretty good suggestion about bundling insurance. After all, that usually comes with savings on two types of insurance that you really need, so it is usually worth looking into.

      • Hannah Sullivan | September 25, 2018 at 2:20 pm

        Thanks for your insight, Duncan!

    • Collum | October 10, 2018 at 10:00 am

      When it comes to protecting my business the insurance broker I choose has to stay with business and keep up with its growth and changes. No business should stand still and a flexible insurance broker is very important to me.

    • Adrian Jones | March 12, 2019 at 8:59 pm

      One of the most important things to keep in mind is that when you look for insurance services that can cover your small business, it’s always best to look around and make sure that you’ll be getting a service that you can rely on and not just the very first thing you see. It’s also a good thing to keep an eye out on unexpected costs since there are some insurance plans that have other charges bundled into the total bill, so always, always ask for the entire list upfront so you know what you’ll be paying. If I had the chance to look for an insurance service I would definitely want to see what I’d be potentially paying before hiring out their services.

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