Understanding Commercial Property Insurance

Commercial property insurance is a cover that compensates for your building in the aftermath of a great loss. If your building burns down is a great example. If your building suffers a major loss, do you have funds that you could pay for that? Most businesses would say no.

You could borrow that money, pay interest on it and have a mortgage on a building for a long time. Or you could purchase insurance on it and fund that loss with a small premium that you pay every year. Generally, the cheapest way to fund catastrophic losses and pay for catastrophic loss is through insurance.

What Does it Entail?

The modern insurance market developed through the 19th and 20th centuries. Initially it covered just a few things and basic perils, which listed specifically what was covered. Then, as time went by, they expanded that to broad perils. In the market today, there’s what’s called special perils. Special perils property coverage covers everything that’s not excluded. For example, some typical exclusions and special peril are war, nuclear, earthquakes, flood or if a governmental entity comes in and forces you to tear down your building. Insects is another example that’s typically not covered by real estate insurance claims Austin TX.

What’s Covered?

When you purchase special peril coverage, you should also purchase some extended coverage that will give you some of those items. If you’re in an earthquake zone, you need to purchase earthquake coverage. It’s not covered by your typical insurance policy. Additionally, if you’re in a flood zone and maybe even if you’re not, you may want to purchase some flood coverage because it’s not covered by special peril. The other element that you want to review is whether you’re insuring to replace your building and whether you’re insuring for actual cash value. Actual cash value gives you the actual cash value of your building at the time of loss.

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