Property insurance can cover the buildings that you own and/or business property and inventory against physical loss or damage.
If you don’t own your building, you’ll still need contents coverage. In the most policies, property insurance for business contents covers furniture, fixtures, inventory, office equipment and other supplies stored at your facility or off-premises. You may insure those items for replacement cost or for actual cash value (ACV), which pays only for the depreciated value of the property.
Replacement cost policies have higher premiums, however they can help your business recover from a loss faster, since you can replace all of the lost or damaged property with new items. If you lease some of the equipment at your business, the leasing company may require that you insure the property at replacement value.
Types of Commercial Property Policies
Different types of commercial property policies protect against different risks, often called perils. Some policies will cover only those risks specifically named in the policy. Other policies will cover all risks, unless the policy specifically excludes them. Be sure to read your policy carefully. You may need to buy additional coverages or specialized policies, such as flood, windstorm, or crime coverage, to fully protect your business.
Commercial property policies in Florida generally fall into one of three categories:
Basic form policies typically cover common risks or perils, such as damage from fire, lightning, windstorm, vehicles, aircraft, or civil commotion.
Broad form policies typically provide basic form coverage plus coverage for additional perils, such as water damage, structural collapse, sprinkler leakage, and losses caused by ice, sleet, or weight of snow.
Special form policies cover against all types of losses except those the policy specifically excludes. Common special form exclusions include losses from flood, earth movement, war, terrorism, nuclear disaster, wear and tear, and insects and vermin.
Most commercial property policies cover damage from windstorms, except in counties on the Florida coast. If your business is in one of Florida’s coastal counties, you’ll need a separate windstorm policy.
Commercial property policies provide either replacement cost coverage, actual cash value coverage, or a combination of both. Replacement cost coverage will pay to replace your property with new property of like kind and quality, up to the policy’s dollar limit. An actual cash value policy will pay the replacement cost of the property minus depreciation due to age and normal wear and tear. Although replacement cost coverage is more expensive than actual cash value coverage, it might better ensure that your business fully recovers after a significant loss.