One of the numerous types of business insurance that any company needs today is business property insurance. This type of insurance provides coverage for things like property and equipment damage, theft, and other losses that businesses can suffer. Since commercial property insurance policies are not standardized in Texas, it is important that business owners understand the different types of business property insurance policies available and the specific protection they offer.

Business Property Insurance Policies

In Texas, three types of commercial property form policies exist: Basic, Broad; and Special. Basic form policies cover things like storm damage, fire, and other frequently encountered perils. Broad form policies cover what Basic provides plus additional events including snow and ice damage, water damage caused by sprinklers or faulty plumbing, structural damage, and other similar things. Special form policies cover perils that other business insurance policies specifically exclude. This can include things like flood damage, landslides, insect and vermin damage, acts of war, etc. Riders covering these perils are added to the other policy forms.

Business Property Insurance Coverage

There are many different perils that commercial property insurance covers, although not every policy covers every peril. Commercial Multiperil (CMP) policies are frequently a good option for the broadest coverage; however, it is still important for business owners to carry the coverage they need. Most policies offer the ability to add other peril coverage to provide the coverage necessary for most losses faced. Business insurance policies generally include the following coverages:

  • Buildings and Structures - Occupied buildings and structures used by the business, including newly constructed buildings .
  • Property - Certain named machinery and business equipment, boilers, and HVAC equipment, business inventory, valuable papers and records, employee personal property, and off-premise property coverage.
  • Ordinance and Law - Additional coverage to bring buildings being repaired up to current code standards.
  • Business Interruption - Lost income and other expenses incurred while making repairs to allow a covered business to return to business as usual after a covered loss.

There are generally two different types of cash payouts concerning business property insurance coverage: replacement cost or actual cash value, which provide very different payments. Replacement cost coverage is typically more expensive.  It will replace a building or items based on the current cost to rebuild or replace them. Cash value coverage is less expensive.  It replaces covered property based on cash value minus depreciation, which is typically a lower payment.  

Other Important Coverages

Even though a policy does not include certain types of coverage, this does not mean a business should not consider adding a rider for that coverage. In Texas, flooding is not typically covered under most policies, nor is wind damage in certain designated areas. Business owners may want to add riders for this coverage to their policies. Crime insurance, which covers things like broken glass, stolen money, robberies, safe burglaries, theft and disappearance, forgery and alteration, is an important additional coverage that many businesses should consider as well.

Business property insurance is an essential part of protecting a business owner's investment in their company. In the worst of times, the right coverage can protect companies from covered losses, help them to rebuild, and be able to continue doing business. To learn more about business insurance and what type of insurance is most suitable for each business, contact an experienced business insurance agent today! 

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