What Is Commercial Property Insurance?
Commercial property insurance covers the physical assets of your business — your building, equipment, furniture, inventory, and other business property — against loss from covered perils including fire, theft, vandalism, wind, hail, and other specified events. Whether you own your building or lease your workspace, commercial property insurance is an essential component of any business insurance program.
GLS Insurance provides commercial property insurance for businesses across all 17 states in our territory. Property risks vary meaningfully by geography — hurricane and flood exposure in coastal Florida and South Carolina, tornado and hail exposure in Missouri, Kansas, and Oklahoma, wildfire exposure in Arizona and Colorado — and we work with carriers that understand the regional risk environment in each state.
What Does Commercial Property Insurance Cover?
The Building
If you own your building, commercial property insurance covers the structure itself — walls, roof, foundation, permanently installed fixtures, and building systems like HVAC and electrical. If your building is mortgaged, your lender will require you to insure the building at an amount sufficient to cover the outstanding loan.
Business Personal Property
Covers movable property inside your building — furniture, equipment, computers, machinery, tools, raw materials, inventory, and other business contents. Business personal property coverage is important whether you own or lease your workspace.
Property of Others
Some commercial property policies include limited coverage for property belonging to customers, vendors, or other parties while on your premises. The limits are typically low, and businesses that regularly hold third-party property — like auto repair shops, dry cleaners, or warehouses — should consider bailee’s liability coverage instead.
Replacement Cost vs. Actual Cash Value
One of the most important decisions in commercial property insurance is the valuation basis: replacement cost or actual cash value. This distinction can mean the difference between recovering fully from a loss and coming up significantly short.
-
Replacement Cost (RC) — Pays to repair or replace damaged property with new property of like kind and quality, without deducting for depreciation. A 10-year-old piece of equipment would be replaced with a new equivalent. Replacement cost coverage costs more in premium but provides far superior protection.
-
Actual Cash Value (ACV) — Pays the depreciated value of the damaged property at the time of the loss. A 10-year-old piece of equipment would be replaced at its depreciated market value — potentially a fraction of what it would cost to actually replace. ACV coverage is less expensive but can leave businesses significantly underinsured after a major loss.
GLS Insurance strongly recommends replacement cost coverage for all commercial property clients. The premium difference is modest compared to the recovery difference in the event of a major loss.
Regional Property Risks Across Our 17 States
The geographic diversity of GLS Insurance’s 17-state territory means that property risks vary enormously. Businesses in Florida and South Carolina face hurricane and flood risk. Kansas, Oklahoma, and Missouri face tornado and severe hail exposure. Texas faces both hurricane risk on the Gulf Coast and severe hail and tornado risk in the interior. Arizona and Colorado face wildfire, hail, and flash flood risk. Iowa, Nebraska, and South Dakota face severe hail and winter storm risk. GLS Insurance works with carriers that understand these regional risks and write property coverage appropriate for your location.
Commercial Property Insurance FAQ
What is the difference between commercial property insurance and a business owner's policy?
Commercial property insurance is a standalone policy that protects your business’s physical assets, while a business owner’s policy, or BOP, typically bundles commercial property coverage together with general liability insurance into one convenient policy. A BOP may be a good fit if you’re looking to protect both your property and your liability under one policy, while a standalone commercial property policy may be better suited for businesses with more complex property needs.
What is the difference between replacement cost and actual cash value coverage?
Replacement cost coverage pays to replace damaged property with new property of a similar kind and quality, without factoring in depreciation. Actual cash value coverage pays the depreciated value of the property at the time of the loss, which may be significantly less than what it costs to replace. The right choice depends on your business’s situation, so it’s worth reviewing your options with a licensed agent.
Does commercial property insurance cover lost income?
Commercial property policies may include business interruption coverage, which can help replace lost income when part or all of your business is temporarily unable to operate due to a covered loss. Waiting periods and how income loss is calculated vary, so it’s worth reviewing the specifics with your agent.
Does commercial property insurance cover flood damage?
A standard commercial property insurance policy does not cover flood damage and must be purchased as a separate policy through the National Flood Insurance Program (NFIP) or a private insurer. Speak with your agent to determine whether you need flood coverage to ensure your property is properly protected.
Commercial Property Insurance FAQ
Does commercial property insurance cover flood damage?
Standard commercial property insurance does not cover flood damage. Flood coverage requires a separate flood insurance policy, available through the National Flood Insurance Program (NFIP) or through private flood insurance carriers. GLS Insurance can assist with both NFIP and private flood options for businesses in all 17 states.
How much commercial property insurance do I need?
Your property should be insured at its full replacement cost — the amount it would cost to rebuild or replace it at current construction and material costs, not its market value or its original purchase price. Underinsurance is one of the most common and most damaging mistakes in commercial property insurance. GLS Insurance helps clients conduct replacement cost estimates to ensure they are properly covered.
Does my commercial property policy cover business income if I have to close after a fire?
Not automatically. Business income / business interruption coverage is typically a separate coverage that must be added to your property policy or included in a BOP. If a covered property loss forces you to temporarily close or reduce operations, business income insurance replaces the revenue you lose during the restoration period. We strongly recommend this coverage for any business that cannot operate from an alternative location during a property loss.
Let’s Get Started
Commercial Property Insurance | Business Property Coverage Quote Request
"*" indicates required fields
Don’t like forms? Contact us at or email us.
