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Compare commercial property insurance

Protect your brick-and-mortar building, inventory and equipment against the worst.

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Commercial property insurance protects a variety of business-owned property against damage or theft, from your office building to fences or signs. Any business that uses a building or equipment or stores inventory needs this type of insurance. But make sure that you understand the way your policy reimburses you for damaged belongings — you could lose thousands of dollars if it factors in depreciation.

What does commercial property insurance cover?

Commercial property insurance is a business insurance policy that protects a business’s buildings, equipment or merchandise from damage. The types of damage covered typically involve theft or the weather, such as wind, hail, fire or stolen valuables. This coverage may include contents temporarily moved to a different location for storage or transport purposes.

Types of damage covered

  • Explosions
  • Fire
  • Hail
  • Lightning
  • Snowstorms
  • Theft
  • Water damage from burst pipes
  • Wind

Types of property covered

  • Your office or store building
  • Computers, desks and supplies
  • Fences and landscaping
  • Glass, such as windows
  • Important documents
  • Inventory
  • Items in temporary storage
  • Outdoor signs
  • Rental or customer property while under your business’s care
  • Tools and equipment
  • Valuables up to the chosen policy limit

What affects the cost of commercial property insurance?

Keep in mind there’s a wide range of factors that can influence how much your business property insurance will cost. The main factors include:

1. Where your business is located

Your business’s location can affect your premiums based on crime in that location or the value of property in your area. Higher burglary activity increases the chances that your building might get damaged or equipment stolen. Plus, higher property values mean the insurance company will pay more to restore your business to working order.

2. Safety and construction features

You might score bonus points with your insurance company for having safety features on your property. Keeping valuables in locked storage, hiring security personnel and installing cameras and strong locks can make a difference.

In addition, your company might thank you for using damage-resistant materials when constructing or remodeling your buildings.

3. Your industry

Some industries use heavy machinery, perform large financial transactions or keep valuable inventory on hand. These industries may see more expensive premiums than the coverage for a small office supplies business.

4. Claims history

Insurers take your business’s previous claims into account when assessing your application. If storm damage or burglary has caused problems in the past, they could point to future claims. Your premium may reflect the higher risk that your insurance may pay out a settlement.

5. The value of your property

When buying your policy, you need to make sure the maximum amount your insurance pays for a claim matches the value of your equipment or inventory. You may have to raise the maximum payout if the standard policy doesn’t cover all of your property.

When insuring a building, your insurance company will look at your building’s records or assess the building’s value in person to set the right limit on your coverage.

Factors to compare with business property insurance

The best thing you can do is research what each insurance company can offer your business. The right policy for your business doesn’t always mean the cheapest quote. Compare the following:

  • Benefits included. Look at the benefits of competing policies, noting those that offer the level of coverage you need. If you need broad coverage, you can search for companies that include extra coverage without charge.
  • Type of reimbursement. Consider a coverage that reimburses your business based on the replacement cost of your building. You can save thousands of dollars this way if you need to repair or replace a damaged building later.
  • Limits and exclusions. Take care to read your entire policy, including fine print and product disclosures. These can familiarize you with any limitations that may draw you away from a policy, such as limited coverage for computers or equipment.
  • Improving safety and security. Look for companies that help you identify and manage risks to your property’s safety. These companies may provide discounts for keeping your risks low.

How do insurance companies determine replacement cost?

Many insurance companies reimburse you for property damage based on the depreciated value of the damaged item. This means you’ll get reimbursed for your property while factoring in its age and used condition, called the actual cash value. So you may not receive enough money to replace your equipment or building with a brand new version.

However, if you buy a policy with replacement cost coverage, you’ll receive the full amount needed to buy brand new property of a similar brand and quality.

What’s not covered?

Your business property insurance policy may list several important situations that won’t receive coverage:

  • Earthquakes — You’ll need a separate or add-on earthquake policy if your business is at risk for earthquake damage.
  • Equipment breakdowns — Your equipment coverage includes damage caused by weather or theft, but not mechanical breakdowns. However, you can buy add-on coverage for breakdowns.
  • Flooding — While all policies cover storm damage, most won’t offer any coverage for damage or loss caused by floods.
  • Lost revenue — You won’t receive reimbursement for lost revenue if your business has to close down from property damage. Lost revenue is covered under business interruption insurance.
  • Money and securities — Your policy may not reimburse lost cash, checks or securities, unless it states this coverage specifically.
  • Motor vehicles — You’ll need to buy commercial car insurance or another policy specialized to your business vehicles.

Bottom line

Commercial property insurance protects your business’s buildings and contents from a variety of storm damage and theft. You can get reimbursed for damage caused by hail, snowstorms, wind, tornadoes, fire or burglaries. Make sure you compare business property insurance options, so you end up with the right level of coverage for you.

Common questions about business property insurance

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