Key Commercial Property Insurance Policy Features to Consider

When evaluating commercial property insurance policies, pay attention to these key features:

Commercial Property Insurance Coverage Limits

A coverage limit is the maximum amount your insurance company will pay for a covered loss. Ensure your coverage limits are sufficient to cover your property and assets.

Commercial Property Insurance Deductibles

A deductible is the amount you pay out of pocket before your insurance coverage kicks in. Higher deductibles typically result in lower premiums, but you'll need to be prepared to pay more in the event of a claim.

Commercial Property Insurance Valuation Methods

Commercial property insurance policies typically use one of two valuation methods:

Actual Cash Value (ACV): This is the amount that a policyholder receives to replace a covered loss of property, minus depreciation.

Replacement Cost Value (RCV): This is the amount that a policyholder receives in order to replace a covered loss of property with new items, without deducting for depreciation. RCV coverage is generally more expensive but may provide better protection.

Commercial Property Insurance Exclusions

While the terms and conditions of each policy may vary, commercial property insurance policies typically exclude perils such as: flood, earthquake, wear and tear, and acts of terrorism. Reviewing your specific policy for what is covered--and what is not is essential.

Coinsurance

A coinsurance clause requires you to insure your property for a certain percentage of its value (typically 80% or 90%). If you fail to meet the coinsurance requirement, you may be responsible for a portion of the loss at the time of a claim.