Real & Personal Property

Included in your insurance coverage planning should be coverage for Fire & Theft of your business personal property.

Commercial Property Insurance

Helps businesses, including farms and ranches, pay to repair or replace buildings, structures, and contents that are damaged or destroyed because of fires, storms, or other events outlined in the policy. It also pays to replace stolen or lost property. Business owners can buy commercial property insurance whether they own, rent, or lease a building. If you rent or lease a building, the building owner’s policy probably won’t cover the contents of the building that belong to you. You will need to buy your own policy to insure your on-premises property, including machinery, furniture, and merchandise. The cost of tenant coverage is usually significantly less than building coverage because the policy will only cover contents, not the building itself. Businesses operating at multiple locations can be covered under a single policy, unless they have different functions and different risk profiles. This could be the case if your business has an administrative office and a separate factory. 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 Texas 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 Texas coast. If your business is in one of Texas’ coastal counties, you’ll need a separate windstorm policy. (Refer to the section on windstorm coverage for more information.) 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. Commercial Property Coverages Commercial property policies are not standardized in Texas. Insurers must comply with minimum requirements but have a great deal of flexibility to develop their own policies. As a result, coverages and policy terms may vary significantly by insurer and by policy.

Commercial Multi-Peril (CMP) Policies

Combine multiple coverages, such as commercial property, liability, inland marine, and commercial auto, to ensure full protection within the convenience of a single policy. It’s typically cheaper to purchase a combined CMP policy than to purchase the coverages individually.

Business Owner Program (BOP) Policies

A common type of commercial multi-peril policy primarily for small businesses. BOP policies combine property and liability coverage in one policy. Commercial property policies provide various types of coverage, either as part of the base policy or through policy endorsements. Endorsements expand or amend a policy’s coverages and usually increase your premium. You can buy certain coverages as separate stand-alone policies. Following are some typical commercial property coverages:

Building Occupied by the Insured Coverage

Insures a building that you regularly use but do not own. This coverage can be important if you lease or borrow a building that is critical for your operations.

Newly Acquired or Constructed Buildings Coverage

Insures a new building if you add it to your policy within a specified amount of time. If you don’t notify your insurer within the time period – usually 30 days – your policy won’t cover the new building. Commercial property policies generally only cover buildings named in the policy.

Employees’ Personal Property Coverage

Insures your employee’s personal property against covered losses if the property is on your premises. Generally, you must buy this coverage as an endorsement if you need more than a limited amount.

Off-premises Property Coverage

Covers your property located off site. Some policies might not cover off-premises property or may provide only limited coverage. You can usually buy an endorsement to cover off-premises property. If you can’t buy an endorsement, you may have to buy a separate policy.

Business Interruption Coverage

Pays for actual or projected lost income if loss from a covered peril prevents normal business operations.

Extra Expense Coverage

Pays any additional costs to expedite your business’s return to normal operations after a covered loss.

Valuable Papers Coverage

Provides limited coverage of your business records and other essential information. You may be able to buy an endorsement to increase this coverage.

Ordinance or Law Coverage

Pays any additional costs required to repair or rebuild a facility damaged by a covered peril to ensure it complies with current building codes. Many policies provide limited ordinance coverage, but you can increase it with an endorsement.

Boiler & Machinery Coverage 

Covers boilers, air conditioning units, compressors, steam cookers, electric water heaters, and similar machinery. Coverage generally extends to machinery specifically listed in the policy and to any subsequent losses, such as when a boiler explosion or water heater leak causes damage to other property. You can usually purchase this coverage as either an endorsement or a separate policy.

Inland Marine Coverage 

Insures goods in transit by land, air, or inland waterways. It also covers projects under construction and transportation and communications structures, such as bridges, tunnels, and communications towers.

Other Coverages to Consider

Depending on the type of business you own and where it’s located, you might want to consider additional coverages to ensure you’re protected from an array of losses.

Crime Coverage

You can buy several types of coverage to protect your business from crime. Common crime coverages include:

Loss of Glass & Money Due to Theft

pays for damage to glass and loss of money resulting from a break-in.

Robbery and Safe Burglary (property other than money) 

A more limited form of coverage that does not include money or securities.

Forgery or Alteration

Protects your business against forgery or alteration of checks, drafts, promissory notes, or other types of payments.

Theft, Disappearance, & Destruction Coverage 

Insures money, securities, and other property against losses, both on your premises and off premises in the custody of an employee or messenger.

This information is designed for general informational and descriptive purposes only. The precise wording of each coverage is subject to specific conditions and endorsements of the actual policy issued. Always read your policy very carefully!