Commercial · Property
Commercial property insurance for Michigan businesses
Commercial property insurance pays to repair or replace your building, equipment and inventory after a covered loss, and keeps income flowing while you rebuild. We tailor limits and options to your operation.
Schedule a Coverage ReviewWhat does commercial property insurance cover?
Commercial property insurance covers buildings your business owns, a leased building when the lease requires you to insure it, and your business personal property, such as equipment, furniture, inventory and stock. Most policies can also include business income and extra expense coverage, which replaces lost income and pays added costs while you recover from a covered loss. Limits and optional coverages are set to fit your business.
| Coverage | What it actually touches | Where it stops |
|---|---|---|
| Building | Buildings you own, or lease if required by contract, including permanently attached equipment, fixtures, machinery, completed additions and floor coverings | Your building limit; property and causes of loss the policy excludes |
| Business personal property | Contents, inventory, stock, furniture, and equipment and machinery not permanently attached, owned or leased by the business | Your contents limit; property of others unless added |
| Business income | Lost net income and continuing expenses, such as payroll, rent and loan payments, during restoration after a covered loss | The period of restoration and the limit selected |
| Extra expense | Added costs to keep operating after a covered loss, such as temporary space, rented equipment or office trailers | The extra expense limit |
Does commercial property insurance cover a building I lease?
A tenant usually insures the building itself only when the lease requires it. Most tenants instead insure their business personal property, including improvements and betterments they paid to install in the space, such as build-outs, flooring and fixtures. Because leases assign building, improvement and liability responsibilities differently, the lease should be reviewed before coverage is set.
What is business income and extra expense coverage?
Business income coverage replaces the income your business loses and pays continuing expenses while operations are suspended for repairs after a covered loss, such as a fire. Extra expense coverage pays the additional costs of staying open as close to normal as possible during that time. Together they keep a damaged business operating and its employees paid, which is why many owners now consider them essential.
What extra expense can pay for after a covered loss:
- Temporarily renting another building or office trailers
- Temporarily renting equipment
- Continuing payroll so you keep trained employees instead of laying them off
- Expedited shipping and other costs to keep serving customers
How should a business set commercial property insurance limits?
Property limits should reflect what it would cost to rebuild your building and replace your equipment and inventory today, not what you paid for them or their market value. Many policies include a coinsurance clause that reduces claim payments when limits are set too low, so underinsuring can cost you on a partial loss as well as a total one. Values should be updated as construction costs, inventory and equipment change.
- Replacement cost vs. actual cash value. Replacement cost pays to replace with new; actual cash value deducts depreciation.
- Inventory swings. Seasonal businesses may need coverage that adjusts for peak inventory.
- Business income worksheet. Income limits should be based on how long a rebuild would realistically take.
What does commercial property insurance usually exclude?
Commercial property policies commonly exclude or limit flood, earthquake, wear and tear, gradual deterioration, and mechanical or electrical breakdown of equipment. Many of these exposures can be covered through endorsements or separate policies, such as flood insurance or equipment breakdown coverage. Reviewing the causes of loss form and exclusions is the only way to know which gaps exist for your location and operations.
Related: Business Owners Policy · Builders Risk · General Liability · Michigan Business Insurance
This page is educational and does not alter any policy. Coverage is determined by the actual policy forms, endorsements and declarations issued by the insurer.