Commercial Property Insurance for Law Firms Part 1

Commercial Property Insurance for Law Firms

Commercial property insurance helps law firms pay to repair or replace buildings and other property damaged or destroyed because of fire, storm, or other incidents covered by the owner’s policy. It also pays to replace stolen or lost property. Business owners can buy commercial property insurance regardless of owning, renting, or leasing a building.

If you rent or lease a building, consider tenant coverage to insure your on-premises property, including machinery, furniture, and merchandise. A building owner’s policy doesn’t usually cover the contents of the building that belong to you. The cost of tenant coverage is generally less than building coverage because the policy only covers contents.

You can buy a single policy to cover a business with more than one location unless they have different functions and risk profiles. If your business has an administrative office and a separate factory, this could be the case. If your company has operations at multiple locations, ask your agent if you need different policies.

Types of Property Policies

There are three types of commercial property policies. The policies protect against different causes of damage, commonly called “perils.” These include fires, lightning, windstorms, or damage caused by vehicles and civil commotion.

• Basic form policies usually cover common perils.
• Broad form policies usually cover the common perils in addition to water damage, structural collapse, sprinkler leakage, and damage caused by ice, sleet, or weight of snow.
• Special form policies cover all types of perils except those the policy specifically excludes. Common exclusions include damages from flood, earth movement, war, terrorism, nuclear disaster, wear and tear, and insects and vermin.

Read your policy carefully. To fully protect your business, you may need to buy additional coverages or specialized policies, such as flood, windstorm, or crime coverage.

Replacement cost and actual cash value coverage

Most commercial property policies provide either replacement cost coverage, actual cash value coverage, or a combination of both.

• Based on current construction costs, replacement cost coverage will pay to rebuild or repair your property. Replacement cost is different from market value and doesn’t include your land value.
• Actual cash value coverage will pay to rebuild or replace your property minus depreciation. Depreciation is a decrease in value due to wear and tear or age. If your business is destroyed and you only have actual cash value coverage, you may not be able to rebuild completely.