With beautiful beaches, ample tourist attractions, and a prosperous business climate, many companies choose Florida for the best chances to profit and grow their business. But Florida also has high risk. The weather is often unpredictable with tropical storms, wind, rain and flooding. In 2018 alone there were over 1 million insurance claims with a loss of $11 billion due to hurricanes. If you plan on opening a business in Florida, it is imperative to have commercial property insurance. Commercial property insurance provides compensation if the property owned by the business is damaged by fire, wind, hail, lightning, theft, vandalism and other covered incidents. Floods and earthquakes are not generally included in a commercial property policy.
What Is Commercial Property Insurance?
Commercial property insurance covers your business, protecting it from losses related to the structure, contents, and other assets that your company owns. If an emergency situation should occur that damages your building, property, or its contents, commercial property coverage pays for these losses.
What Types of Commercial Properties Are Covered?
Commercial property insurance covers a wide range of buildings and properties. These properties include, but are not limited to, office buildings, industrial offices, industrial warehouses, manufacture and distribution centers, single-tenant retail buildings, shopping centers, large retail centers, restaurants, investment properties, medical facilities, hotels, motels, vacant buildings and properties, as well as multifamily structures including apartment complexes, high-rise apartment buildings, and condos.
Purchasing Commercial Property Insurance
It is possible to purchase a commercial property insurance policy on its own, however many people find it to be more cost effective to bundle it with other necessary coverages for you business. These bundles include:
- Business Owners Policy (BOP): A BOP is generally used by small businesses to bundle property insurance and liability insurance into one package. It includes property insurance, contents coverage, general liability and business interruption insurance.
- Commercial Package Policy (CPP): Larger businesses tend to invest in a CPP. A CPP is more flexible and covers the same property and liability insurances as BOP. You can also add more coverages such as E&O insurance, personal liability, employment practices liability and more.
You may want to consider adding inland marine insurance to your commercial package policy. This coverage provides compensation if equipment or possessions are damaged during transport. Inland marine insurance is crucial if your company transports items, equipment or produce. For industries that are likely to face lawsuits, also consider adding an umbrella insurance policy for when your business’ liability insurance reaches its maximum.
For vehicles owned by the company, commercial auto insurance is needed. Florida requires companies to carry commercial auto insurance if they use vehicles for work purposes. Minimum requirements for commercial auto insurance in Florida are:
- $10,000 in personal injury protection
- $10,000 in property damage
Limits vary depending on the size of vehicle and type of cargo. For example, certain vehicles between 26,000 and 34,999 pounds must carry $50,000 or more in liability insurance.
Deciding Between CPP and BOP
Deciding between a CPP and a BOP depends on the specifics of your business. Small businesses are generally fine with BOP, but it’s inflexible and has limited coverage. A CPP is much more flexible, but also more expensive. Consider your business’ size and unique needs before speaking with an insurance agent.
How Much Does Commercial Property Insurance Cost in Florida?
Many factors can affect the cost of commercial insurance. These include:
- Age of the company
- Claims history
- Coverage limits and types
- Vehicle types and weight (for commercial auto insurance)
On average, a BOP may cost $1200 a year. The cost of a CPP is harder to decipher due to its flexible nature. Business owners pay an average of $742 a year for commercial property insurance.
Leasing vs. Owning Your Business Structure
No matter if you rent or own the structure where your business is conducted, you will need commercial property coverage to protect your business investments; however, there are a few differences in insurance policies and coverage for those who lease a structure and those own a building.
- Lease the Property: If you lease the business property, it is the tenant’s responsibility to purchase commercial property insurance to minimize the risks associated with loss. Commercial property insurance for renters does not usually cover the structure itself, as the property manager should have their own coverage for the actual building and surrounding property. Rather, this coverage protects the business owner’s investments, and is often referred to as “business personal property” or “contents coverage,” which includes furnishings, fixtures, appliances, equipment, supplies—basically all of the items your business owns which are not a part of the actual building structure.
- Own the Property: If you unequivocally own the business structure, your business must purchase comprehensive commercial property insurance, which is also likely required by your mortgage lender. A comprehensive policy protects the entire property, including the structure, parking lot, surrounding property, other buildings or structures on the property, and signage.
What Does Commercial Property Insurance Protect Against?
There are endless disasters that could strike and cause losses to your business. Commercial property insurance protects against such losses caused by fire, wind, natural disasters like storms, floods, and earthquakes (although you’ll want to speak with your insurance broker specifically about coverage options for these disasters), equipment failures, vandalism, theft, and even terrorism. It is best to let your insurance expert know exactly what is included in your business inventory, what you want covered, the concerns you have regarding local and regional weather patterns, or other concerns you have regarding your business location.
At Mid Florida Insurance, an experienced agent can help a business owner decide exactly what commercial insurance plans should be purchased. A business should tailor their policies to their individual needs and be aware of the exclusions and additions that may be necessary. Based on these changes, premiums can fluctuate. Running a business can be quite an unpredictable venture and owners should always be prepared for the worst case scenarios.