An Owner's Guide to Understanding Commercial Property Insurance in Chicago, IL

An Owner's Guide to Understanding Commercial Property Insurance in Chicago, IL

The National Fire Protection Association (NFPA) estimates that in 2022, the economic loss from property damage caused by fires was around $18 billion. While this number may seem shockingly high, when you consider how quickly fires start and spread, it's clear how they can cause so much damage.

Thus, you must have commercial property insurance if you own commercial real estate. Read on to learn more about this insurance and why it's necessary to obtain.

Commercial Property Insurance Explained

Commercial property insurance protects your business's physical assets from several disasters, such as:

  • Burst pipes
  • Explosions
  • Fire
  • Storms
  • Theft
  • Vandalism

Typically, this insurance does not cover damage from earthquakes or floods. When you purchase a commercial property insurance policy, you'll need to add these perils to your policy for an additional cost.

As a commercial landlord, your properties are your business, so you must have insurance to protect those properties and your commercial tenants. The economic losses from these disasters are too significant to risk anything happening.

What Does It Cover?

Commercial property insurance covers your commercial building, everything inside of it, and everything just outside the structure's perimeter. This includes:

  • Computers
  • Documents
  • Equipment and machinery
  • Fixtures
  • Furniture
  • Exterior signs
  • Fences
  • Inventory
  • Landscaping
  • Others' property (in or within 100 feet of the insured building)

How Much Does It Cost?

The cost of commercial property insurance varies based on several factors, such as:

  • Construction
  • Fire and theft protection
  • Location
  • Occupancy
  • Value of business assets

If your building is in an area that is prone to severe weather, like hurricanes or tornadoes, your policy will likely be more expensive.

However, a building with upgraded electrical wiring, HVAC system, and plumbing may receive a discount. Buildings with fireproof materials, sprinkler systems, and security systems may also receive a lower price.

The industry also matters. Business offices generally have less risk of a disaster than restaurants.

Commercial Property Insurance vs. Landlord Insurance

Commercial property insurance and landlord insurance are similar but provide different coverage. While landlord insurance often covers damage to the property from accidents, natural disasters, theft, and vandalism, it also covers the following:

  • Loss of rental income due to rental property damage
  • Legal costs from disputes with tenants or other third parties
  • Liability claims for personal injury or property damage caused by the rental property

However, landlord insurance is often not suitable for commercial properties, only residential properties. It doesn't have the level of coverage to handle equipment damage, inventory, or other business-related losses in a disaster.

Which Business Can Buy Commercial Property Insurance?

Many businesses can purchase this type of insurance coverage. Some examples are:

Employ the Help of a Property Management Company

Commercial property insurance is essential when those properties are the primary source of your business income. Thus, the next step is to research insurance policies and providers.

If you need help, let our property managers assist you. We can recommend several insurance providers in the Chicago area. Yet, we can do so much for you, too.

With over 20 years in the business, our Chicago team is ready to handle all your commercial property needs, from management and marketing to maintenance and financial reporting.

Contact us today to learn more!