What Is Commercial Property Insurance?
Whether you own a massive warehouse or lease a small retail storefront, commercial property insurance is essential. Unlike a standard homeowner's policy, commercial policies are highly customizable and designed to protect the physical assets critical to keeping a business operational.
A robust commercial property insurance policy protects two main categories:
- The Structure — The physical building itself (if owned by the business), including the roof, HVAC systems, and attached fixtures.
- The Contents — The business's inventory, specialized machinery, computers, and furniture located inside the building.
Business Interruption Coverage
One of the most critical add-ons (riders) to a commercial property policy in Florida is Business Interruption Insurance. If a hurricane tears the roof off a restaurant (a casualty loss), standard property insurance will pay a contractor to fix the roof. However, it will take six months to complete the repairs, during which the restaurant cannot serve food and makes zero income. Business interruption coverage steps in to replace that lost revenue, helping the owner pay their commercial lease and retain their employees while the building is closed.
Landlord vs. Tenant Policies
In commercial real estate, insurance responsibilities are dictated by the commercial lease.
In a standard Triple Net (NNN) lease, the landlord buys the commercial property insurance to cover the building's shell, but forces the tenant to reimburse them for the monthly premiums. Furthermore, the tenant must buy their own separate policy to cover everything inside the walls (their inventory and equipment), and they must list the landlord as an "additional insured" party to protect the landlord from liability.
Related Terms
- Commercial Lease — Dictates who buys the insurance policy
- Net Lease — A lease where the tenant pays the landlord's premiums
- Bad Faith Insurance Claim — Filed if the insurer refuses to pay for commercial damages
Barnes Walker Commercial Law
Barnes Walker's attorneys assist business owners in negotiating complex commercial leases to ensure insurance requirements are fair, and litigate against insurance companies that wrongfully deny commercial property damage claims. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. Ch. 627
Regulates property and casualty insurance in Florida, including coverage requirements, claims handling, and the Citizens Property Insurance Corporation for high-risk properties.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC