Types of Commercial Property Insurance (2026)

Reimburses repair or replacement costs for the physical structure, including walls, roofs, floors, and permanently installed systems. Coverage triggers when a named peril (fire, wind, vandalism, burst pipes) damages the building.

Standard for building owners. Tenants don't need it unless their lease requires it or they've made permanent improvements ($50 to $150/sq ft for build-outs). Triple-net (NNN) leases sometimes require tenant building coverage.

Reimburses loss or damage to equipment, inventory, furniture, tools, and supplies you own. Your landlord's insurance covers the building structure, not your contents, even if building plumbing caused the damage.

Most policies only cover property within 100 feet of the premises. Offsite or job site equipment needs inland marine coverage. Set limits at replacement cost during peak inventory, not average stock.

Replaces lost net income and covers continuing fixed expenses when covered property damage forces temporary closure. Requires physical property damage to trigger; economic slowdowns, pandemics, and supply chain issues don't qualify.

A waiting period (often 24 to 72 hours) applies before coverage starts. A restoration period cap (often 12 to 18 months) limits how long payments continue. Calculate your limit as: (monthly net income + monthly fixed expenses) × expected recovery months.

Reimburses additional costs to keep operating after property loss: temporary space ($3,000 to $15,000/month), equipment rental, expedited shipping, overtime labor.

Often included as a sublimit within business interruption. Service businesses often lose 20% to 40% of customers during 60+ day closures.If relocation isn't feasible due to licenses or non-portable equipment, put budget toward higher BI limits instead.

Standard policies exclude rising water, storm surge and overflow entirely, which is why flood insurance has to be bought separately, through NFIP or private insurers. NFIP limits are $500,000 for the building and $500,000 for contents, with a 30-day waiting period.

Outside high-risk zones is where about 25% of flood claims come from. FEMA maps don't always capture urban drainage issues. Lower sublimits or exclusions apply to basement contents in many cases.

Covers structural damage and contents loss from seismic events that standard policies exclude. Deductibles are 10% to 20% of coverage amount (not flat amounts). A $1M building with 15% deductible means $150,000 out of pocket before coverage pays.

Covers total or near-total loss, not moderate damage. California has 90%+ probability of a 6.7+ quake within 30 years. Tenants don't need building earthquake coverage but may want contents protection.

Pays for code upgrades required when repairing or rebuilding damaged property. Standard policies restore buildings to pre-loss condition, not current codes.

Most jurisdictions require full code compliance when repairs exceed 50% of building value. Upgrades on pre-1990 buildings commonly reach $50,000-$150,000: electrical ($15,000 to $50,000), sprinklers ($30,000 to $70,000), ADA ($10,000 to $50,000). Coverage costs about $300/year.

Wear-and-tear exclusions in standard policies leave a gap that equipment breakdown coverage fills, paying for mechanical and electrical equipment failures. Mechanical failure, electrical surge, motor burnout or operator error can all trigger coverage.

$5,000 to $15,000 in repairs, plus $20,000 to $100,000 in spoiled inventory, is what a restaurant refrigeration failure alone can cost. Spoilage and business interruption triggered by equipment failure get included in many policies. Restaurants, manufacturers, medical practices and data centers are where this coverage matters most.

Coverage for theft, fraud and employee dishonesty goes beyond standard policy limits here. Burglary, robbery, employee theft, forgery and certain fraud schemes all fall under this coverage.

$50,000 is the median loss from employee theft. Social engineering fraud, like fake invoices or wire transfer scams, is commonly excluded and needs a specific endorsement. Evaluate this coverage if you handle $5,000 or more a month in cash, valuable inventory or wire transfers.