Property

Whether you lease or own your space, it is highly recommended that you obtain property insurance, which will cover any damages or loss of the building and its contents. Under a property insurance policy, coverage for the actual building will typically be limited only to damage and/or replacement of the roof or interior/exterior walls. The property’s floors, electrical systems, ventilation, etc. will not be covered. In addition, property insurance covers ordinary risks such as fire or vandalism, but often excludes damages caused by floods and civil riots. The building’s plumbing, heating and ventilation systems are also often excluded from coverage.

If you a purchasing a building, consider investing in a replacement cost policy -- even though it might be expensive and difficult to obtain. When you declare the costs to rebuild, include information about the building and the actual construction costs. A contractor or appraiser can help you determine the cost of rebuilding the property.

In addition, if you lease a space and make major improvements during your occupancy, notify your insurance company so that your policy will be adjusted to reflect these improvements. For more information about insurance issues in a leased commercial or industrial space, review Chapter 7: Commercial and Industrial Leases.