The commercial property insurance coverage reimburses the company for equipment lost at its current cost, rather than the amount the company originally paid. This clause allows companies to replace outdated equipment and compensates for increases in equipment costs due to inflation. However, companies should be aware of policy limits that may prevent them from obtaining full replacement costs. For instance, if the commercial property insurance policy carries at limit of $750,000, but the costs of replacing the lost equipment is $900,000, the company must make up the difference or upgrade its policy.
Commercial property insurance premiums can vary between companies, industries, locations and any preventive measures the policyholders have in place. While a comprehensive commercial property insurance policy can carry some high premiums, businesses can deduct the costs of these premiums from their income taxes.