What Does Commercial Property Insurance Cover in California?

What Is Commercial Property Insurance?

Commercial property insurance is a type of insurance policy that may help protect physical assets from risks like fire, theft, vandalism, and certain natural events. Coverage often extends to buildings, inventory, equipment, and more. In California, where wildfires, earthquakes, and fluctuating weather conditions are real concerns, having the right commercial property insurance can be especially important.

Depending on your specific policy, coverage might apply whether you own, rent, or lease your workspace. It’s also commonly bundled with other types of insurance in a Business Owner’s Policy (BOP), depending on your business type and size.

What Types of Property Might Be Covered?

Commercial property insurance in California may help protect a wide range of physical assets. These could include:

• Buildings and Structures – If you own your building, coverage may include the structure itself and any attached fixtures.
• Business Equipment – Tools, machinery, and electronics essential for day-to-day operations.
• Furniture and Fixtures – Desks, shelving, lighting, and other permanent or semi-permanent installations.
• Inventory – Products held for sale or distribution.
• Signage – Some policies may extend to outdoor signs, although limits and exclusions might apply.
• Landscaping – In certain cases, exterior elements like fences or shrubbery may be included, but coverage may be limited.

It’s worth reviewing your policy details carefully or consulting with a licensed insurance advisor to clarify exactly which items are covered.

Are Natural Disasters Covered in California?

This is a particularly important question for California businesses. While commercial property insurance often covers events like fire, windstorms, or hail, coverage for natural disasters like earthquakes and floods is typically not included in standard policies.

• Earthquake Coverage – Earthquakes are common in many parts of California. If your business is located in a high-risk seismic zone, you may need to purchase a separate earthquake endorsement or policy.
• Flood Insurance – Flood damage is also generally excluded from standard commercial property insurance. Businesses in flood-prone areas should consider a separate commercial flood policy.
• Wildfires – Fire damage is commonly covered, including losses due to wildfire. However, availability and cost may vary depending on your location and recent wildfire history.

Given the diverse geography and climate risks across California, it’s a good idea to evaluate your specific exposures with the help of a local insurance expert.

What Are Some Common Exclusions?

While commercial property insurance provides broad coverage, it’s important to understand what it typically does not cover. Common exclusions may include:

• Wear and Tear – Routine maintenance issues or aging equipment are generally not covered.
• Employee Theft – For this type of risk, you may need to explore commercial crime coverage.
• Equipment Breakdown – Damage from mechanical failure might require a separate equipment breakdown policy.
• Cyber Risks – Losses from cyberattacks or data breaches aren’t included and would fall under cyber insurance.
• Acts of War or Government Seizure – These are typically excluded across most policies.

Understanding these limitations can help you identify where supplemental coverage may be needed.