For commercial property (office, retail, warehouse, industrial, mixed-use), the right form is a commercial package or, for smaller properties, a Business Owners Policy (BOP). The structure depends on the building type, the tenant mix, the size, and the lender requirements.
Commercial coverage looks different from residential investor coverage. The lease determines who insures what. The tenant mix drives the liability profile. The lender requirements drive the minimums. Below is how we structure each piece.
Commercial package vs BOP
Two main structures for commercial property:
Business Owners Policy (BOP)
A pre-packaged policy designed for smaller commercial properties and small businesses. Bundles property and general liability with baked-in coverages (business income, loss of rents, basic equipment breakdown). Best for:
- Smaller commercial properties under $5M in replacement cost.
- Standard tenant types (office, retail, light industrial).
- Single-building or small-portfolio operations.
Commercial Package Policy (CPP)
A modular structure where you build the policy from individual coverage parts: commercial property, general liability, equipment breakdown, crime, inland marine, and others. Best for:
- Larger commercial properties.
- Mixed tenant types (medical, restaurant, manufacturing).
- Properties with specific exposures (large parking lots, multiple buildings, environmental risks).
- Portfolios with consistent coverage needs across multiple properties.
We quote both structures and show you the comparison.
Office, retail, warehouse, industrial differences
The use of the building drives the underwriting:
Office
Lowest claim frequency among commercial classes. Standard markets write competitively. Liability concentrates on slip and fall, parking lot incidents, and certain professional services exposures. Tenant improvement coverage is often a meaningful part of the policy.
Retail
Higher liability exposure from foot traffic, loading docks, and shopping cart claims. Anchor tenants, restaurants, and grocery tenants raise the property exposure. Mixed retail with a restaurant tenant requires specific underwriting because of the fire risk from cooking operations.
Warehouse and industrial
Lower liability per square foot but higher property values per building. Sprinkler systems, fire alarm protection, and security drive carrier appetite. Tenant operations matter (chemical storage, manufacturing processes, hazardous materials).
Mixed-use
Combinations of residential over commercial (apartment over retail), or office plus retail. Need a commercial policy that handles both the habitational and commercial exposures. Some carriers specialize in mixed-use; others avoid it.
Tenant improvement coverage
Commercial leases often place responsibility for tenant improvements (build-out, fixtures, finish) on either the landlord or the tenant depending on the lease terms. Insurance needs to match.
Two approaches:
- Landlord insures the building including TI. Simpler. Landlord rebuilds after a loss and recovers the TI cost from insurance. Lease typically requires tenant to insure their own contents and business income.
- Landlord insures the building shell; tenant insures TI. The lease assigns TI responsibility to the tenant. The tenant carries property coverage on their improvements.
Look at the lease language before quoting. Mismatch between lease and policy is a common claim dispute.
Business income
On commercial property, "business income" is the equivalent of loss of rents on residential. It pays the rental income lost during a covered repair period.
For commercial, the period of indemnity is often longer than residential because:
- Commercial repairs take longer (permits, code compliance, larger structural work).
- Re-leasing after a major loss can take 6 to 12 months.
- Tenant lease commitments may have specific re-occupancy timelines.
We typically write 12 to 18 months of business income on commercial property, with extended business income coverage for the re-leasing period after repair.
Ordinance and law
Commercial buildings are often older. Ordinance and law coverage pays the additional cost of bringing a damaged building up to current code during repair. For older commercial properties, increasing ordinance and law to 10-25% of dwelling is one of the highest-value additions to the policy.
See the FAQ entry on ordinance and law for more.
Lender and lease requirements
Commercial lenders and commercial leases both impose insurance requirements that the policy needs to satisfy. Common items:
- Replacement cost on the building.
- Lender named as mortgagee/loss payee.
- 30-day notice of cancellation.
- Liability coverage of $1M to $5M depending on the property.
- Business income at 12 to 18 months of rent.
- Tenant additional insured status (per the lease).
- Waiver of subrogation in favor of certain parties (lender, anchor tenant).
- Certificates of insurance issued to specific entities at specific addresses.
Send us the loan documents and the lease summary and we will structure the policy to satisfy requirements without overpaying. We issue certificates to lenders and tenants directly.
What we need to quote commercial property
- Address and square footage.
- Property type and tenant mix.
- Year built and year of major renovations.
- Construction type and protection class (sprinklers, alarm).
- Replacement cost estimate or recent appraisal.
- Annual gross rental income (for business income calculation).
- Prior 5-year claims history.
- Lender and lease summary if applicable.