Investing in a commercial property comes with a unique set of risks. As a commercial property owner you will want to consider covering your building, outdoor signs, furniture, equipment, inventory, and business income.

Some unique choices you will have when purchasing insurance will be:

• Replacement Cost (RC) vs. Actual Cash Value (ACV): Replacement cost coverage will rebuild or repair your commercial building just as it was before a claim. On the other hand, purchasing ACV coverage considers depreciation during a loss, and depending on how much coverage you purchase it may not rebuild the building in the event of a total loss. If there is a loan on a property, most banks require build owners to carry replacement cost coverage.

• Coinsurance: Unlike most homeowners insurance policies that require you to insure the home for 100% of its replacement cost, commercial building policies allow building owners to insure for less if they wish. Usually, building owners can insure the property for 10-20% less than its full replacement cost.

• Deductibles: Commercial building insurance policies come with many deductible options. Deductibles, designed to limit an insurance company’s exposure to small claims, are the tipping point in a claim that designate where the insurance company begins paying for the loss. For example, if your policy has a $1,000 deductible, and a fire caused $10,000 worth of damage, your insurance company will pay $9,000 towards the claim, beginning with the first dollar after the $1,000 deductible.