Commercial Property Insurance vs Business Interruption - What’s The Difference?

Commercial Property Insurance vs Business Interruption - What’s The Difference?

When protecting your business, it’s important to understand how different types of insurance coverage work together. Two of the most common — and often confused — are commercial property insurance and business interruption insurance. While they complement each other, they serve very different purposes. Here’s a breakdown of what each covers and why most businesses need both.

What Is Commercial Property Insurance?

Commercial property insurance is designed to protect the physical assets your business owns. Think of it as coverage for the “things you can touch.”

Examples of what it protects include:

• Your building or office space
• Furniture, equipment, and machinery
• Inventory and supplies

This policy typically covers risks such as:

• Fire
• Theft
• Vandalism
• Certain weather events

For example, if a fire damages your building or destroys your inventory, commercial property insurance helps cover the repair or replacement costs.

What Is Business Interruption Insurance?

Business interruption insurance works differently. Instead of covering the cost of repairing or replacing physical property, it helps replace lost income if your business is forced to close temporarily after a covered event.

Here’s what it can help cover:

• Lost revenue while operations are shut down
• Ongoing expenses like payroll, rent, and utilities
• Temporary relocation costs if you need to move your operations

Think of it this way: if commercial property insurance fixes your building after a fire, business interruption insurance pays the bills while you’re waiting to reopen.

Key Differences Between the Two

• Commercial Property Insurance protects what your business has (buildings, equipment, inventory).
• Business Interruption Insurance protects what your business earns (income and ongoing expenses).

They work hand in hand — one restores your physical property, while the other keeps your cash flow stable during recovery.

Why Your Business Needs Both

Many business owners make the mistake of carrying commercial property insurance alone, assuming that will cover everything. But without business interruption coverage, you may struggle to pay your employees, cover rent, or keep the lights on if operations shut down.

Having both ensures your business is protected from both the physical damage of an event and the financial impact of downtime.

Final Thoughts

The best protection comes from combining commercial property insurance with business interruption coverage. Together, they provide a complete safety net for both your physical assets and your income stream.

If you’re not sure whether you have the right mix of coverage in place, it’s worth reviewing your policy with a licensed insurance professional who can tailor coverage to your business’s specific risks.