Commercial Property Insurance in Texas

What commercial property insurance covers in Texas

Commercial property insurance pays to repair or replace the physical things a business owns or is responsible for. Three coverages sit on nearly every Texas policy.

The three parts:

• Building, which covers the structure, permanently installed fixtures, and usually the fit-out a tenant paid for
• Business personal property, which covers stock, furniture, equipment, computers and tools kept at the described location
• Business income and extra expense, which replaces earnings lost while the damage is repaired and pays the cost of trading somewhere else

A tenant who owns no building still needs the policy. The equipment, the stock and the improvements a Texas tenant installed are the tenant’s loss, not the landlord’s.

Replacement cost and actual cash value on a Texas policy

The valuation term on the declarations page decides what the insurer pays, and it can matter as much as the limit.

The two terms:

• Replacement cost pays what it costs to replace damaged property with new property of like kind and quality at today’s prices
• Actual cash value pays replacement cost minus depreciation, so an older roof or an eight-year-old oven settles for a fraction of what a new one costs

A Texas policy can carry replacement cost on the building and actual cash value on the roof, or actual cash value on the roof once it passes a stated age. The declarations page and the endorsements say which, and the cover page does not.

Wind and hail deductibles on a Texas commercial property policy

Texas commercial property policies carry a separate deductible for wind and hail, usually written as a share of the insured value rather than a flat amount.

How that plays out:

• The flat all-other-perils deductible applies to fire, theft, water and impact
• The wind and hail deductible applies to a storm claim, and on a larger building it is a far bigger number
• Some coastal policies carry a named-storm deductible as well, separate again

The Texas Windstorm Insurance Association writes windstorm and hail coverage under Texas Insurance Code ch. 2210 for the fourteen first-tier coastal counties and the part of Harris County east of Highway 146, where private markets often will not.

How coinsurance cuts a Texas property claim

Coinsurance is the clause that penalizes a business for insuring a building for less than the stated share of its value, and the penalty lands at claim time rather than at renewal.

How the mechanism works:

1. The policy states a coinsurance percentage on the declarations page.
2. The insurer compares the limit carried against the value the property should have been insured for.
3. A limit that falls short means the insurer pays the same proportion of the loss, and the business absorbs the rest.

Partial losses are where this bites. Underinsuring a Texas building shrinks every claim under the clause, not only a total loss. Values get reviewed at renewal for that reason.

What Aulona Insurance Group can place

Aulona Insurance Group places commercial property for Texas businesses statewide, standalone or inside a business owners policy, through insurers the agency holds appointments with.

Inside the small-business program:

• Annual gross revenue under $5 million, and total W-2 payroll under $5 million
• Loss history under $20,000, with no more than two incidents in the past three years
• No prior carrier cancellation and no bankruptcy filing
• New businesses, with no minimum time in business

A business owners policy caps at $5 million of total insured value per location, and each location needs its own BOP. Property above that cap goes on a commercial package instead.

Luka Cenaj, the agency’s licensed principal, goes through the building, the values and the roof on a recorded call.

Where Aulona Insurance Group is not the right fit

Aulona Insurance Group cannot place commercial property for every Texas building, and the building itself is usually what decides it.

Where a Texas property submission stops:

• Total insured value above $5 million at one location on a business owners policy
• A building whose occupancy is a class the agency does not write: night clubs, gas stations, auto dealerships, hospitals, cannabis, used-goods dealers, livestock
• Roofing and siding, including the contractor’s own yard
• Surplus-lines property, including a building the standard markets will not quote

Revenue, payroll, loss history, a prior cancellation and a bankruptcy filing are the size tests above.

Flood is excluded on the standard commercial property forms Aulona Insurance Group places and is written separately through the National Flood Insurance Program, where 44 CFR §61.11(d) sets a 30-day wait on a new policy. Surplus-lines property sits outside what the agency writes in-house.

What moves the price of a Texas commercial property policy

The premium on a Texas commercial property policy is set by the insurer, not by Aulona Insurance Group, and the insurer applies rates filed with the Texas Department of Insurance.

What the property rating reads:

• Construction, and whether the building is frame, joisted masonry or non-combustible
• Age of the roof, which underwriters treat as a separate question from the age of the building
• Protection: sprinklers, alarms, and distance to a fire station and a hydrant
• The county, because hail in North Texas and windstorm on the coast are priced where they happen
• The values insured, the deductible, and the wind and hail deductible chosen

Aulona Insurance Group publishes no premium on this site and does not rank insurers by price.