From Baltimore’s waterfront to the tech parks in Montgomery Village, Maryland commercial property insurance protects businesses from fires, storms, theft, and business interruptions. While not universally required by state law, it’s often mandatory through leases, mortgages, or government contracts. Getting the right protection is essential for business resilience.
This guide covers who needs coverage, what’s included, factors affecting costs, and how to file claims under Maryland law.
WHO NEEDS THIS COVERAGE IN MARYLAND?
State law does not universally require every business to carry commercial property insurance. However, most businesses are still obligated to secure it through various contractual agreements. According to Maryland commercial property insurance requirements:
Leases: Landlords commonly require proof of coverage from tenants to protect the leased premises and the tenant’s business personal property.
Mortgages: Lenders require specific limits and certificates of insurance to protect their financial interest in the property. Maryland Insurance Article Section 19-116 governs certificates of insurance forms, ensuring they don’t alter the policy. Coverage limits are determined by loan agreements themselves, not state law.
Government Contracts: Many state, federal, or local government jobs and procurement agreements require specific types and limits of commercial insurance, often necessitating standardized ACORD or ISO documentation.
Important Note – Workers’ Compensation Insurance: Maryland law requires every employer with one or more employees to carry workers’ compensation insurance. Limited exceptions exist for agricultural employers with fewer than three employees or annual payroll under $15,000. Failure to maintain this mandatory coverage can result in significant penalties.
Industry-Specific Considerations:
Construction: Maryland Home Improvement Commission (MHIC) licensed contractors are required to maintain general liability insurance. As of June 1, 2024, the requirement is at least $500,000 per the MHIC, though there may be implementation discrepancies with the current statutory language. Construction firms also need builder’s risk and equipment policies for their own property.
Healthcare: Medical offices need specialized equipment insurance, professional liability, and cyber protections due to sensitive patient data.
Agriculture: While some small farms may have exemptions from workers’ compensation requirements, property insurance is crucial for covering barns, equipment, and crop storage.
Failing to meet contractual terms can lead to eviction, loan default, or other civil penalties.
WHAT MARYLAND BUSINESS PROPERTY INSURANCE COVERS
Policies provide more than structural protection—they help businesses recover from disasters and maintain continuity.
Core Coverage:
Building Damage: Covers direct physical damage to your own commercial structure from covered perils like wind, fire, lightning, and vandalism. This typically falls under “All-Risk” coverage, which covers all perils unless specifically excluded.
Contents & Equipment (Business Personal Property): Replaces or repairs damaged inventory, furniture, machinery, tools, and supplies.
Business Interruption (Business Income with Extra Expense): Replaces lost income and covers necessary operating expenses if your location is temporarily closed due to covered property damage.
Valuable Add-Ons (Endorsements):
Ordinance or Law Upgrades: Helps pay for increased costs to rebuild or repair older spaces to meet current building codes.
Equipment Breakdown: Covers HVAC systems, freezers, medical scanners, and other machinery from sudden, accidental breakdown, as standard policies exclude mechanical or electrical breakdown.
Crime Endorsements: Protect businesses from losses due to theft and forgery.
COMMON CLAIMS AND RISK SCENARIOS
Maryland commercial property insurance claims are typically driven by severe weather events, infrastructure failures, and fires.
Real-World Examples:
Hurricanes & Storm Surge: Along the coast, hurricane-specific percentage deductibles may apply once a hurricane warning is issued by the National Hurricane Center for any part of Maryland, affecting the entire state
Tornadoes & High Winds: Central and western Maryland counties can experience damaging winds and tornadoes that cause significant structural damage.
Winter Freeze-Ups: Burst pipes during cold snaps and collapsed roofs from heavy snow loads are major drivers of seasonal claims.
Kitchen Fires & Vandalism: Restaurants face constant fire risks. Vandalism and theft are also common, particularly in urban areas.
Standard policies exclude flood damage, so separate commercial flood insurance through the NFIP or private plans may be necessary.
COMMERCIAL PROPERTY INSURANCE COSTS IN MARYLAND
Commercial property insurance costs in Maryland depend on various factors rather than fixed amounts. These factors include:
Building Characteristics:
- Building age and materials (older structures may incur higher premiums)
- Masonry or fire-resistive construction generally leads to lower rates than wood-frame
- Building size and replacement cost
Location Factors:
- Proximity to water (properties in flood zones require separate flood insurance)
- Coastal properties face higher wind deductibles
- Population density and local claim volume
- Fire protection ratings and proximity to fire stations
Business Factors:
- Industry type and risk profile
- Claims history
- Coverage limits and deductible levels chosen
- Security systems and loss prevention measures
Policy Structure:
- Whether coverage is standalone or bundled in a Business Owner’s Policy (BOP)
- Types and amounts of endorsements selected
Insurance rates have been influenced by rising claim severity and frequency from weather events and inflation trends affecting the commercial property insurance market.
MARYLAND COMMERCIAL PROPERTY INSURANCE CLAIMS PROCESS
Business owners must follow the legal claims process under Maryland law, particularly COMAR 31.15.07 (Unfair Claim Settlement Practices), overseen by the Maryland Insurance Administration (MIA).
Key Timelines for Insurers:
15 Working Days (Acknowledgement): Insurer must acknowledge they received your claim within 15 working days of notification.
15 Working Days (Affirm/Deny Coverage): After receiving properly completed claim forms or other proofs of loss, the insurer must affirm or deny coverage within 15 working days.
45 Days (Investigation Delay Notification): If the investigation isn’t complete, the insurer must notify you in writing within 45 days why additional time is needed and provide updates every 45 days thereafter.
Prompt Payment: If the claim is accepted, payment for the undisputed portion must be made promptly after the claim is settled.
Dispute Resolution: Policyholders can request mediation through the Maryland Insurance Administration if disputes arise. Arbitration, if available in your policy, is often faster than litigation.
Penalties & Bad Faith: Missed policy deadlines by the insured or submission of false claims may result in denial of coverage. Insurers are held to standards of good faith and fair dealing under Maryland insurance regulations. Unfair claims settlement practices can lead to penalties by the MIA and potentially a private cause of action for bad faith.
FINAL TAKEAWAYS FOR MARYLAND BUSINESS OWNERS
Your building isn’t just a structure—it’s your livelihood. Whether you operate a café in Towson, a clinic in Rockville, or a warehouse in Frederick, commercial property insurance protects your payroll, property, and business continuity.
Here’s what to do now:
- Review all contracts (leases, loan agreements) for specific Maryland commercial property insurance requirements
- Understand how location, industry, and building characteristics impact your premiums
- Consider bundling property and liability coverage into a Business Owner’s Policy (BOP)
- Add crucial endorsements like commercial flood insurance or Ordinance or Law coverage if your property’s risk profile requires them
Protect what you’ve built—before the next storm hits. Call our experts at 855-718-7552
