Business Property Insurance

Business property insurance covers losses when a company’s buildings, equipment, or inventory are damaged or lost due to fire, water, storms, theft, or vandalism. Coverage extends to both owned and leased property, as well as investments made in leased premises.

Who is this insurance relevant for?

Property insurance is relevant for every company that has physical assets—whether owned or leased—at its place of business. The higher the value of the assets and the more business continuity depends on them, the more important such protection becomes.

Relevant if your company

has owned or rented premises
uses production, technological, or IT equipment
holds stock in the warehouse or at the point of sale
invested in the fit-out of leased premises
owns assets acquired through leasing or a bank loan

In cases of leasing and pledging, property insurance is usually mandatory under the financing agreement.

Probably not relevant if

The activity is carried out solely remotely, without a physical business location.
only personal portable equipment is used
the premises owner insures the building, and you do not have your own equipment or inventory

Important: property owner’s insurance covers the building, but not your equipment, inventory, or investments in the fit-out of the premises.

What does business property insurance protect against?

Standard coverage includes fire, water damage, storms and other natural forces, burglary, and vandalism. The scope of coverage is selected based on needs—ranging from basic insurance against fire and natural forces to an “all-risks” option that covers all incidents except for explicitly listed exclusions.

Most commonly excluded risks

Fire, lightning strike, explosion
Water damage — pipeline failures, consequences of firefighting
Storm, hail, downpour, weight of snow
Burglary and robbery
Vandalism and intentional damage by third parties
Breakage of glass structures
Damage to electrical equipment due to short circuit

Insured property

Buildings and structures
Equipment, machinery, office and IT hardware
Inventories — raw materials, finished goods, merchandise
Specialized machinery
Investments in premises for lease
Cash in the safe, billboards, employee property at the place of business

A separate insurance amount is specified for each property, and there may be multiple addresses—coverage is not necessarily uniform across all business locations.

What does this insurance typically not cover?

Property insurance covers damage to your own property. It does not cover damage to third parties, workers’ health, vehicles or business interruption losses – separate products are available for this purpose. Natural wear and tear and failures due to improper operation are also not prohibited.

Not included in the coverage

Normal wear and tear, corrosion, mold
Faults caused by improper operation or lack of maintenance
Manufacturing defects and associated losses
Property in an open area without a separate agreement
Buildings under construction or reconstruction, absent a separate agreement
Intentional acts of the policyholder

Covered by separate products

Damage to third parties → general civil liability
Harm to employee’s health → employer’s civil liability
Company vehicles → vehicle insurance
Business interruption losses → business interruption insurance
Cargo in transit → cargo insurance

Some exceptions are subject to negotiation. If a specific risk is critical to your operations, please note this in the questionnaire comments—the broker will look for an insurer willing to include it.

What determines the cost of business property insurance?

The price is determined by the value and composition of the insured property, the nature of the activity, the construction of the building, the security measures installed, the history of damages and the selected deductible. The level of operational risk and fire protection are usually the most influential.

Type of activity. Offices, services, retail, warehousing, and manufacturing. Manufacturing—and particularly high-risk manufacturing—is subject to the strictest assessment.
Value and composition of assets. Buildings, equipment and inventories are valued separately — each category has its own insurance amount.
Building structure. Masonry is rated better than wood or metal arch construction. The roof covering is also important — thatched or wooden increases the risk.
Fire protection. A fire detection system connected to a central security monitoring station can reduce premiums by approximately 15–20%. It is one of the most effective investments in risk management.
Burglary protection. Alarm systems and their connection to a monitoring center, video surveillance, access control, physical security, and perimeter fencing.
Claims history. The last three years are evaluated—both the number of claims and their magnitude.
Deduction. A higher deductible reduces the premium but shifts part of the risk to you.

What to decide before taking out insurance

Several decisions determine whether the damage will be fully compensated. It is worth considering them before submitting a request, as changing the terms later is more difficult.

Replacement value or market value. Replacement value allows for the asset to be rebuilt as new, whereas market value accounts for depreciation and is lower. Replacement value is almost always more appropriate for buildings.
Realism of insured amounts. Reduced amounts lower the premium but trigger the underinsurance rule.
Deductible amount. It is worth choosing an amount that the company can cover with its own funds without difficulty.
Beneficiary. In the case of a lease or a bank pledge, the financier is usually designated as the beneficiary.
Places of insurance. If there are multiple locations, consider whether they all require the same level of protection.
Payment frequency. The contribution can be paid in one, two, or four installments per year.

An example of underinsurance. The value of the asset is €500,000, and it is insured for €300,000 (60%). In the event of a €50,000 loss, the insurer may provide proportional compensation—approximately €30,000. The company covers the remaining amount.

What you will need to fill out the questionnaire

We will retrieve the company name, address, and NACE code from the Centre of Registers—you simply need to enter the company code. It is worth having the following at hand:

Addresses of all insurance locations
Asset amounts by category: buildings, equipment, inventory, specialized machinery, leasehold improvements.
The building wall structure and roof covering
Data on fire safety and security systems — whether they are connected to a monitoring station and which company services them.
Damages over the past three years: date, amount, reason.
The desired insurance start date and the beneficiary, if different from the company.

The questionnaire takes about 8–10 minutes to complete. If you do not have a specific piece of information, you can skip the field—the broker will clarify it later.

Frequently Asked Questions

Is business property insurance mandatory?

By law, no. However, it is often mandatory under a leasing or bank loan agreement when the asset is pledged as collateral or purchased using financing. It is worth checking the financing agreement for this requirement.

Can I insure rented premises?

The building itself is usually insured by the owner. You can insure your equipment, inventory, and investments in the fit-out of the premises—such as repairs, partitions, and building systems. This constitutes a separate object of insurance.

What is the difference between replacement value and market value?

Replacement value is the cost of rebuilding or replacing an asset with a new one. Market value accounts for depreciation and is lower. When rebuilding a building after a fire, the market value is often insufficient to cover the costs.

What is underinsurance?

If the specified insured amount is lower than the actual value of the property, the insurer may compensate only a proportional share of the loss. Therefore, it is advisable to specify realistic amounts rather than reduced ones in an attempt to lower the premium.

Does the insurance cover water damage?

Yes — the consequences of pipeline accidents and fire fighting are included in the standard coverage. Flooding and groundwater rise are usually assessed separately and are not always prohibited.

Is it necessary to have an alarm system?

It is not mandatory, yet significant. A fire detection system connected to a central security monitoring station is one of the most effective risk management investments and can noticeably reduce insurance premiums.

Can I insure multiple addresses under a single policy?

Yes. You can specify multiple insured locations in the questionnaire and assign separate property values to each. The scope of coverage does not necessarily have to be the same for all locations.

How long does it take to get a quote?

Filling out the questionnaire takes about 8–10 minutes. The broker usually makes contact within one business day to align on needs before approaching insurers.

Related insurance products

Property insurance covers damage to your property. These products cover areas that are not included in it.

General civil liability

Damage to third parties arising from your operations, premises, or products

Employer's civil liability

Harm to an employee’s health or life in the event of a workplace accident

Corporate vehicle insurance

Comprehensive (CASCO) and civil liability insurance for the company’s vehicle fleet

Insure your business assets

Fill out the questionnaire — you will receive offers from the main Lithuanian insurers. The request is non-binding.

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