For what primary purpose do commercial policyholders take out property insurance?

Commercial policyholders primarily take out property insurance to enable risk transfer. This means that businesses seek to mitigate their exposure to financial loss resulting from various risks, such as damage to physical assets due to fire, theft, natural disasters, or other unforeseen events. By purchasing property insurance, they transfer the financial burden of these risks to the insurance provider, who assumes responsibility for covering potential losses.

The primary aim of property insurance is not just compliance with legislation, although regulatory requirements can influence insurance decisions. While increased working capital can be a beneficial outcome of managing risks effectively, it is not the core purpose of property insurance itself. Similarly, while obtaining risk management is an essential component of a business strategy, it encompasses a broader range of practices beyond just insuring property. Risk transfer through insurance remains the fundamental objective for commercial policyholders seeking to safeguard their assets and ensure business continuity.