What is small-business commercial fire & property insurance?
Commercial fire & property insurance protects a shop — restaurant, cafe, retail store, salon, PC room, and the like — against fire, explosion, and rupture losses to the building, fixtures, equipment, and inventory, and adds liability cover for fire damage inflicted on others.
A single fire can wipe out tens of thousands to hundreds of thousands of dollars of interior fit-out, kitchen equipment, and stock, so property insurance is effectively essential for the self-employed.
This calculator is based on Korean rules (2026). It reflects the coinsurance clause in Korean fire policies (Commercial Act Article 674), the mandatory fire-liability insurance for “multi-use businesses” under the Special Act on the Safety Control of Multi-Use Businesses, and related disaster-liability and special-building rules.
Enter your business type, tenancy (rented or owned), and floor area, and the tool estimates the replacement value of fixtures and inventory, then applies the 80% coinsurance proportional-payout rule to show how much you actually receive and how much you bear yourself in a fire.
It also diagnoses whether your business must hold mandatory fire-liability insurance, checks a tenant’s liability exposure, and estimates business-interruption loss — all on the 2026 basis.
Who needs this
- • Prospective founders opening a restaurant, cafe, or bar
- • Tenants who invested heavily in interior fit-out and equipment
- • Owners unsure whether their business needs mandatory fire-liability insurance
- • Retailers holding large amounts of inventory
- • Anyone worried about lost income if fire halts operations
- • Owners checking whether their current cover amounts are adequate
The 80% coinsurance and proportional payout — the key trap
Fire policies on general property (shops, stores, offices) carry an 80% coinsurance condition.
The coinsurance ratio is the sum insured divided by the insurable value (replacement cost).
At 80% or above, a loss is paid in full up to the sum insured; below 80%, a proportional payout applies and you receive only part of the loss.
Proportional-payout formula and example
Payout = Loss × Sum insured ÷ (Insurable value × 0.8)
(capped at the sum insured)
- • Fixtures value KRW 200M, sum insured KRW 100M (ratio 50%), fire loss KRW 50M
- • 80% threshold = 200M × 0.8 = KRW 160M
- • Payout = 50M × (100M ÷ 160M) = KRW 31.25M
- • Out-of-pocket (coinsurance shortfall) = 50M − 31.25M = KRW 18.75M
Had the same fixtures been insured for KRW 160M (80%) or more, the full KRW 50M loss would have been paid.
Basis: Commercial Act Article 674 (proportional payout for underinsurance) and the coinsurance clause in the fire policy.
Over-insurance and double insurance
Conversely, insuring above the insurable value is void for the excess (Commercial Act Article 669).
The premium on the excess is essentially wasted, and payment is capped at the insurable value.
Insuring the same property under several policies does not double your recovery: insurers share the actual loss in proportion to each sum insured (Commercial Act Article 672), so you only pay premiums twice.
What is covered — building, fixtures, inventory
Commercial property insurance sets a separate sum insured for three distinct classes of property.
Omit one, or under-insure it, and that class is unpaid or proportionally reduced.
- Building (owned): insure only if you own the premises. If you rent, the landlord insures the building, so you cover only fixtures, equipment, and inventory.
- Fixtures & equipment: interior fit-out, kitchen equipment, HVAC, display cases, PCs and electronics, furniture — the biggest loss item for tenant businesses.
- Inventory (goods): merchandise, raw materials, supplies. Retailers carry large stock and should insure to peak-season inventory.
Enter business type, structure, and area, and the calculator auto-estimates the replacement value of fixtures and inventory.
Restaurants, dense with kitchen equipment, get a higher per-square-meter estimate; retailers get a higher inventory rate.
These are reference figures — adjust them to your actual fit-out quote and stock levels.
Mandatory fire-liability insurance for multi-use businesses (2026)
“Multi-use businesses” carry high casualty risk in a fire, so under Article 13-2 of the Special Act on the Safety Control of Multi-Use Businesses they must hold fire-liability insurance.
This insurance pays statutory amounts to victims for death, injury, or property damage caused by fire (including explosion), even where the owner was not at fault.
Which businesses are covered (Enforcement Decree Art. 2)
- • Restaurants, snack bars, bakeries: total floor area of 100㎡ or more above ground (66㎡ underground). Excluded if on the ground floor with a main entrance directly to the outside.
- • Bars and entertainment taverns: covered regardless of area
- • Karaoke rooms and PC rooms (internet game facilities): regardless of area
- • Academies: when meeting thresholds such as 300+ capacity
- • Bathhouses, postpartum care centers, studio apartments (gosiwon), indoor shooting ranges, massage parlors, and more
Statutory limits (Enforcement Decree Art. 9-3, effective 2026-07-01)
- • Death: up to KRW 150M per victim (minimum KRW 20M if the loss is under KRW 20M)
- • Injury: per victim within the Schedule 2 amounts (Grade 1: KRW 30M)
- • Permanent disability: per victim within the Schedule 3 amounts (by grade)
- • Property damage: up to KRW 1 billion per accident
Failure to insure carries an administrative fine of up to KRW 3M (from KRW 1M depending on the lapse period) under Article 25(1)6-2 of the Act.
You would also bear the full liability for fire damage to others uninsured, so cover must be in place before opening.
One useful rule: holding multi-use fire-liability insurance exempts you from separately taking out disaster-liability insurance for the same risk (Framework Act on the Management of Disasters and Safety, Article 76-5(2), latter part).
So a multi-use business can satisfy both obligations with a single fire-liability policy.
A tenant’s fire liability — what if the landlord’s building burns?
This is a risk tenants must watch closely.
If a fire starting in your unit spreads to the landlord’s building or a neighboring store, the tenant bears an obligation to restore the leased property and to compensate for the damage.
Fire Liability Act — even ordinary negligence creates liability
Under the Act on Liability for Fire Caused by Negligence (revised 2009), even a fire caused by ordinary negligence creates liability to injured neighbors under Civil Act Article 750.
However, a person without gross negligence may petition the court to reduce the damages, and the award may be lowered in light of the cause and scale of the fire.
Even though the landlord insures the building, a tenant should separately arrange fire third-party property liability (tenant’s liability) alongside property cover for fixtures and inventory to limit exposure toward the landlord and neighbors.
Enter whether you hold fire-liability cover, its limit, and the expected third-party damage, and the calculator shows the insurer payout and your out-of-pocket share.
If a tenant is uninsured, the tool warns that the full cost of the landlord’s burned building would fall on you.
Business interruption — the real cost of downtime
Fire damage is not only the burned property.
During the months it takes to rebuild, revenue drops to zero while fixed costs — rent, wages, loan interest — keep running.
Business-interruption cover pays this lost profit and fixed cost.
- • Interruption loss = monthly operating profit (+ fixed costs) × expected recovery months
- • With business-interruption cover, lost profit and fixed cost during recovery are reimbursed
- • Any period beyond the indemnity-period limit (e.g., 12 months) is not covered
- • Property cover alone rebuilds the shop but leaves downtime losses to you
Enter monthly profit, expected recovery months, and whether you hold the cover, and the tool computes the interruption loss, the payout, and the uncovered amount.
When recovery exceeds the indemnity-period limit, the excess is shown as uncovered.
Reference — disaster-liability and special-building fire insurance
Disaster-liability insurance
Disaster-prone facilities — lodging, ground-floor restaurants (100㎡+), gas stations, logistics warehouses, underground malls, libraries, apartment blocks of 15 floors or fewer — must hold disaster-liability insurance under Article 76-5 of the Framework Act on the Management of Disasters and Safety.
Limits follow the Motor Accident Compensation standard (death KRW 150M, property KRW 1 billion per accident), and non-compliance draws a fine of up to KRW 3M.
Special-building fire insurance
Buildings of 11+ floors, large retail stores (gross area 3,000㎡+), and restaurants or academies of 2,000㎡+ are “special buildings” that must hold fire insurance with a personal-injury liability rider under the Act on Fire Compensation and Insurance.
Small shops usually do not qualify, but for a large complex, non-compliance carries a criminal fine of up to KRW 5M.
How to use
Step 1: Enter business details
Enter business type, tenancy, structure, and floor area.
Fixtures and inventory replacement values are auto-estimated from type and area.
Step 2: Enter property sums insured
Enter sums insured for fixtures and inventory to see coinsurance ratios.
Use the loss-ratio slider (partial / half / total loss) to model the loss size.
Step 3: Check liability and interruption
Enter fire-liability status, limit, and expected third-party damage.
In the business-interruption section, enter monthly profit and recovery months.
Step 4: Review the diagnosis
Review the coinsurance shortfall, the mandatory-insurance diagnosis, the annual-premium estimate, and the coverage checklist.
Underinsurance, over-insurance, and mandatory-cover gaps are flagged at a glance.
Frequently asked questions (FAQ)
Q. I’m a tenant — do I skip the building?
A. The owner insures the building, so a tenant leaves the building sum at zero and insures only fixtures and inventory.
But because a fire can make you liable for the landlord’s building, arrange fire third-party property liability separately.
Q. How do I know if my shop is a multi-use business?
A. Restaurants and bakeries are multi-use at 100㎡+ above ground (66㎡ underground).
Bars, karaoke rooms, PC rooms, postpartum centers, and gosiwon are multi-use regardless of area; academies depend on thresholds such as 300+ capacity.
Q. Do I need both fire-liability and disaster-liability insurance?
A. Holding multi-use fire-liability insurance exempts you from separately taking out disaster-liability insurance for the same risk (Framework Act on Disasters and Safety, Art. 76-5(2), latter part).
A single fire-liability policy satisfies both obligations.
Q. Is the calculator’s premium the actual price?
A. The premium is an estimated range based on sums insured, business type, structure, and coverage level.
The real premium depends on the insurer, riders, discounts, and fire-risk assessment, so confirm with a quote.
Q. My inventory swings by season — how do I insure it?
A. Set the inventory sum insured to peak-season stock.
If a fire occurs when stock is high, a base-level sum triggers proportional payout and larger losses.
Diagnose your shop’s coverage now
Just enter business type and area to check coinsurance shortfall, mandatory insurance, and interruption loss at once.
This is a reference tool based on 2026 Korean statutes and policy terms; confirm actual enrollment and payout with your insurer’s policy and quote.