A commercial property policy is designed to encompass the many different exposures of a business. It consists of, not only, basic coverages, but also, offers the option of adding additional coverages via endorsement. Endorsements allow you to add or delete coverages/exposures to an insurance policy.
Basics Commercial Property Coverage
Covered Property: Building and structures, completed additions, permanently installed equipment, business personal property, fixtures, tenant improvements and betterments, and exterior building glass. Coverage is written on an open peril (all risk) type basis. This provides the broadest coverage and does not list covered perils but, instead, includes a list of what perils are not covered. The form places the burden on the carrier to show that a specific exclusion applies.
Property Coverage Limit: Property coverage is written based on the replacement cost of item.
Deductible: The limits of property coverage are shown on the declarations page. All property policies contain deductibles. They apply to both the building and business personal property. For a loss to be paid, the loss must exceed the deductible and the insured is responsible for paying the deductible.
Additional Commercial Property Coverages
Building Ordinance/Law: Provides coverage to bring a building up to code after a covered cause of loss. There are three parts to this coverage and they are; Coverage A provides for loss to the undamaged portion of the building. Coverage B provides for the cost to demolish and remove the undamaged portions of the building but only if the destruction is due to the building code or ordinance imposed following a covered loss. Coverage C provides for the increased costs to repair or rebuild the property to comply with current building, zoning or land use ordinances or laws.
Equipment Breakdown Coverage: Provides coverage for loss due to mechanical or electrical breakdown of equipment. Types of equipment can include boilers, compressors, steam cookers, hot water heaters and similar types of equipment. Additional types of equipment that may qualify for this are photocopiers and computers, however, the carriers’ coverage form will determine this. Coverage is provided for the cost to repair or replace the equipment and other property damaged by the equipment breakdown such as a boiler exploding and damaging the interior walls of the building.
Off Premises Coverage: Most commercial property policies either limit the amount of coverage for property located off site or do not cover it at all. This provides coverage for your property located off site or that you regularly take off premises during the course of business.
Employees Personal Property Coverage: Most property policies provide limited coverage for employee’s personal property or do not pick up coverage for this exposure at all. Employees Personal Property Coverage can be added to the property policy via endorsement for an additional charge to the property policy itself.
Business Income/Extra Expense Coverage: See loss of income coverage.
Newly Acquired or Constructed Building Coverage: This allows the business owner 30 days to report a newly purchased property to the carrier. The property form is such that it requires all property to be listed in order for coverage to apply.
Building Occupied by The Insured Coverage: Sometimes times a building owner will require the tenant to provide property coverage for the building that they are renting. This coverage will pick up this exposure.
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