Commercial Property and Commercial Package Policies
Core commercial property tools
The Building and Personal Property Coverage Form (BPP) insures buildings, business personal property, and personal property of others at a described location. Key extensions include debris removal, preservation of property, valuable papers, and newly acquired or constructed property. Coverage may be specific (a limit per building) or blanket (one limit over several locations) - blanket is more forgiving when values shift between sites.
Coinsurance and valuation choices
Commercial property uses a coinsurance percentage (80%, 90%, 100%) and the same formula as personal lines: (carried ÷ required) × loss, capped at the limit. Alternatives: agreed value (coinsurance suspended if the insured submits a statement of values), reporting form (premium based on reported values, deposit premium, penalty for under-reporting), and peak season endorsements. Causes-of-loss forms parallel personal lines: basic, broad, and special (open perils).
Business income and extra expense
Business income replaces net income and continuing expenses during the period of restoration, subject to a waiting period; extra expense pays costs to keep operating. Both require a direct physical loss by a covered peril.
Package policies and specialty forms
A Commercial Package Policy (CPP) combines property and casualty coverages (BPP, CGL, inland marine, crime, auto, equipment breakdown) under one policy with shared declarations, limits, and conditions. Related forms: builders risk (property under construction), equipment breakdown, condominium commercial, and businessowners policy (BOP) for eligible small risks.
Traps
- Blanket vs. specific limits, and whether the loss occurred at a scheduled location.
- Business income is not "lost profits from a pandemic" - there must be covered physical damage.
Worked example: Values $800,000; limit $600,000; 90% coinsurance ($720,000); $90,000 loss → (600,000 ÷ 720,000) × 90,000 = $75,000, less deductible.