Commercial Lines Insurance Coverages
Commercial Property and Liability
Commercial lines cover businesses through Commercial Package Policies (CPP), Businessowners Policy (BOP), and Commercial General Liability (CGL). BOP combines property and liability for small businesses. CGL covers bodily injury, property damage, personal and advertising injury. Key concepts: occurrence vs. claims-made triggers; aggregate limit; products-completed operations; premises-operations. Commercial Property covers buildings, business personal property, and business income (including extra expense). Equipment breakdown, crime, and inland marine are often separate. Workers Compensation provides statutory benefits for employee injuries. Commercial Auto covers business vehicles.
Traps
Questions often test CGL coverage triggers: occurrence form covers injury during policy period even if claim later; claims-made covers claims first made during policy period. Watch for your work exclusion and impaired property exclusion. Business income requires a period of restoration and may have a waiting period (e.g., 72 hours). Coinsurance in property policies: if insured value is below coinsurance percentage, claim is reduced. Additional insured endorsements and waiver of subrogation are common.
Worked Example
A retailer has a BOP with building limit $500,000, business personal property $200,000, and business income $100,000. A fire causes $100,000 building damage, $50,000 inventory loss, and $20,000 business income loss. Deductible $2,000. Payment: Building $100,000 – $2,000 = $98,000; BPP $50,000 (no deductible again); BI $20,000 (if waiting period met). Total $168,000, subject to limits.
Rule of Thumb
For coinsurance: payment = (insurance carried / insurance required) × loss, capped at policy limit. Insurance required = coinsurance % × value at time of loss.