Commercial Property Forms and Special Causes of Loss
Commercial property architecture
Commercial property forms (building and personal property, business income, and extra expense) are modular. Candidates must know the Building and Personal Property Coverage Form, the Causes of Loss forms (basic, broad, special), and the Special Causes of Loss form, which covers risk of direct physical loss unless excluded. Common exclusions include ordinance or law, earth movement, flood, nuclear hazard, utility services, war, and wear and tear.
Key concepts
- Blanket versus specific insurance: blanket applies a single limit across multiple locations or properties.
- Scheduled limits apply per location.
- Agreed value option suspends coinsurance when the insured submits a statement of values.
- Ordinance or law coverage addresses the cost of rebuilding to current code; it is limited or excluded unless endorsed.
- Debris removal, preservation of property, and pollutant cleanup have sub-limits.
Traps to watch
- Special form still excludes flood and earth movement - "all risk" is never truly all risk.
- Ordinance or law is often the largest uninsured gap after a fire in an older building.
- Blanket limits do not eliminate coinsurance unless agreed value is selected.
Rule of thumb
Under the special form, if the loss is direct physical loss and no exclusion fits, coverage applies. Start with the exclusion list, not the peril list.
Worked example
An older building is destroyed by fire. The insured rebuilds to current code, incurring extra costs for sprinklers and accessibility. Without ordinance or law coverage, only the physical damage is paid; the code-upgrade costs are excluded. Adding the endorsement with a stated limit covers the gap.