CIC Commercial Property cheat sheet

Building and Personal Property (BPP) coverage has three separately insured interest groups: Building, Your Business Personal Property, and Personal Property of Others; limits apply per group unless a blanket or agreed value option applies.

Replacement Cost valuation on the BPP form applies to the Building and to Your Business Personal Property of a tenant; it does not apply to Personal Property of Others unless endorsed, and stock sold but not delivered is excluded from RC.

Coinsurance clause: payment = (limit carried / limit required) x loss, where limit required = coinsurance % x value of covered property at time of loss; the calculation applies to the sum insured per item, not per location.

Agreed Value option suspends the coinsurance requirement when the insured submits a signed statement of values; it applies only to the property scheduled on that statement.

Blanket insurance spreads a single limit across two or more locations or interest groups; the per-location limit is the total blanket limit less the value of the other covered property.

The Causes of Loss forms attach to the BPP form; the BPP form itself provides only the coverage triggers for the property, while the cause-of-loss form determines perils covered and exclusions.

Business Income and Extra Expense coverage must be added by endorsement to the BPP form; the BPP form alone does not provide time element coverage.

Debris removal, preservation of property, and fire department service charges are additional coverages with their own sublimits inside the BPP form; they do not erode the building limit unless the additional coverage limit is exhausted.

Basic Form covers fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.

Broad Form adds falling objects, weight of snow/ice/sleet, and water damage from accidental discharge of a plumbing, heating, or sprinkler system; it excludes water damage from repeated seepage or leakage over 14 days or more.

Special Form insures risks of direct physical loss unless excluded; the burden shifts to the insurer to prove an exclusion applies, and the form includes a built-in collapse and water-damage extension.

Standard exclusions on all three forms include ordinance or law, earth movement, flood (surface water), fungus/wet rot, wear and tear, and employee dishonesty; most can be bought back by endorsement.

Ordinance or Law exclusion is partially bought back with the Ordinance or Law Coverage endorsement, which covers undamaged portion value, demolition cost, and increased cost of construction.

Equipment Breakdown must be added by endorsement; the causes-of-loss forms exclude loss caused by mechanical breakdown, electrical arcing, and centrifugal force.

Spoilage coverage is an endorsement that covers perishable stock from breakdown of refrigeration or power interruption; a separate utility services endorsement covers off-premises power failure.

The Water Backup and Sump Overflow endorsement adds coverage for water backing up through sewers or drains; without it, such loss is excluded as water damage.

Business Income pays net income plus continuing normal operating expenses during the period of restoration; it does not pay the cost of replacing lost income beyond the policy's chosen limit.

Period of Restoration begins 72 hours after the direct physical loss (for the Special Form) and ends when the property is repaired with reasonable speed or when business resumes at a new permanent location.

Business Income coinsurance: payment = (limit carried / limit required) x loss, where limit required = coinsurance % x annual net income plus operating expenses for the 12 months following policy inception.

Extra Expense pays reasonable costs to avoid or minimize business interruption; it has its own limit and does not reduce the Business Income limit unless the form provides otherwise.

The 72-hour waiting period is a deductible-style feature of Business Income coverage; shorter or longer periods can be endorsed, and the period applies to each occurrence.

Extended Business Income (formerly Extended Period of Indemnity) continues Business Income payments after the period of restoration for a stated number of days, typically 30, 60, or 90.

Contingent Business Income covers loss caused by physical damage at a supplier's or customer's location; it requires a scheduled or blanket limit and is not part of the base Business Income form.

Civil Authority coverage pays Business Income and Extra Expense when an order of a civil authority prohibits access to the premises because of damage to nearby property; it is limited to a stated number of days, commonly 30.