CIC Commercial Property key terms

In the commercial property form, the structure described on the declarations, including completed additions, fixtures, permanently installed machinery and equipment, and personal property used to service the premises.

Tangible property used in the insured's business that is not permanently attached to the building, such as furniture, stock, supplies, and machinery, plus leased improvements and the insured's interest in property of others.

Property belonging to someone else that is in the insured's care, custody, or control, such as customer goods held for storage, repair, or processing, which can be added to the coverage grant.

The collective term for the categories of property the form will insure, namely building, business personal property, and personal property of others, each subject to its own limit and valuation rules.

The maximum dollar amount the insurer pays for a covered loss, shown on the declarations for each coverage part, with additional sublimits applying to specified property categories and causes of loss.

A separate, usually lower cap within the overall limit that restricts payment for a particular category of property or expense, such as outdoor signs or newly acquired property.

A property rating provision requiring the insured to carry insurance equal to a stated percentage of the property's value; a lower limit reduces recovery proportionally on a partial loss.

A valuation option that suspends the coinsurance condition when the insured submits an accepted statement of values, so partial losses are paid without a coinsurance penalty.

A valuation basis that pays the cost to repair or replace damaged property with new property of comparable material and quality, without deducting for physical depreciation.

A valuation basis equal to replacement cost less physical depreciation, commonly used for older property or when the insured has not elected replacement cost valuation.

An optional endorsement that settles losses on the basis of the cost to repair or replace with property of less costly but functionally equivalent design, rather than matching the original construction.

Coverage for the cost of clearing and hauling away wreckage after a covered loss, typically subject to an additional amount of insurance and a percentage-of-loss cap.

Coverage for reasonable costs the insured incurs to protect covered property from further damage after a covered loss, provided the costs are reported and the property is not abandoned.

Automatic coverage for buildings or business personal property the insured acquires after the policy inception, subject to a sublimit and a reporting deadline.

A policy design in which the insured reports values periodically and pays premium on those reported values, with a deposit premium and a maximum limit for any one loss.

An endorsement that increases the business personal property limit for a defined period when inventory is unusually high, such as during a holiday selling season.

Coverage for accidental damage to covered property caused by the sudden breakdown of boilers, pressure vessels, machinery, or electrical equipment, usually written as a separate coverage part.

Endorsement coverage for loss of perishable stock caused by a change in temperature, power failure, or equipment breakdown, often with a stated dollar limit.

Coverage for the increased cost to repair or rebuild in compliance with current building codes, including demolition of undamaged portions, usually provided by endorsement with its own limit.

The part of a commercial property policy that defines which perils are insured, ranging from basic named perils through broad named perils to the open-peril special form.

A causes of loss form that insures risks of direct physical loss unless the loss is specifically excluded or limited, placing the burden on the insurer to prove an exclusion applies.

A form that insures only the perils it lists, such as fire, lightning, windstorm, hail, or vandalism, so a loss from an unlisted cause is not covered.

A policy provision that removes specified causes of loss or property types from coverage, such as wear and tear, faulty workmanship, or employee dishonesty.

A doctrine addressing losses caused by two or more perils at the same time, one covered and one excluded, which can require payment when a covered peril sets the excluded peril in motion.

Damage that follows from an excluded cause but results from a separate covered peril, such as fire that breaks out after faulty wiring fails, which may be covered despite the exclusion.

A provision in the causes of loss form that bars payment for costs arising from enforcement of building codes, which is why separate ordinance or law coverage must be purchased.

The causes of loss provision that extends payment for removal of debris from a covered peril, subject to a limit and a reporting requirement separate from the property limit.

A limitation that removes coverage for damage from flood, surface water, waves, and water that backs up through sewers or drains, unless flood or water backup coverage is added.

Separate coverage, often written by endorsement or a government program, that insures loss from rising water, surface water, and mudslide, which the standard property form excludes.

A limitation that removes coverage for earthquake, landslide, sinkhole, and similar ground movement, which can be added back by endorsement for an additional premium.

A policy or endorsement that fills gaps left by the primary property form by adding perils such as flood and earthquake, typically written on a broad or special basis.

A causes of loss extension that pays for damage to perishable stock from temperature change or power interruption, often tied to equipment breakdown or off-premises utility failure.

Time element coverage that pays the loss of net income and continuing normal operating expenses, including payroll, during the period needed to restore operations after a covered loss.

The time beginning when the physical loss occurs and ending when the property is repaired, rebuilt, or replaced with reasonable speed, or when business resumes at a new location.

Coverage for costs above normal operating expenses that the insured incurs to avoid or minimize business interruption, such as temporary quarters, expedited shipping, or overtime labor.

An optional extension that continues business income payments for a stated number of days after the period of restoration ends, allowing time for sales to return to pre-loss levels.

Coverage for lost income caused by physical damage at the premises of a supplier, customer, or key dependent property, rather than at the insured's own location.

Coverage for business income and extra expense loss when a government order prohibits access to the insured's premises because of covered damage to nearby property.

Time element coverage that reimburses a tenant for the value of a favorable lease lost when the leased premises are damaged, measured by the difference between contract and market rent.