CISR Commercial Property cheat sheet

Insurable interest must exist at the time of loss; a party with no financial stake in the property cannot collect, even if named on the policy.

The commercial property policy is modular: declarations, one or more coverage forms, causes of loss form, endorsements, and conditions combine to define the contract.

Replacement cost values the loss at today's cost to repair or replace with like kind and quality, without deduction for depreciation; actual cash value applies depreciation.

Coinsurance is a value-maintenance device, not a penalty: the insured shares the loss when the limit carried is below the required percentage of value.

A mortgagee clause protects the lender's interest independently; the lender receives loss payment and notice rights even if the insured's own conduct impairs coverage.

Common exclusions that shape the need for separate coverage: flood, earthquake, wear and tear, employee dishonesty, and business interruption losses.

Deductibles may apply per occurrence or per building; a percentage deductible (for example, wind) is calculated on the limit or value, not on the loss amount.

Named insured, additional insured, and loss payee are distinct roles; only the named insured generally controls the policy and receives return premiums.

Coverage A (Building) attaches to the building and to permanently installed fixtures, machinery, and equipment that are part of the structure.

Coverage B (Your Business Personal Property) covers furniture, fixtures, stock, and machinery used in the business, including leased personal property the insured has contracted to insure.

Coverage C (Personal Property of Others) covers property in the insured's care, custody, or control, such as customer goods in a bailee exposure.

The 80% coinsurance condition is the default on the Building and Personal Property form; a higher or lower percentage, or none, requires an endorsement.

The coinsurance formula: (limit carried / limit required) x loss = payable amount, subject to the deductible and the policy limit.

Newly acquired or constructed buildings are typically covered for a limited period and sublimit, and the insured must report or add them to the policy.

Valuation defaults to actual cash value unless replacement cost is selected; replacement cost conditions often require insurance to at least 80% of replacement value.

The form includes debris removal, preservation of property, and fire department service charge extensions, each with its own sublimit and conditions.

Loss payment options include paying the value of the property, repairing or replacing it, or taking the damaged property; the insurer chooses among them.

Basic form is named-peril: 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 named perils to the Basic list, including falling objects, weight of snow, ice, or sleet, and water damage from accidental discharge of a plumbing system.

Special form is open peril (risk of direct physical loss) and shifts the burden to the insurer to prove an exclusion applies.

Theft is not a named peril on the Basic or Broad forms; it is covered under the Special form unless excluded, and excluded for the insured's own employees.

Earth movement and flood are excluded on all three causes of loss forms and require separate policies or endorsements.

Ordinance or law coverage addresses the added cost of rebuilding to current code; without the endorsement, code-upgrade costs are excluded.

The Special form includes the faulty workmanship, design, and repair exclusions; resulting damage to other covered property may still be payable.

Protective safeguards condition: if the insured warrants a sprinkler or alarm system, a loss caused by the insured's failure to maintain it can reduce or bar recovery.

Utility services exclusion and water backup are common gaps; water backup and sump overflow require a specific endorsement.

Business income covers net income plus continuing normal operating expenses, including payroll, during the period of restoration.

The period of restoration begins at the time of loss and ends when the property is repaired with reasonable speed, or when business resumes at a new location.

Extra expense pays costs to avoid or minimize shutdown, such as temporary premises, equipment rental, and expediting; it does not require a loss of income.

A business income coinsurance clause typically requires a limit equal to projected annual business income; the formula is (limit carried / limit required) x loss.

The 72-hour waiting period applies to civil authority and certain utility service interruptions, not to the standard business income coverage itself.

Extended business income pays for income lost after the property is restored, while business resumes to pre-loss levels, for a stated number of days.

Contingent business income responds to loss at a supplier's or customer's premises; it must be added by endorsement, often with a named list.

A period of restoration does not extend for delays caused by ordinance enforcement, permit delays, or the insured's inability to fund repairs.

Inland marine covers property in transit, property of others in the insured's care, and mobile or frequently moved property that standard property forms handle poorly.

The nationwide marine definition defines eligible exposures; it excludes property customarily covered by fire insurance or ocean marine.

Coverage follows the property rather than a fixed location, which is the defining feature separating inland marine from commercial property.

Motor truck cargo covers goods in transit on owned or hired trucks; it is not a substitute for the carrier's legal liability or auto liability.

Bailee coverage protects customer property in the insured's custody, such as goods held for repair, storage, or processing.

Equipment floater covers contractor's tools and machinery, whether at a job site, in transit, or in storage, often with a per-item limit.

Valuation is often actual cash value on older equipment; replacement cost and agreed value endorsements change the settlement basis.

Inland marine policies generally have no coinsurance clause; instead they rely on accurate reported values and per-item or per-location limits.

Common exclusions include wear and tear, mysterious disappearance, employee dishonesty, and property in the insured's own vehicles unless endorsed.