CISR Commercial Property key terms

A lawful, financial stake in the property such that the insured benefits from its survival and suffers a loss from its damage. It must exist at the time of loss for property coverage to respond.

The concept that insurance restores the insured to roughly the same financial position held before a loss, no better and no worse. It limits recovery to the actual value of what was damaged.

A valuation method equal to replacement cost minus depreciation, or the fair market value of the damaged property. It reflects what the item was worth in its pre-loss condition.

The amount needed to repair or rebuild damaged property with new materials of like kind and quality at current prices, without any deduction for depreciation.

The reduction in value of property from age, wear and tear, obsolescence, or market conditions. It is subtracted from replacement cost to arrive at actual cash value.

A property condition requiring the insured to carry insurance equal to a stated percentage of the property's value. If the limit is lower, a loss payment is reduced proportionally.

The minimum amount of coverage an insured must buy to avoid a coinsurance penalty at the time of loss. It is usually expressed as a percentage of the property's full value.

A policy election that suspends the coinsurance condition in exchange for a limit the insured and insurer agree equals the property's full value. The value is usually documented at inception.

The amount of each loss the insured must absorb before the insurer pays. Commercial property forms commonly apply a dollar deductible per occurrence, with higher amounts for certain perils.

The core commercial property form that insures buildings, business personal property, and personal property of others at described premises. It provides the coverage structure to which causes of loss forms attach.

The categories of property a commercial property form insures at a described location, typically the building, business personal property, and personal property of others in the insured's care.

Tangible property used in the insured's business that is not permanently attached to the building, such as furniture, machinery, stock, and supplies. It is usually insured at the described premises.

Property owned by someone else that is in the insured's care, custody, or control at a described premises, such as customer goods. Coverage is usually limited to the insured's interest.

An enumerated list of items the building and personal property form excludes, such as land, vehicles, and certain growing crops. Separate coverage or endorsements are needed for those items.

Supplementary coverage that pays to clear wreckage and debris of covered property after a covered loss. It typically carries its own limit and a reporting condition.

Coverage for reasonable costs the insured incurs to protect covered property from further damage after a loss. These expenses are paid in addition to the property limit.

The obligations an insured must fulfill following a loss, such as giving prompt notice, protecting property, preparing an inventory, and cooperating in the claim investigation. Failure can jeopardize coverage.

A formal sworn statement the insured submits detailing the amount and circumstances of a claim. Insurers commonly require it within a stated period after the loss.

The valuation and settlement provision that states how and when the insurer pays a covered loss, including the option to repair, rebuild, or pay cash.

The forms that define which perils are insured under a commercial property policy. The basic, broad, and special forms offer progressively wider coverage and attach to the property form.

Coverage that responds only to the causes of loss specifically listed in the policy. Anything not on the list is excluded unless added by endorsement.

A causes of loss form that insures risks of direct physical loss unless the peril is specifically excluded. The burden shifts to the insurer to show an exclusion applies.

A policy provision that removes specified perils, property, or situations from coverage. Common property exclusions include ordinance or law, earth movement, and flood.

An exclusion barring costs to comply with building codes or laws regulating construction or repair after a loss. Limited coverage may be added by endorsement.

A written amendment attached to a policy that changes, adds, or removes coverage. It takes precedence over the base form and is used to tailor protection.

Coverage that pays for financial losses continuing over time after physical damage, rather than for the damaged property itself. Business income and extra expense are the principal examples.

Time element coverage that replaces net income and continuing normal operating expenses during the period of restoration following a covered loss. It helps stabilize the business through recovery.

Coverage for reasonable costs above normal operating expenses that the insured incurs to continue operations and avoid or minimize business interruption after a covered loss.

The time beginning when physical damage occurs and ending when the property should reasonably be repaired or replaced with similar quality and speed. It caps the duration of business income payments.

An optional extension that continues business income payments for a stated time after the period of restoration ends. It addresses the lag before the business regains its pre-loss customer levels.

A requirement that the business income limit equal a stated percentage of projected annual business income and expenses. Underinsurance reduces the claim payment proportionally.

Coverage for income loss caused by physical damage at a supplier's or customer's location, not at the insured's own premises. It is usually added by endorsement with a sublimit.

Coverage for income loss when a government order prohibits access to the insured's premises because of covered damage nearby. It typically applies for a limited number of days.

Coverage for movable property that travels or is in the hands of others, written on flexible forms outside standard property rules. It often uses open perils and follows the goods.

A regulatory framework that lists the kinds of property and risks eligible for inland marine treatment. It helps determine which exposures can be written on marine forms.

Inland marine coverage protecting a business that holds others' property for processing, repair, storage, or sale. It covers the insured's liability for damage to those goods.

A property exclusion for damage to property in the insured's care or control, addressing exposures better handled by inland marine or liability coverage. Bailee forms fill this gap.

Inland marine coverage on goods being transported by the insured carrier or on the insured's own goods in transit. Limits typically apply per vehicle or per shipment.

Inland marine protection for property while it is being shipped or moved between locations. It addresses exposures that fixed-location property forms often leave uninsured.