Commercial Lines Applications and Policy Forms
Property and income
Commercial property policies use building and personal property coverage, causes-of-loss forms, and coinsurance. Business income coverage replaces net income plus continuing normal operating expenses during the period of restoration, and often comes with a coinsurance percentage or a maximum period of indemnity. Extra expense pays costs to continue operations. Blanket versus specific limits, agreed value, reporting forms, and margin clauses are common exam topics, as are builders risk, equipment breakdown, crime, and inland marine floaters.
Liability and packages
The Businessowners Policy (BOP) bundles property and liability for eligible small businesses (apartment buildings, offices, retail, and service or processing risks) and is written on a simplified basis with business income included. It does not provide professional liability, auto liability, or workers compensation. The commercial general liability policy sits alongside commercial auto, umbrella/excess, and workers compensation. Umbrellas require underlying coverage at scheduled limits and apply a self-insured retention when a loss is not covered by the underlying policy.
Endorsements and evidence of coverage
Additional insured endorsements extend liability coverage to others, but only as the endorsement wording specifies - a certificate of insurance is only evidence of coverage and does not amend, extend, or alter the policy.
Trap: an occurrence-based CGL does not cover claims for professional errors, and a BOP cannot be used to insure a bar, auto dealer, or large manufacturing risk.
Worked example: Annual business income exposure is $240,000 with 50% coinsurance ($120,000 required) but the policy carries only $100,000. A covered shutdown costs $60,000 in gross earnings. Recovery = (100,000 ÷ 120,000) × 60,000 = $50,000, less the deductible.
Rule of thumb: for any commercial question, identify the line (property, general liability, auto, workers compensation), then the form, then the limit basis.