Commercial Property Coverages
Building and personal property
The commercial property coverage form insures the building, your business personal property (including tenant improvements and betterments and property of others in your care) and personal property of others. Choose a causes-of-loss form: basic, broad or special. Limits may be specific, scheduled, blanket or reporting (deposit premium with periodic reports) - reporting forms suit fluctuating inventory but cannot be used to insure an unstable or unknown value.
Coinsurance and valuation
The commercial coinsurance clause works exactly like the homeowners version: (limit carried ÷ limit required) × loss, where required = coinsurance % × value at time of loss. Alternatives include agreed value (no penalty, suspended if not renewed) and replacement cost. Watch for the vacancy condition - if the building is vacant beyond the stated consecutive days, certain perils are excluded or coverage is reduced.
Business income and extra expense
Business income pays lost net income plus continuing normal operating expenses during the period of restoration; extra expense pays costs to avoid or shorten the shutdown. Traps: business income does not pay fines, penalties or contract penalties; civil authority coverage has its own waiting period (commonly 72 hours); extended period of indemnity extends recovery after the building is repaired. Business income is coinsured on projected annual income, not on the building limit.
Specialty lines
Inland marine covers property in transit and property of others, following the nationwide marine definition - builders risk, motor truck cargo, bailee and valuable papers. Crime is first-party (employee dishonesty, forgery, computer fraud, money and securities) or third-party (robbery, burglary outside premises). Equipment breakdown (boiler and machinery) covers loss from the malfunction of covered objects, including expediting expense and spoilage.
Rule of thumb: coinsurance applies to the value of what was lost; business income coinsurance applies to projected 12-month income.