Commercial Property and Liability Insurance
Commercial property and liability tests business-oriented forms: building and personal property coverage, business income, causes of loss, coinsurance, and the CGL. The exam emphasizes how commercial limits and exclusions differ from personal lines.
Commercial property
The BPP form covers building, business personal property, and personal property of others. Causes-of-loss forms are basic, broad, or special. Coinsurance is common; the insured must carry a stated percentage of value or share the loss. Business income coverage pays lost net income and continuing expenses during the period of restoration, often with a 72-hour waiting period for utility service interruptions.
Commercial liability
The CGL provides Coverage A (bodily injury and property damage), B (personal and advertising injury), and C (medical payments). Key limits are each occurrence, general aggregate, products-completed operations aggregate, and damage to premises rented. Additional insured status must be conferred by endorsement, not by certificate. The employer's liability exclusion and workers' compensation exclusion are standard.
Worked example
A retailer carries $600,000 on a building with a $1,000,000 replacement cost and an 80% coinsurance clause. A fire causes $300,000 damage; deductible $10,000. Required insurance is $800,000. Payment = ($600,000 ÷ $800,000) × $300,000 = $225,000, less $10,000 = $215,000. Business income is calculated separately from the period of restoration.
Traps
Do not apply the coinsurance penalty before checking margin clauses; do not treat a certificate as coverage; and do not confuse the general aggregate with the each-occurrence limit.