Commercial Property Insurance
Forms and structure
The Building and Personal Property Coverage Form is the backbone: Coverage A building, B business personal property, C personal property of others. Coverage extensions add newly acquired property, valuable papers, outdoor property, and personal effects, each with its own sub-limit. Causes-of-loss forms mirror personal lines: basic, broad, and special.
Coinsurance, agreed value, reporting
Commercial property usually carries a coinsurance percentage (80, 90, or 100). Underinsurance triggers a proportional penalty. Agreed value is the alternative and waives the penalty for property whose value is hard to estimate. Reporting forms shift the duty to the insured to report values periodically; underreporting at the time of loss can produce a penalty, and the premium is adjusted at audit.
Time-element coverage
Business income (with extra expense) replaces lost net income plus continuing normal operating expenses during the period of restoration. Extended period of indemnity adds a tail after the property is rebuilt. Extra expense pays to keep operating and does not require a suspension of business.
Other coverages and clauses
Builders risk covers property under construction, including materials and supplies. Equipment breakdown covers mechanical or electrical failure, which property forms exclude. Ordinance or law, flood, and earthquake need endorsements or separate policies. The loss-payable/mortgagee clause protects a lender, which receives notice of cancellation and may pay premium to continue coverage.
Traps
Do not confuse blanket (one limit, multiple locations) with specific insurance. The period of restoration does not include time to comply with building codes unless endorsed. Business income does not cover loss of market or off-premises utility failure unless endorsed.
Worked example
Agreed value $1,000,000, $300,000 loss, $5,000 deductible = $295,000. With 80% coinsurance, only $600,000 carried on a $1,000,000 building, the same loss pays (600,000 / 800,000) x 300,000 minus $5,000 = $220,000.