Commercial Property and Businessowners Coverage
Forms to know
The Businessowners Policy (BOP) bundles property and general liability for eligible small and medium businesses: offices, retail, service, apartments, and similar low-hazard risks, within turnover and building-size limits. BOP property is written on a special (open peril) basis with no coinsurance, includes business income for 12 months, and adds liability. Ineligible risks include auto dealers and repair, most manufacturing, high-hazard operations, and large buildings.
The Commercial Property Coverage Form with Causes of Loss forms (basic, broad, special) serves larger or unusual risks. Coverage parts: building, business personal property, personal property of others, business income (net income plus continuing expenses), and extra expense.
Important features
Coinsurance, agreed value, blanket versus specific limits, reporting forms, and replacement cost valuation appear here. Business income has a waiting period (often 72 hours) and an optional extended period of indemnity. Additional coverages include debris removal, preservation of property, and pollutant cleanup; endorsements add spoilage, equipment breakdown, and ordinance or law.
Traps
BOP has no coinsurance - do not apply the penalty. Business income pays lost profit and continuing expense, not the value of damaged stock. Vacancy and unoccupancy have different meanings and different consequences.
Worked example: A BOP insures a shop for $500,000 and a fire causes $80,000 of damage. Because BOP property is not coinsured, payment is $80,000 less the deductible.