Commercial Property and Business Income Coverage
Domain 4 tests commercial property forms and time-element coverage. The exam expects you to separate building damage from business income loss and to apply coinsurance and the period of restoration correctly.
Commercial property
- CP 00 10 covers building and business personal property.
- Causes of loss forms: basic, broad, special (open peril).
- Coinsurance, agreed value, blanket limits, and reporting forms change how limits apply.
- Business income covers lost net profit plus continuing normal operating expenses during the period of restoration.
- Extra expense pays costs to continue operations or minimize shutdown, not lost profit.
- Civil authority, dependent property, and extended business income extensions have specific triggers and time limits.
Worked example
A fire closes a restaurant for four months. Monthly net profit is $15,000 and continuing expenses are $5,000, so monthly business income loss is $20,000. Four months = $80,000. If the insured saves $3,000 per month in variable payroll, the loss is $68,000 before deductible. Extra expense for a temporary kitchen is claimed separately, subject to its own limit-not added to business income automatically.
Traps
The period of restoration ends when the property should have been repaired with reasonable speed, not when the insured actually reopens. A 72-hour waiting period may apply to certain utility service interruptions. Do not treat extra expense as business income, and do not apply coinsurance to business income unless the form says so.