Commercial property coverages and commercial package policies
Commercial property and packages
Commercial property forms cover buildings, business personal property, and sometimes personal property of others. Causes of loss forms range from basic to broad to special. Business income and extra expense replace lost net income and continuing expenses during the period of restoration. Extra expense helps avoid or shorten downtime. Blanket limits apply across locations; specific limits apply separately. Agreed value can suspend coinsurance. Commercial package policies combine property with liability and often add crime, inland marine, equipment breakdown, or builders risk.
Traps
Coinsurance penalties are common exam material. Vacancy, unoccupancy, spoilage, electrical arcing, and ordinance or law provisions can surprise candidates. Business income is not the same as extra expense, and both depend on a covered cause of loss. Check whether the policy is reporting or nonreporting. A certificate of insurance is evidence of coverage, not a policy.
Worked example
A business has a $1,000,000 building limit, $800,000 value, and an 80% coinsurance clause. Required insurance is $640,000, so the limit satisfies the clause. A $200,000 covered loss is paid at the limit less any deductible, subject to policy terms. If the limit were $480,000, the payment fraction would be 480,000 / 640,000. Rule of thumb: compare the limit with required insurance first, then apply the deductible.