Commercial Property Insurance
Forms and coverage parts
The Building and Personal Property Coverage Form (CP 00 10) covers the building, business personal property, and personal property of others at a described location. Causes of Loss forms attach separately: Basic (broad named perils plus riot and aircraft), Broad (adds water damage, glass breakage, falling objects, weight of snow or ice), and Special (open peril). The commercial condo unit-owners form and builders risk cover specialized exposures.
Limits and features
Common options include agreed value (suspends coinsurance), blanket limits, inflation guard, replacement cost endorsement, and extended period of indemnity. Ordinance or law pays the extra cost to rebuild to current code, including demolition.
Time-element coverage
Business income pays lost net income and continuing expenses during the period of restoration following a covered physical loss; extra expense pays costs to keep operating and can respond even when the business is not suspended. Civil authority coverage typically carries a 72-hour waiting period.
Traps
Expecting business income to pay for lost customers without physical damage; forgetting that even the Special form excludes pollution, utility services (unless endorsed), wear and tear, and employee dishonesty; treating coinsurance as the maximum payable.
Worked example
A $1,200,000 building insured for $700,000 with 80% coinsurance requires $960,000 of insurance. A $240,000 loss pays ($700,000 ÷ $960,000) × $240,000 = $175,000, less the deductible. Raising the limit to $960,000 would have paid the full $240,000.