Commercial Property and Businessowners Coverage
Commercial property mechanics
Commercial property forms insure building, business personal property, and personal property of others, often at separate limits. Causes-of-loss forms escalate: basic (named perils), broad (more named perils), and special (open peril, subject to exclusions). Business income replaces net income plus continuing expenses during the period of restoration, and extra expense pays costs to keep operating. Note the 72-hour waiting periods for utility service interruption and civil authority losses.
Coinsurance works as it does in homeowners but with larger consequences; alternatives include agreed value (coinsurance waived) and reporting forms (deposit premium plus periodic reports, with a year-end audit). Blanket coverage applies one limit across locations; specific coverage insures each separately. Equipment breakdown, inland marine floaters, builders risk, and crime are usually separate policies or endorsements.
The Businessowners Policy (BOP) bundles property and liability for eligible small businesses - typically offices, retail, service, and apartment risks - with size and occupancy restrictions. The BOP has no coinsurance, includes business income for up to 12 months, and adds liability, medical payments, and limited ordinance-or-law coverage. Larger or hazardous risks need a commercial package policy.
Traps: confusing the business income dollar limit with a time limit; forgetting the vacancy condition (60 days, with reduced loss payment for certain perils); assuming a BOP covers a restaurant with a liquor exposure or a high-rise.
Worked example: 80% coinsurance, value $1,000,000, required $800,000, carried $600,000, loss $200,000. Payment = (600 ÷ 800) × $200,000 = $150,000, less the deductible.