Unit 11: Commercial Property Insurance

Flashcards

Commercial Property Insurance

Buildings, business personal property, and personal property of others.

Components of Commercial Property Coverage

Declarations, conditions, one or more coverage forms, causes of loss form, and endorsements.

Building and Personal Property (BPP) Coverage Form

The main form used to insure buildings and business personal property.

Coverage A in BPP

Buildings and structures listed in the declarations.

Coverage B in BPP

Business personal property owned by the insured.

Coverage C in BPP

Personal property of others in the insured's care, custody, or control.

Three Causes of Loss Forms

Basic, Broad, and Special.

Perils Covered Under the Basic Causes of Loss Form

Fire, lightning, explosion, windstorm, smoke, vandalism, and more.

Perils Added Under the Broad Form

Falling objects, weight of ice/snow, water damage from plumbing, and collapse.

Perils Covered Under the Special Form

Open perils unless specifically excluded.

Debris Removal Additional Coverage

Covers costs to remove debris of covered property after a loss.

Preservation of Property Additional Coverage

Covers property removed from premises to protect it from damage.

Pollutant Cleanup and Removal Coverage

Covers cleanup of pollutants released due to a covered cause of loss.

Increased Cost of Construction Coverage

Covers increased costs due to building code changes.

Electronic Data Additional Coverage

Provides limited coverage for restoration of lost data.

Valuation Method for Commercial Property

Replacement cost or Actual Cash Value, depending on the policy.

Coinsurance in Commercial Property

Requires insurance to a percentage of property value, typically 80%.

Underinsuring Under the Coinsurance Clause

A penalty applies to partial losses.

Agreed Value Optional Coverage

Suspends the coinsurance clause if insured agrees to a stated value.

Inflation Guard Optional Coverage

Automatically increases limits over time to keep up with inflation.

Replacement Cost Optional Coverage

Pays full replacement value instead of ACV, without deduction for depreciation.

Standard Limits for Debris Removal

25% of the direct loss plus $10,000 additional limit.

Duties of the Insured After a Property Loss

Notify the insurer, protect property, provide proof of loss, allow inspection.

Business Income Coverage

Covers lost income during the period of restoration after a covered loss.

Extra Expense Coverage

Covers expenses to avoid suspension of operations.

Period of Restoration

Begins 72 hours after loss; ends when property is repaired or replaced.

Leasehold Interest Coverage

Covers the value of a favorable lease lost due to a covered loss.