Commercial Property and Business Insurance Coverages

Vocabulary flashcards covering commercial property insurance, business interruption, leasehold interest, ocean marine, BOP/CPP policies, and business auto policies based on lecture notes.

Declarations Page (Commercial Property)

The summary and invoice sheet of the policy detailing the named insured, property location, limits of insurance, deductibles, coinsurance, and valuation methods.

Special Coverage ($$)

An open perils level of coverage where all causes of loss are covered except those explicitly excluded, with premiums increasing alongside broader protection.

Building Coverage

Insurance for the physical structure listed on the declarations, including completed additions, permanent fixtures, installed machinery and equipment, outdoor fixtures, floor coverages, and appliances used for refrigerating, ventilating, cooking, or dishwashing.

Business Personal Property

Property owned by the business that is located inside or within 100 feet of the building, such as furniture, fixtures, machinery, raw materials, goods in process, and finished goods.

Personal Property of Others

Property belonging to other people that is temporarily in your care, custody, or control while located on or within 100 feet of the premises, such as customer items left for repair.

Coverage Extensions Coinsurance Requirement

The condition that policy coverage extensions are only triggered if the policy carries a coinsurance percentage greater than 80%.

Debris Removal Coverage

An additional coverage paying 25% of the total amount of the direct physical loss plus the deductible, with an extra $25,000 triggered if costs exceed the 25% sublimit or if the loss plus debris removal exceeds total policy limits.

Increased Cost of Construction

An additional coverage paying either $10,000 or 5% of the limit of insurance applicable to that building, whichever is less.

Fire Department Service Charge

An additional coverage providing payment up to a limit of $1,000 for incurred service charges.

Pollutant Clean Up and Removal

An additional coverage under which the maximum amount most insurers will pay is $10,000 for the sum of all covered expenses.

Vacancy Clause (Commercial Property)

A loss condition stating that if a building is vacant for more than 60 consecutive days prior to a loss, the insurer will refuse payment for vandalism, sprinkler leakage, glass breakage, water damage, or theft, and slice 15% off payments for any other type of claim.

Inflation Guard

An optional coverage calculation where: $\text{Amount of increase} = (\text{Base limit}) \times (\text{Annual \%}) \times \frac{\text{Number of days since inception}}{365}$

Business Income Coverage

A core business interruption coverage that replaces the financial lifeblood of a business while operations are suspended, paying for net income and continuing normal operating expenses.

Extra Expenses Coverage

A core business interruption coverage that pays for the extra, necessary costs incurred to keep a business running or get back open faster following a loss that would not have been spent otherwise.

Period of Restoration

The specific time window restricting business interruption payouts; it starts 72 hours after physical damage occurs (kicking in immediately for Extra Expenses) and ends when the property should be repaired and reopened with reasonable speed or when business resumes at a new permanent location.

Civil Authority Coverage

A coverage built into business interruption policies that covers lost business income when a civil authority blocks public access to your street or building.

Extended Business Income

An extension providing extra time (typically 30 days) to cover lost income while business returns to normal levels after repairs are finished and operations reopen.

Tenant's Lease Interest

The financial savings of paying rent that is lower than the current market rate; it represents the net leasehold interest at the time of loss and decreases as the remaining lease term gets shorter.

Bonus Payments (Leasehold Interest)

The unamortized portion of any upfront cash bonus paid to a landlord in order to secure a lease.

Improvements and Betterments

The unamortized value of permanent alterations, upgrades, or fixtures paid for out of pocket by a tenant that cannot legally be taken when leaving.

Prepaid Rent (Leasehold Interest)

Any advance rent paid by the tenant that the landlord refuses to refund after a loss.

Hull Coverage

Ocean marine coverage protecting the vessel itself against perils such as collision and grounding.

Protection and Indemnity (P&I)

Ocean marine liability coverage for damage arising from operating the ship, including bodily injury or crew injury.

General Average

The ocean marine approach for handling cargo losses when cargo is sacrificed or lost in an effort to save the entire voyage.

Particular Average

The ocean marine approach for handling losses when a specific cargo is damaged by a specific peril.

Instrumentalities of Transport

Transportation infrastructure property under inland marine insurance, specifically identifying bridges, tunnels, radio and TV towers, and piers and docks.

Business Owners Policy (BOP)

A package policy designed for small to medium-sized businesses (fewer than 100 employees and under $25 million in revenue) that includes CGL, property, and business income, but excludes workers compensation, professional liability, auto, flood, and earthquake.

Commercial Package Policy (CPP)

A policy structure providing broader coverage for larger companies, combining coverages such as Errors and Omissions, Directors and Officers, Inland marine, Commercial Auto, and Crime.

Any Auto (Symbol 1)

The broadest business auto coverage designation, which covers literally any auto.

Specifically Described Autos (Symbol 7)

A business auto coverage symbol that covers only the specific vehicles explicitly listed and scheduled in Item 3 of the declarations page.

Hired Autos Only (Symbol 8)

A business auto coverage symbol that applies only to vehicles the business leases, hires, rents, or borrows.

Non Owned Autos Only (Symbol 9)

A business auto coverage designation covering employee personal cars driven on company errands or business affairs.

Comprehensive Coverage (Business Auto)

First-party physical damage protection covering vehicle damage from any cause except collision or overturn, including fire, theft, and vandalism.

Collision Coverage (Business Auto)

First-party physical damage insurance that covers damage to the insured vehicle caused by crashing or rolling over.

Premium Audit

A business auto policy condition allowing the insurer to audit business books at the end of the year to adjust final premiums if actual exposure exceeds initial estimates.