Chapter 9: Commercial Package Policy & Commercial Property Coverage

Inflation Guard

The limit of insurance for property subject to this additional coverage automatically increases by the annual percentage shown in the Declarations

This percentage of increase is applied to the policy at the rate of 1/365 of each year

Interline Endorsements

Used to coordinate coverage contained in one coverage part with the other coverage parts to prevent duplication

Control of Property

Coverage not affected by any act or neglect of any person who is not under the control or direction of the named insured

A breach of any condition will only affect coverage at the location(s) where the breach occurred

Spoilage Coverage

A commercial property endorsement that provides coverage for perishable stock owned by the insured of in their care, custody, or control at the insured premises

Two covered causes of loss:

- Breakdown or contamination

- Power outage

Electronic Data

Includes information, facts, or computer programs stores as or on computer software or stored on disks, drives, or data processing devices

Additional coverage pays for cost to replace or restore information that has been destroyed or corrupted by a covered cause, up to $2,500 in any one policy year

Extra Expenses

The necessary expenses incurred by the insured during the period of restoration that would not have been incurred had the covered loss not occurred

The period of restoration begins immediately

Insurance Under Two or More Coverages

If a loss could be covered under multiple sections or coverages, the insurer will not pay more than the actual amount of the loss or damage

Concealment, Misrepresentation, or Fraud

Insurer has the right to void the policy if any insured intentionally conceals or misrepresents a material fact concerning the coverage part, the covered property, or a property claim

Common Policy Declarations Page

Shows the Who, What, When, Where, and How Much that applies to the insurance provided by the policy

It defines each of the coverage parts included on the policy

Common Policy Conditions

Contains the legal obligations and duties of the insured and insurer

- Cancellation

- Changes

- Examination of Your Books and Records

- Inspections and Surveys

- Premiums

- Transfer of Your Rights and Duties Under This Policy (Assignment)

Commercial Package Policy

Allows businesses to customize property and casualty coverage for their particular risks

Businesses may create a package policy by choosing one or more coverage parts

Causes of Loss Forms

Three Causes of Loss Forms:

- Basic

- Broad

- Special

Business Income Coverage Forms

Coverage for lost income provided during the period of restoration, which begins 72 hours after the time of loss, and ends on the earlier of the date when the property should be repaired with reasonable speed, and the date when business is resumed at a new, permanent location

Business Income

The net income (profit or loss before income taxes) that would have been earned had the covered loss not occurred, plus normal, ongoing operating expenses, including payroll

Builders Risk Coverage Form

Provides property coverage for buildings or structures under construction, including foundations, fixtures and machinery, equipment used to service the building, building materials and supplies used for construction and owned by the insured, and temporary structures such as scaffolding

Optional Coverage

- Agreed Value

- Inflation Guard

- Replacement Cost

- Extension of Replacement Cost to Personal Property of Others

Policy Period, Coverage Territory

Commercial property coverage parts cover loss or damage that take place during the policy period and within the coverage territory, the United States, its territories and possessions, Puerto Rico, and Canada

Other Insurance

If another insurance policy applies to the same loss, the commercial property coverage part will pay its share of the loss on a pro rata basis

No Benefit to Bailee

Insurance must benefit the insured

It should not benefit any other person or organization

Legal Action Against Us

All policy terms and conditions must be met before legal action may be brought against the insurer

Legal action must be brought within 2 years of the data of loss

Mortgage Holder

Policy will pay to each mortgage holder shown in the Declarations its share of a covered loss or damage, in order of precedence, as its interests may appear

Vacancy

If the building has been vacant for more than 60 consecutive days, the policy will not pay for any loss or damage resulting from vandalism, sprinkler leakage, building glass breakage, water damage, or theft