Business and property owners that want to insure only the building and its contents can look to the Commercial Property Insurance policy for coverage. This policy pays to repair or replace the building and its subject to the perils prescribed in the policy. Although it is considered to be a monoline policy, Commercial Property Insurance provides more coverage than just building and contents.
Building Coverage
The policy provides building coverage based on replacement cost or actual cash value, depending on the type of policy selected, less the deductible. If you insure based on replacement cost of the building, you are assured of having the funds needed to build a new building in the event of a total loss. By selecting “actual cash value,” you would receive payment for a new building minus the applicable depreciation. In either case, the building must be insured for at least 80 to 100% of the replacement cost.
Business Personal Property
The Business Personal Property (BPP) coverage provides protection for your contents in the building that includes equipment, furniture, office equipment, supplies and inventory. With most policies, this coverage will extend to BPP that is off-premises so a business laptop used by an employee is covered while the employee is traveling.
Business Interruption Coverage
The typical commercial property policy will include or allow the endorsement of Business Interruption Coverage. This coverage is vital for most businesses because it provides for reimbursement of expenses to temporarily relocate your business in the event of a claim caused by a covered peril. The reimbursement is normally paid on a monthly basis until the company can move back into the damaged building and assume normal operations.
Additional Coverage
As with most other insurance policies, the commercial property insurance policy can be endorsed to cover additional risks to the property.
• Undamaged Stock Protection – This additional coverage provides reimbursement for the value of items that cannot be sold due to damage that has resulted to related goods.
• Data Protection – This additional coverage provides protection in the event of data loss through a computer breach or viruses.
• Computer Protection – Provides coverage in the event that computers are damaged as a result of viruses.
• Intangible Coverage – This coverage provided reimbursement for financial loss due to copyright and trademark infringement.
• Off Premise Protection – Provides protection for covered business assets that are in other locations such as trade shows and exhibits or other remote locations.
Underwriting Considerations
When developing the proper rate to charge, the underwriters will take into consideration four major criteria; construction, occupancy, protection and exposure:
• Distance to closest fire department and fire hydrant
• Construction – wood frame, masonry, joisted masonry and fire resistant
• Roof material – asphalt shingles, metal, slate, tile or tar, and gravel
• Automated sprinkler system – whether 100% or less coverage and certification
• Local or monitored fire and burglar alarm system
• Plumbing – PVC, copper or steel
• Fire extinguishers – number of available, certified and maintained
• Number of exits
• Number of stories
Business and property owners are encouraged always to seek the advice of an experienced agent or broker when considering insurance for their property and contents. There are many carriers offering many different coverage selections, and your agent will help you navigate the selections to develop the best coverage for your individual needs.
