There are a few coverage sections within commercial property coverage you should be aware of:
- Building Coverage – Buildings, structures, permanently installed fixtures, machinery, and equipment are listed under this coverage
- Business Personal Property – Consists of furniture, fixtures, machinery, and equipment not permanently installed. Inventory and any other personal property owned by and used in your business are also included
- Personal Property of Others – Property that is in your business¿s care, custody, and control but not owned by your business or you personally.
What Is "Coinsurance?"
Insurance policies will require you to fully insure the value of your buildings. If a building is not insured to value, you can be subject to a fine at the time of a loss. This fine is generally referred to as "coinsurance." It is essential to read and be aware of the coinsurance clause of your commercial property policy and to discuss any questions with your broker/agent, or a lawyer.
What Are Covered Causes of Loss?
The policy language, exclusions, and endorsements will determine whether a property loss is covered. Covered causes of loss can be chosen by you in your policy. Causes of loss fall into two categories: specified perils and open perils.
- Specified Perils – Consists of a list of each peril to be insured against, such as fire, explosion, windstorm, or vandalism.
- Open Perils – More costly than specified perils coverage. Covers everything unless specifically excluded in the policy. Earthquakes and floods are generally excluded from this type of coverage.
Is There a Way to Customize Your Insurance Policy?
There are various coverage forms and endorsements that can be used to supplement your policy. These include the following:
- Building Ordinance or Law – Provides coverage for damage caused by a building code or other zoning activity
- Peak Season – An endorsement that provides additional limits on personal property inventory during a designated period of time such as peak shopping season
- Legal Liability – Basic negligence coverage for accidental damage or injury
- Glass – If there is significant glass exposure to cover on your property, a glass form should be added to your policy and should include the number of panes, dimensions, location, and any other significant details – a separate glass deductible may be listed as well
- Time Element – Business interruption, extra expense, and loss of rents and rental value are the most common time element policies
- Builder’s Risk – Added to a policy for a one year minimum period to cover a new building or structure under construction or an existing structure experiencing additions, modifications, or other maintenance
- Improvements – Covers all permanently installed improvements which are permanent even when an occupant leaves the building
- Inflation Guard – Automatically adjusts the limits of insurance to keep up with price increases – this helps to prevent coinsurance penalties
Does My Business Need a Lawyer to Resolve Its Commercial Insurance Matter?
Business insurance policies tend to be very complex and specific. Additionally, state law regulates business insurance and affects exactly what your policy can cover. Having a lawyer go over your business’ policy can help your company understand its coverage. If your business has to go to court, a lawyer will know your state’s laws and give you the best chance of winning your lawsuit.