Guide Commercial Property Coverage Guide (Commercial Lines)

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Commercial Property Coverage Form: These forms can be any of several commercial property forms containing an insuring agreement and related provisions. A Builders Risk Coverage Form may be added to provide broader coverage for buildings under construction. Each commercial property coverage form contains the following elements:. Cause of Loss Form: This is a required component of the commercial property coverage part that specifies the perils causes of loss covered.

The three forms available, basic, broad, and special, allow the insured to select, or the underwriter to offer, a range of covered perils.

Commercial Insurance Concepts Other Commercial Property Coverage Options

The Basic Form covers the least number of perils and the Special Form covers all perils that are not excluded. Commercial Property Conditions: This is a required component of the commercial property coverage part that contains conditions applicable to all commercial property coverage forms. They are printed as a separate form and apply to all coverage forms included in a commercial property coverage part; unless, a coverage form contains a condition to the contrary.

The Commercial Property Conditions do not require reiteration in each coverage form. This is not a complete list of endorsements available. A few of the most common endorsements are:. However, private insurers offer flood insurance by endorsement for some properties. In some cases, the private insurer may provide only excess flood insurance. Earthquake and Volcanic Eruption Coverage: Both endorsements extend commercial property coverage to include earthquake and volcanic eruption. Coverage for Unattached Signs: Most commercial property policies do not cover or limit coverage on signs not attached to the insured structure.

Coverage may be added by endorsement or may be purchased on a separate Inland Marine insurance contract. The Signs Coverage Form normally covers neon, fluorescent, automatic, or mechanical signs. Utility Services Endorsement: Endorsements are available to provide coverage some very limited for losses due to the interruption of power, even away from the insured premises.

In most cases, the cause of the power interruption must be covered by the policy and there is normally a waiting period. Newly Acquired Locations: Extends coverage, at the option of the insured, to property at premises newly acquired during the policy period, if the required coinsurance is shown in the declarations.

This coverage is normally limited, is an additional amount of insurance above the limit shown on the declarations page, and is not subject to the coinsurance provision. Extra Expenses Insuring Agreement: Covers Expenses, in addition to ordinary expenses, that an organization incurs to mitigate the effects of a business interruption.

Business income insurance can be purchased with or without an extra expense insuring agreement. Like many other forms of commercial insurance, additional coverage is available with the Business Income Insuring Agreement:. Expenses to Reduce Loss: coverage for necessary expenses incurred by the named insured to reduce business income loss, the expenses are covered only to the extent they actually reduce the business income loss.

The maximum period of coverage can normally be increased by endorsement. Alterations and New Buildings: In most cases, business income losses result from the interruption of operations that are already underway. However, the form also provides coverage for the loss of income resulting from a delay in starting operations if the delay results from damage at the described premises by a covered cause of loss to any of the following:.

Interruption of Computer Operations: This endorsement provides a very limited amount of coverage for loss of business income or extra expense when business operations are suspended due to an interruption of computer operations resulting from the destruction or corruption of electronic data caused by a covered cause of loss.

Utility Services: This endorsement extends the policy to cover loss of earnings resulting from off-premises interruptions of utilities and communications services. Maximum Period of Indemnity: An option that deletes the coinsurance clause while limiting loss payment to the lesser of 1 the amount of loss sustained during the days following the beginning of the period of restoration or 2 the policy limit. Business Income Agreed Value: An option that suspends the coinsurance clause as long as the insured carries an amount of business income insurance that is equal to the value agreed on by the policyholder and the insurer.

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Extended Period of Indemnity: An option that extends the duration of Extended Business Income coverage to include business income losses that continue for more than 30 days after the property is restored. Some provide broader coverage that others. Ordinance of Law: Increased Period of Restoration: An endorsement that covers business income loss during the additional time required to comply with building ordinances or laws. They can range from very basic to broad. If a lower amount is selected, the rate will be more. The Deductible Amounts Selected: Policyholders willing to self insure some of the smaller losses by choosing a higher deductible, receive a lower premium.

The Optional Coverage Selected: The more optional coverage selected, the higher the premium. The Construction of the Building: Some construction types are more fire resistive than others. In other words, a masonry noncombustible building would be cheaper to insure than a frame building. The Occupancy of the Building: The Occupancy refers to the type of activity conducted inside the building.

These are among the coverages you may choose to add to your BOP with the payment of an additional premium:. Accounts Receivable — As part of your risk management plan, to the extent feasible, you should keep backup copies of your accounts receivable in a separate location.

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For some businesses, however, it may be in the nature of the business that accounts receivable records are vulnerable to property loss. If needed, you may extend coverage under your BOP. The accounts receivable extension obligates the insurer to pay amounts due from your customers that you are unable to collect. Adding Additional Insureds — In many situations, a business is required by contract or law to add coverage to its BOP for other parties who usually have property at risk that is in the care of the insured. Such parties typically include managers or lessors of a rented or leased premises and mortgage holders.

Computer Fraud and Funds Transfer Fraud — Your business may run the risk that someone will cause an unauthorized transfer of funds from your bank account, whether through electronic or written instructions. Burglary and Robbery — If your business has high-value goods that are attractive to criminals, loss control will go a long way to reducing the threat of theft or burglary. Optional burglary and robbery coverage, however, may be a wise part of the risk management plan. Burglary means taking of property from inside the described premises by a person unlawfully accessing the premises as evidenced by marks of forcible entry or exit.

Robbery means unlawfully taking property from a person who has the property in his or her care and custody. The insurer covers the property on the business premises, while it is at a bank or savings institution, when it is in the custody of any employee or businessowner in his or her living quarters or while it is in transit between any of these places.

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If additional coverage for such property is needed, it can be purchased separately. Earthquake and Volcano Coverage — You may add this endorsement to your BOP to protect your business property from losses due to these perils. A different method of calculating deductibles, as a percentage of the coverage rather than as a flat dollar amount, may apply to this coverage.

Electronic Commerce — If your business relies on e-commerce—that is, business activity conducted over the Internet—you may want to add the Endorsement for Electronic Commerce to your BOP. The insurer covers your lost income and extra expenses in the event your ability to conduct e-commerce is slowed down or stopped due to the causes of loss covered by the BOP.

The endorsement also provides coverage for the cost of reconstructing electronic data if it is lost due to a covered cause of loss or if it is stolen by someone other than an employee, volunteer worker or contractor. Employee Dishonesty — Burglary and robbery insurance does not cover losses caused by employees or authorized representatives who commit dishonest acts.

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Employee Dishonesty Insurance provides this coverage. Most experts agree that businessowners tend to greatly underestimate their vulnerability to theft by their own employees. The ACFE says smaller companies, particularly those with fewer than employees, are most susceptible to these losses. Virtually any business with employees is at risk of losses caused by employee dishonesty. As with other causes of loss, effective loss control measures can go a long way toward reducing this loss exposure. Employee Dishonesty Insurance covers losses caused by temporary or leased workers as well as employees.

Many employee fraud schemes go on for years before they are detected. If you have added this coverage to your BOP, your insurer will pay for a covered loss or damage sustained during the policy period and discovered no later than one year from the end of the policy period. Food Contamination — If you are involved in a food business, there is always some risk that food you sell could cause food poisoning or transmit a communicable disease from an employee of your business. This risk can, of course, be reduced and controlled by following a good risk management plan, but it can never be totally eliminated.

The Endorsement for Food Contamination provides coverage for most of the expenses you would incur if food you sold caused food poisoning or disease. Coverage includes the cost of additional advertising to restore your reputation. Mechanical Breakdown — This option provides coverage for mechanical or electrical breakdown to your boilers, pressure vessels, refrigeration systems, piping, and mechanical and electrical machines or apparatus that generate, transmit or simply use mechanical or electrical power.

For many businesses that depend on such equipment, a breakdown means the inability to operate and loss of income. Mechanical breakdown coverage might be a wise investment to cover this type of risk. Money and Securities — You have the option to add coverage for money and securities to your policy. More Coverage for Valuable Papers and Records — As part of your loss control plan, to the extent feasible, you should keep backup copies of records in a separate location and valuable papers in a fire proof safe or a bank safety deposit box.

For some businesses, however, it may be in the nature of the business that certain valuable papers and records are vulnerable to property loss.

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Should you lose valuable papers and records as the result of a covered cause of loss, your basic BOP will pay the expense, up to your policy limit, to reconstruct the records. If needed, you may add more coverage to your BOP for the cost to reconstruct valuable papers and records, including those that exist on electronic media. The covered property includes documents, manuscripts and records including abstracts, books, deeds, drawings, films, maps or mortgages. It also includes electronic data processing, recording or storage media; data stored on such media; and programming records used for electronic data processing or electronically controlled equipment.

Newly Acquired or Constructed Property — If your policy covers buildings, you may extend the coverage to newly acquired buildings intended for similar use as the insured building or as a warehouse. This coverage also applies to new buildings while being constructed on the premises described in your policy. Any newly acquired business personal property is also covered. This is temporary coverage that provides time to report the new property to your insurer. The coverage expires 30 days after you acquire the property or begin construction. Debris removal of these items is included.

Outdoor Signs — For some businessowners, the only outdoor asset not covered by their basic BOP that they wish to insure is outdoor signs not connected to their building. The BOP provides an option to add just this coverage. Personal Effects — You may extend your coverage to apply to personal effects owned by officers, managers and anyone who works at the company. It does not apply to loss or damage by theft. Spoilage Coverage — If you are in a business that involves supplies, inventory or other materials that must be maintained under controlled temperature or humidity conditions for preservation and that are susceptible to loss or damage if the controlled temperature or humidity conditions change, you will probably want to add the Endorsement for Spoilage Coverage to your BOP.

The covered causes of loss are mechanical breakdown of your refrigeration or humidity control system and power outages due to conditions beyond your control. The insurer will cover the cost of property that is spoiled by these causes. A good place to start is determining the value of your building.


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If your coverage is based on replacement value, your premiums may rise by a percentage each year to keep pace with the rising costs of new construction, but your out-of-pocket cost in case of emergency would likely be lower. Businesses in certain industries, for example, may have expensive manufacturing equipment they must include, while others focus on assessing the value of their in-stock inventory.

Work closely with your representative to determine the appropriate value of building contents, because an accurate assessment can help get your business up and running much sooner in the event of a covered loss. Do you own or rent the location of your business? If you rent your space, your situation likely demands different options. These details are usually determined by your existing contract, so you should look closely at your lease or purchase agreement to find the gaps in coverage.

After that, work with your insurance representative to customize your policy to minimize your loss potential. Successful providers can customize a range of policy options, making it easier for your business to get the coverage you need. As you research potential providers, keep the following factors in mind:.


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Having the appropriate business property insurance coverage in place is crucial to getting your business up and running in the wake of a loss. Risk management strategies and tips that can help you make your business safer—potentially saving lives, time, and money. Is your business prepared for the future? Learn about different coverages to help protect you, your business, and your employees. Choosing the right property insurance provider for your business is key. Our business personal property insurance will help protect you from financial loss if your personal property is damaged at your business by a covered loss.

Protection against liability claims for your business. Coverage options include product liability, cyber liability, and errors and omissions. Welcome to your account hub. Choose from the systems below to get started! Please enter your email address below and we'll send you a password reset email. Please select the option below that best represents your role. Thank you for creating your Sentry login account. We just need a few more things to connect your retirement information to your account. To create your account, please click the link in the email. After you create your account, we'll only need a few more pieces of information from you - including your contract ID number - to complete the registration process.

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