YOU ASK:

What are the characteristics of commercial property insurance?

WE ANSWER:

Commercial property insurance is typically offered as part of the Commercial Package policy (CPP). The Commercial property insurance coverage is specifically designed to provide protection for any buildings or business personal property, used for commercial purposes.

Components of the Commercial Property Coverage

Commercial property insurance is very flexible in that you can combine different coverage options that will best suit your particular commercial insurance needs. Here are the obligatory parts that every commercial property coverage part is constituted of:

  • Commercial property declarations form contains basic personal information such as name and address of the policyholder, and also data about the property to be insured.
  • Commercial property conditions form outlines the terms and conditions applicable to the Commercial property coverage. These include the Control of Property condition, the Policy Period condition, the Transfer of Rights condition, the Concealment or Fraud condition, the Liberalization clause, etc.
  • Commercial property coverage forms describe the nature of the specific coverage, such as what is and what is not covered, plus any other special considerations which may apply. Every policyholder can choose one or more commercial property coverage forms to add to their Commercial property policy. The most common coverage forms that an insured can choose from are the following:
    • Building and Personal Property coverage - protects the commercial buildings and business personal property owned by the insured, plus any indoor and outdoor fixtures, appliances, machinery and equipment.
    • Builders Risk coverage can also be included in Commercial property insurance to protect any buildings and structures which are in the process of construction.
    • The Condominium Association form covers the buildings and business personal property owned by the condo association against any damage or loss.
    • The Condominium Commercial Unit Owners coverage is different from the above-mentioned coverage since it provides protection to commercial condo owners, rather than condo associations.
    • Business Income coverage form protects the insured against loss of business income caused by any physical damage to the covered commercial property. Policyholders can choose between two forms: Business Income with Extra Expense and Business Income without Extra Expense.
  • Causes-of Loss forms specify the causes of loss that are insured against, including any exclusion that may apply. Policyholders can choose between three forms:
    • The Basic Form names certain perils that are covered under the Commercial property insurance policy. The covered perils, usually 11, include fire, smoke, lightning, explosion, vandalism, sprinkler leakage, riot, aircraft, vehicles, windstorm and hail, volcanic eruption, collapse of sinkhole.
    • The Broad Form provides coverage for all the basic form perils, plus water damage, weight of snow, ice or sleet, and falling objects.
    • The Special Form is the one best recommended by insurance specialists, but also the most expensive one. It covers any physical damage to the insured property, unless specifically excluded.
  • Endorsements are also an important part of a Commercial property insurance policy. For an extra premium you can get the Spoilage endorsement or the Ordinance or Law endorsement.
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