Commercial Property Insurance

Commercial Property Insurance

If you own a commercial property, it is a good idea to protect it with property insurance. Coverage can be written on a named perils basis or an open perils basis 

  • Named Perils – provides insurance for the causes of loss or perils specifically listed in the policy. If a peril is not “named” in the policy, no coverage applies. Named peril policies may contain up to 1 named perils. Additional perils may be covered by endorsement if the carrier offers it. 
  • Open Perils – this type of policy provides coverage for all causes of loss that aren’t not specifically excluded under the policy. Typical exclusions are flood and earthquake damage. 

Loss Valuation 

The carrier will pay for losses to property based on the valuation method stated in the policy or chosen by the insured. Typically valuation is either valued at the actual cash value of the replacement cost but other valuation methods do exist.

  • Actual Cash Value (ACV) – The cost to repair or replace property at its replacement value, minus depreciation.
  • Replacement Value – The cost to replace property with property of like kind and quality, at current pricing, without a deduction for depreciation. 
  • Other valuation methods may include: Agreed Value, Stated Value, Valued Policy, Functional Replacement Value, and Market Value 

How is Property Insurance Written? 

The property insurance can cover multiple buildings or just one depending on your needs and property. A Specific Limit insures a single building or property for a single limit of insurance. A Scheduled Limit insures one or more buildings or property on a single policy with specific limits applying to each piece of property or building. Lastly, the policy can be written on a Blanket Basis insuring property located at more than one location, more than one type of property at the same location, or both. 

Typical Property Exclusions

Although exclusions vary from carrier to carrier, typical exclusions you will see on a Commercial Property Policy include but are not limited to: 

  • Ordinance or Law
  • Earthquake or Earth Movement 
  • War, Nuclear Hazard, and Military Action
  • Water damage, Flood, Sewer Backup
  • Utility failure that originates off-premises
  • Neglect of the insured to protect covered property from further loss 
  • Intentional loss 
  • Governmental Action
  • Fungus, Wet Rot, Dry Rot, and Mold