Businesses that are covered by a commercial property insurance policy can expect to see protection for buildings and personal property they own within the building. Many policies drafted by insurers are based on standard ISO property policies that describe what is protected and what is excluded in a policy. It should be a standard operating procedure for businesses to research their policies thoroughly to understand what they need to find additional coverage in order to limit risks and high costs.
Here’s a look at what’s generally covered in a commercial property policy and what is excluded.
Property policies cover two categories of property: buildings and business personal property, also known as BPP. If a business owns a building in which they operate their daily business, then their policy should cover both the building and the BPP it contains. If a business rents out or leases a building, then their policy will usually cover only their BPP.
Building coverage usually includes machines and equipment that are installed permanently and air conditioning equipment. Fixtures, such as property that is permanently attached to the building, are usually covered under a commercial property insurance policy as well. Floor coverings, fire extinguishers, and appliances are also considered building property.
Business personal property consists of property that a business owns that does not qualify as building property and is not otherwise excluded. This includes office furniture, machines and equipment, raw materials, and finished goods. Betterments that a business makes to a property that is leased are covered if they are paid for and cannot be removed legally.
While most commercial property insurance programs cover a wide array of items, they should not be considered blanket programs for everything under one roof. A commercial property insurance excludes a number of things that businesses should be made aware of in order to avoid confusion and high losses.
These exclusions include money and securities, food stamps, animals in their stock, vehicles and aircraft, land, piers, docks, crops and grain, the cost of excavations, and grading or backfiling. Many policies also exclude building foundations and paved surfaces, such as walkways and roads.
When it comes to electronic data, such as personal and business information stored on a business’s hard drive and network, exclusions to commercial property insurance apply. This means that the cost to restore valuable information isn’t covered by commercial property insurance.
Coverage extensions stand for coverage that is already provided by the policy but that is extended in another way. For example, most commercial property insurance policies extend building and personal property coverages to include newly acquired pieces of property. A building’s coverage is extended to include new buildings constructed at an existing location as well as buildings that are newly acquired at a different location.
About The Hilb Group
Deciding what coverage you need and what limits and deductibles make the most sense can be tricky. Founded in 2009, the Hilb Group has been helping clients to make sense of their options and make the smartest choices for their circumstances. Whether you need Warehouse Insurance or any other type of business or personal coverage, we encourage you to contact our friendly, experienced, and capable team today. Call us at (800) 776-3078 for a consultation.