Commercial property policies have the purpose of covering business-owned buildings and property. Policy forms may be created by the Insurance Services Office (ISO), or by the insurers themselves. Typically, the type of form used by an insurer is based on the basic ISO property policy. Therefore, the format among most property policies remains the same.
The typical format of a property policy is explained below:
Usually, the first part of a property policy is labeled “Coverage”. This section explains the terms “covered property” and “excluded property”, as well as “additional coverages” and “coverage extensions”.
Two principal categories of property are covered, which are Buildings (also referred to as real property) and Business Personal Property (BPP). Depending on an individual’s circumstances, both real property and BPP should be covered by the policy. For example, if an individual is the owner of the building that their company operates in, then the policy should include both categories of property.
Building/Real Property– The coverage for building property typically includes permanently installed machines and equipment. Items that would fall under the category of real property included boilers, air conditioning equipment, and built-in fixtures, like bookcases or cabinets. Kitchen appliances and outdoor furniture are also usually covered by building property.
Business Personal Property (BPP)– BPP includes property that is not considered to be permanently attached to the building. Items covered by BPP include office furniture, unattached machines and equipment, and raw materials.
Types of Additional Coverages are normally included in commercial property policies. Property that did not qualify as real property or BPP would be covered under Additional Coverages. Examples of additional coverages included in property policies are Debris Removal, Pollutant Cleanup, and Electronic Data.
“Coverage Extension” is an extension of real property and/or BPP, which are the two categories of coverage that are already included in a property policy. For instance, Newly Acquired Property is usually an extension to Building and BPP coverages. Coverage extensions included in most policies are the minimum developed by the ISO form. Extensions derived from the ISO include but are not limited to Personal Effects and Property of Others, Valuable Papers and Records, and Property Off-premises.
To receive the coverage you need for your business, consult with Brazelton Insurance Group today.