Commercial Insurance Claims

When a commercial property loss occurs, a business owner’s immediate goal is to do whatever necessary to cut losses and resume operations ASAP. But settling a denied, delayed or underpaid commercial property insurance claim is a complex business transaction, and business owners should treat it as such, using the diligence and professional assistance typically used when negotiating a critical business contract.

Accepting an insurance company adjuster’s opinions or an insurance company’s offer of settlement in haste and without independently investigating the damages and reviewing all insurance policies for available coverages can easily lead to a settlement that is far less than the coverage for which the business has been paying premiums for years.

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The commercial package policy (CPP) program was started by the Insurance Services Office (ISO) in 1986. Every policy includes three standard elements: the cover page, common policy conditions, and common declarations. These pages make the insurance unique for a given policyholder by identifying that policyholder’s specific exposures. The information in the declarations must be accurate for the desired protection to exist.

Typical commercial property policies can cover:

  • Property damage, including the buildings, fixtures, machines, furnishings, raw materials, and inventory
  • Consequential Property Coverage: Business Income Coverage (BIC)
  • In addition to the cost of repairing and/or replacing damaged or lost property, a business is likely to experience some negative consequences of being unable to use the damaged or lost property. Therefore, the following types of coverages are offered:
    • Business interruption, which covers normal operating expenses, i.e., those costs associated with the activity of the business, not the materials that may be consumed by the business.
    • Business’s profit and continuing operating expenses, including payroll, for a specific time period.
    • In addition to losing sales, a business may need to incur various expenses following property damage in order to minimize further loss of sales. These extra expenses are also covered by the BIC.

Key Takeaways

  • The commercial package policy (CPP) is a modular business insurance option that bundles coverages such as commercial property, commercial general liability, commercial inland marine, professional liability, and more, into a single policy.
  • The CPP contains the standard elements: cover page, common policy conditions, and common declarations.
  • Common business property exposures are insured through the commercial property policy of the CPP.
  • Property declarations and conditions of the commercial property policy form identify the covered location, property values and limits, premiums, deductibles, and other items.
  • The commercial property policy’s building and personal property (BPP) form provides coverage for direct physical loss to buildings and contents and additional or extended coverages, per the insured’s valuation provision up to the limits of insurance and subject to listed exclusions.
  • Three causes of loss options are available in the BPP: basic (eleven named perils), broad (fifteen named perils), and special (open perils), all subject to exclusions.
  • The commercial property policy provides coverage of net income losses as a result of being unable to use damaged or lost property through the business income coverage (BIC) form.
  • BIC protects against business interruption and extra expense losses.
  • The BIC offers the same three cause of loss options as the BPP.
  • Both the BPP and the BIC are subject to coinsurance provisions; this can be modified in the BIC through use of the monthly limit of indemnity, maximum period of indemnity, and payroll endorsements.

Know which coverage(s) you purchased, and claim the benefits you are owed.

Contact our firm for a free consultation about your case.