The Standard Property Policy
The popular Commercial Package Policy (CPP) may not be available because of your building’s size, age, construction or its contents. Fortunately there is an alternative, the Standard Property Policy (SPP).
Besides commercial buildings, the SPP also covers completed building additions, property used for maintaining or servicing the building (such as mowing or painting equipment), permanent fixtures (such as permanent shelving), and machinery. The SPP also covers material meant for construction or repairs to a covered building.
Dealing With Indirect Loss
A business owner wants to protect company assets and one way to achieve this is by handling direct threats to buildings, equipment, office furniture, etc. However there is another area of concern that is critical for survival – addressing indirect threats.
Valuable Papers And Records
Whether a business is a restaurant, a television station, a steel mill, a toy manufacturer or an accounting firm, they have one thing in common; they all have various types of important papers and records.
Covering Business Utility Services
A commercial property insurance policy is reliable enough to handle direct loss to a business’s structures, equipment and related property. However, what happens when weather conditions turn mean and cause indirect damage by knocking out utility services? Property could be harmed by heat-induced transformer breakdowns. This form of power interruption affecting compressors, motors and switches, at a business could result in food spoilage or damage to climate-sensitive property. Equipment damage may also occur due to an accidental, sudden loss of power.
Equipment Breakdown Protection
Equipment Breakdown Coverage policies handle a substantial loss exposure to items such as unfired vessels - Air, steam or water tanks, refrigeration systems, rollers, steam pressers, ironing equipment, steam cookers, generators, chemical processing tanks, motors, switches and controls, compressors, pumps, gears, etc. Breakdown policies are important. They fill a large gap! Commercial property policies typically exclude losses involving machinery or equipment breakdowns. The breakdown form provides the following coverages:
Additionally Insured–Lessor of Leased Equipment
Contractors and subcontractors commonly perform jobs with rented or leased equipment. Such equipment includes use agreements where the rental company requires a "certificate of insurance". Rental companies also commonly require being named as an additional insured to protect their legal liability related to the rented/leased equipment.
Functionally Valuing Older Business Property
Businesses that have been successful for decades are usually ones that also consistently take care of their property. While maximizing the use of every asset, it also raises a coverage issue. Aging equipment may have reached the point where it:
Commercial Output Policy
Many businesses protect themselves by purchasing a standard Commercial Property Policy which handles routine building and business property loss exposures. However, this type of coverage is not as useful to operations that involve the following:
- heavy retail sales activity
- active product transportation
- above average processing/manufacturing, or
- equipment installation and/or repair
For such businesses, there is a coverage alternative, specifically the Commercial Output Policy (COP).
Vacancy Provision
Under a commercial property policy, coverage is significantly different for buildings that are vacant for extended periods. Usually, certain types of coverage are completely eliminated during the vacancy. Insurance companies are interested in protecting ongoing businesses and premiums are based upon active occupancy. Continued, full coverage may be provided, but that is only at the insurance company’s discretion. If a vacant risk is accepted, it usually means paying more premium.
The Commercial Property Policy
No matter the size or type of business, tangible property is a major asset. A national standard for insuring such property is the Insurance Services Office (ISO) Commercial Property Program (CPP). The CPP may be written as a single policy (covering only buildings and property) or as a package that provides property, liability and, other important protection for your business.
The Parts of A CPP
A Commercial Property Policy is flexible because it consists of several basic parts: