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| Common Commercial Property Coverages |
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Commercial Coverage
Commercial property policies in
Michigan generally fall into one of three categories:
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- Basic form policies typically cover common risks or perils, such as damage caused by fire, lightning, vehicles, aircraft, or civil commotion. Most basic form policies also cover damage from windstorms, except in counties on the
Michigan coast, where businesses will likely need to purchase a separate policy for windstorm protection.
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- Broad form policies typically provide basic form coverage plus coverage for additional perils, such as water damage, structural collapse, sprinkler leakage, and losses resulting from ice, sleet, or weight of snow.
- Special form policies cover against all types of losses except those specifically excluded by the policy. Common special form exclusions include losses resulting from flood, earth movement, war, terrorism, nuclear disaster, wear and tear, and insects and vermin.
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Additional Coverage
Many business owners buy additional coverage. Some are available as separate policies, and others are available as endorsements, or "riders," that enhance or amend a policy’s base coverage. Generally, adding endorsements to a policy will increase your premium. Ask your agent about these additional coverage:
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- Liability insurance. Protects against the cost of lawsuits and possible court judgments.
- Business interruption coverage. Pays for actual or projected income lost when a covered peril prevents normal business operations. Coverage forms can be added to a commercial property policy that provide only business income coverage, only extra expense coverage, or a combination of both in the same form.
- Newly acquired or constructed buildings. Most commercial property policies provide a specific benefit for newly acquired property, usually for 30 days. This allows for any newly obtained property to be insured before it is added to the existing policy. Generally, a commercial property policy insures only the buildings specifically named in the policy. The newly acquired property coverage extension stipulates an amount of time during which the insurance company must be notified of the acquisition, after which the coverage will not apply.
- Boiler and machinery coverage. Boilers, air conditioning units, compressors, steam cookers, and electric water heaters are examples of machinery typically covered by this endorsement. Coverage generally extends to specifically listed machinery and any subsequent losses that result, such as when a boiler explosion or water heater leak causes damage to other property. This coverage may also often be purchased as a separate stand-alone policy.
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- Extra expense coverage. Pays any added costs a business may incur resulting from the need to expedite the return to operations after a covered loss.
- Building occupied by the insured. Covers a building that is regularly used by the insured but not owned. This endorsement can be important if a business leases or borrows a building that’s critical for operations.
- Property off premises. Property located within a covered structure is generally covered by a base policy. However, damage to property located off premises may not be covered, or may only be covered to a limited extent. Coverage for off-premises property can often be purchased as an endorsement to the base policy or as a stand-alone policy.
- Valuable papers coverage. Assigns a value to records or other essential information that could be lost. Papers are typically covered only to a limited extent by the base policy.
- Personal property of employees while at insured premises. Generally only property owned by the insured entity is covered, unless this endorsement is added. A coverage extension in the base policy might provide a limited amount of coverage for personal effects and property of others.
- Ordinance or law coverage. Provides an additional amount to cover the increased cost of construction necessary to comply with building codes that might be triggered after a covered loss damages the insured property. This coverage can be added by endorsement, but the base policy might contain a limited benefit.
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