A lot of business owners purchase commercial property insurance for their buildings, but rarely do they know what they are purchasing. There are 3 different coverage forms: Basic, Broad and Special.
It makes sense that Basic has the least amount of coverages and Special has the most, so the more coverage you get, the more expensive the coverages, but is it worth the extra expense for the additional cost to get the added coverages. As a business owner, that is your decision.
To make it easy to see the coverage differences, we’ve included the below chart:
Cause of Loss Forms – Comparison Chart
* Windstorm or Hail, Vandalism, and Sprinkler Leakage may be individually excluded by endorsement
** Exclusion for vehicles owned/operated by named insured
Although the chart includes the Types of loss commonly covered by each form type, be sure to review these coverages with your agent. Ask your agent if the policy is covered by an Admitted or an Excess and Surplus Lines Company. Standard Companies policy forms are reviewed and approved by the state, but Excess and Surplus Lines Companies do not need to file their policy forms with the state, so be careful when purchasing these policies and review all of the exclusions with your agents. For example, some Excess and Surplus Lines Companies will offer Special Coverage, but exclude Water Damage and/or Theft Coverage.
Other Coverages To Consider relating to Commercial Property Insurance
You may have noticed that the Broad and Special Form cover water damage, but does not include flood. To clarify, Water Damage would be the bursting of a water pipe, but flood is the rising of surface waters caused by an outside source such as heavy runs or a storm surge.
Flood Policies can be purchased separately. Even if you are not in a flood-prone area, it is a good coverage to consider. The National Flood Insurance Program has stated that 40% of claims come from moderate to low risk flood areas.
Lastly, we highly recommend adding Business Interruption Coverage to your Commercial Property Policy (also known as Business Income and/or Extra Expense Coverage). This coverage provides any loss of income that could occur if you have a covered loss that causes your business to close or relocate during the time it would take to repair your building.