Types of Property Coverage

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Commercial property insurance is a broad category that includes many types of coverage. This article provides an overview of the coverages available to businesses.

Commercial Property Policy

The property coverage most often purchased by businesses is the commercial property policy. It covers the types of property many businesses own. Examples are buildings, production machinery, office equipment, furniture, and stock.

A property policy is flexible and can be adapted to meet the needs of your business. Coverages you need that aren't automatically included in the policy can be added via endorsements.

Commercial property coverage can be written as a separate policy. Alternatively, it can be written in combination with general liability and other coverages under a package policy.

Businessowners Policy

A businessowners policy (BOP) is a type of package policy designed for small and medium-sized businesses. It includes commercial property and general liability coverages. A BOP affords the same basic property coverage as a commercial property policy. However, a BOP also includes business income, extra expense and various crime coverages.

Inland Marine Insurance

Commercial property and BOP policies cover property situated at the premises described in the declarations. They afford little coverage for property located away from those premises.

However, many businesses own equipment that they use at an off-site location. For example, a tree trimming company owns ladders, saws, a chipper truck and other equipment that it transports to job sites. This type of property can be covered by inland marine insurance.

Inland marine insurance is designed to cover movable property.

It is a broad category that includes many different coverages. Inland marine differs from ocean marine insurance, which covers ships and cargo traveling on the high seas. Inland marine insurance generally covers property transported over land. Because inland marine policies cover movable property, they are often referred to as floaters.

An example of inland marine insurance is contractors equipment coverage. Some others are listed below. Most inland marine coverages can be added to a commercial property or package policy.

  • Fine Arts Coverage Covers loss or damage to statuary, paintings, carvings and other valuable works of art.
  • Accounts Receivable Coverage Protects your business against losses caused by your inability to collect sums owed to you by customers due to damage to your accounts receivable records.
  • Motor Truck Cargo Coverage Covers loss or damage to goods transported by truck. The truck may belong to you or to a trucking company.
  • Installation Floater Covers damage to property (such as a boiler) that you intend to install at a customer's location. Coverage applies while the property is in transit to or from the job site, and while it is awaiting installation at the customer's location.
  • Exhibition Floater Covers damage to property being displayed at a trade show or exhibition. It also covers the property while in transit to or from the exhibition site.

Builders Risk Insurance

Property and BOP policies are designed to cover completed buildings. They provide very limited coverage for new buildings being constructed at the described premises. New buildings constructed elsewhere are not covered. Thus, a building under construction requires a special coverage called builders risk  insurance. Builders risk is a type of inland marine insurance. Unlike most inland marine coverages, however, builders risk is generally written by itself.

As its name suggests, a builders risk policy covers a building in the course of construction. The policy begins when construction starts and ends when the project is completed.

The policy is usually purchased by the general contractor or project owner. It protects all parties involved in a project against property losses. These include the owner, the general contractor and all subcontractors. 

Crime Insurance

Theft is a covered peril under commercial property and BOP policies. However, these policies exclude  some types of property, such as money and securities, which are highly vulnerable to theft. Moreover, property policies do not cover theft committed by employees. To protect themselves against property losses that result from acts committed by criminals, businesses may purchase crime insurance.

Crime insurance may be written alone or added to a package policy. There are many types of crime coverages. Here are some examples:

  • Employee Theft Coverage Protects businesses against theft of money, securities and other property by employees
  • Computer Fraud Coverage Protects businesses against theft of property committed by a thief via the use of a computer
  • Money and Securities Coverage Covers loss of money and securities that takes place inside your premises or a banking institution, or outside your premises