The commercial property coverage form describes two types of property that are covered: the property (the building) and business personal property (the “stuff” owned by the business and located in the building or on the property). It also details many types of property that are NOT covered. Insureds can be in for a rude awakening when they suffer a loss and find out that parts of their building property and certain valuable and important business property will not be covered by their insurance. Often times this frustration can be turned toward the agent.
Always, ALWAYS advise the insured to read their policy. It is their responsibility to know their obligation in entering an insurance contract. One of those obligations is knowing what is covered and what isn’t. But that doesn’t mean you can’t help them by pointing them to resources in advance, such as the “Property Not Covered” section of the commercial property form. If a client finds something on the list that would devastate them if lost, you can advise them on what type of endorsement or separate policy is required to provide the protection they need.
These are some of the most common types of “property not covered” for which businesses utilize endorsements and separate policies to provide coverage. Note: this is not a comprehensive list.
Property Not Covered
- Money – Whether stolen or burned in a fire cash isn’t covered. Another type of policy would be required for a business that wants to insure large sums of money kept onsite.
- Paved surfaces – Driveways, parking lot, sidewalks, bridges or patios.
- Animals and Pets – Unless the client is in an animal related business where they keep their own animals as inventory, or those owned by others, pets aren’t covered. Talk to the client about their coverage options for animal related businesses.
- Foundations of buildings and structures that are below the ground.
- Land – The dirt under the foundation and the surrounding property.
- Trees and plants – Endorsements are available if the trees and plants are crucial to the business.
- Any of the business property while it’s airborne or water borne. There are policies available to cover items off premises and on the move.
- Retaining walls – Unless it’s part of the building.
- Valuable papers – Advise all clients to store copies of all valuable papers in a secure place, and in a different location. An endorsement is available for those that need extensive coverage for recovering valuable papers and information found on valuable papers.
- Electronic data – Advise clients to back up all data and store it in a separate location or server. A small amount of coverage is available, but likely not enough to cover all the types of data than can be lost, either by a crash or system malfunction, or physical hardware damage, like fire and flood, that causes data loss.
- Vehicles – A separate auto policy is required. Motorized vehicles used only on the business’s property, such as a forklift in a building, are covered.
- These items while stored outdoors or permanently outdoors: fences, radio towers, antennas, satellite dishes, wiring, grains, crops, and hay, unless identified in coverage extensions.
- Signs – Signs come in two categories, either attached to the building or unattached (freestanding). For attached signs, the commercial property policy provides a small amount of coverage. Unattached signs would require separate coverage for the things most likely to happen to it. Signs can be very pricey and are exposed to the elements. For the best coverage, advise your client to look into an inland marine policy for their signs.
Remember, there is no way the agent can tell the insured about everything the policy won’t do. It’s important to remind them of this and encourage them to read the policy to know what it does and doesn’t contain. You can help them make good decisions about coverage needed and provide excellent service by asking questions and learning everything you can about their business.