Debris removal is a very common coverage with its own supplemental coverages that are added to the property insurance policy. Sometimes it can be a percentage of the building limit or contents values. Usually 5% for debris removal would be a standard percentage amount that would be used. The supplemental for trees, shrubs and landscaping is usually around $5,000 or $10,000. Clearly if you have a large building structure the 5% might be too low of a figure. Also, if you have extensive landscaping designs those sublimit amounts might be too low if the landscaping becomes damages from vandalism, wind, flood, etc.

In the United States the differing states, counties, and municipalities, have their own unique laws with regards to public protection. Usually it is in rural areas where government entities charge the property owner for public service calls to their property such as the fire department. Clearly the insurance company wants the fire department to respond to all potential fires to help mitigate the damages and losses for the insurance company’s client. Most all property insurance policies have a provision to provide coverage for fire department service charges if any. Normally the supplemental coverage is from $1,000 to $10,000.

Typically property insurance policies exclude coverage for any type of environmental claims or losses. Many insurance companies have gone from an exclusion of environmental impairment liability claims to a sublimit (maybe $5,000) on paying pollution cleanup and removal coverage as a supplemental coverage to prevent litigation. By placing a sub limit for environmental claims, pollution claims etc., the insurance company is limiting their exposure to pollution areas of coverage. Instead of insurance company fighting with the insured about whether not this is a pollution claim by having a pollution coverage endorsement with reduced limits of coverage the insurance company adverts complex litigation over coverage issues.

Some of the other additional coverages and/or supplemental coverages that are found in property policies have to do with newly acquired properties. Usually there is a time limit from start to finish whereby the insurance company will grant automatic coverage to newly acquired buildings or contents and/or land. Typically there is a 90 to 100 day grace period whereby there’s automatic coverage before you as the insured must notify the insurance company specifically to add the newly acquired property. The insurance company typically has a supplement for the newly acquired properties. Usually that can be anywhere from $100,000 to $2 million. That supplement varies by carrier substantially across the United States.

In summary, while there are a lot of coverages built into the business owners’ policy, it is the sub-limits of supplemental coverages that need to be reviewed. You might have coverage in the sub-limits but the amount of coverage is usually very limited.

If you happen to be in the transportation business the property of others can take on various values and risk characteristics that can change substantially from cargo to cargo. Therefore businesses that are in the transportation industry typically have motor truck cargo insurance specifically accept these types of exposures. If you happen to be any business that provides services for property of others this can also create gaps in coverage if you do not have the appropriate property of others coverage.

If you are in the auto repair industry, depending on how many vehicles you have any one time the property of others coverage can be quite substantial. In this service industry this type of coverage is called garage keepers insurance. It provides protection for the garage owner for the cars that you keep on the premises to service, repair, etc…

Agricultural type of content’s such as crops, hay, fruit trees, potatoes, etc. are also not covered under the property insurance. The property insurance policy also excludes coverage for any land or water that is on the premises. To protect against abuse all property policies in United States have provisions that exclude any coverage for property that is of a contraband nature which means property that is illegal. Title and ownership of property can also be issues when it comes to property insurance. If you sell your property or parts of your inventory still remains on your premises there might not be any coverage for that since you no longer have an insurable interest in the property as it has been sold.

Although they may be listed on your balance sheet as personal items and contents, automobiles, trucks, and vehicles are not covered under the property insurance policy. Even though you might have vehicles stored on the premises they are almost always going to be covered under your automobile policy and not on the property insurance policy. Knowing how your policy defines “property” is important as what you as the insured thinks is property is usually no 100% what the insurance company defines as property.

Business personal property is almost always covered within your insured building or outside the building on the premises but usually within 1,000 feet of the primary insured location. You do not necessarily have to own your business personal property. There’re many different categories of this type of property. Your property could be 100% financed by a bank and while they are the legal owner you still can provide business property insurance coverage. Many times businesses lease their business contents. Most common types of leased business personal property are the copy machine, the phone system or many different types of office equipment. In this era of the virtual office you could conceivably lease everything within your space. When you have a loan on your contents or the property you lease you will have to name the lessor and/or the bank as a loss payee on your property and provide the appropriate evidence of property insurance coverage.

Most businesses from time to time have personal property of others in their care custody or control. These items could be stored at their desk or work area or in a specific locker room storage location within the premises. You may or may not have any responsibility to provide reimbursement if employees personal property becomes damaged or stolen. Providing coverage for property of others will help alleviate that risk exposure. Property of others could also extend to your clients and customers if you are in a particular business that provides services for other people’s contents. Maybe you are providing repair or maintenance on their contents. While the client should have their own insurance protection for their personal property a business owner can sometimes be legally liable for the property that is within your care custody or control. This coverage can be afforded under the business personal property portion of the commercial property policy.

Usually in manufacturing businesses or distribution businesses the business personal property can transform into many different forms and shapes and locales. Business personal property which is of the inventory nature can increase in value from raw materials all the way through to the finished product. Having built-in protection for inventory fluxes as they increase from a work in progress standpoint can help prevent gaps in coverage and losses. In further articles we will explore the final two coverages of business income and extra expense.

There is one category of items which are not permanent but can be lumped in to the building property coverage amount. Those items are things which have to do with the building’s repair or service such as materials and supplies. Also equipment that is use for construction additions or remodels and the items that are used in the process can be considered building property. Even though they are not yet permanent the intent is for these items to one day in the future are used for either repair or maintenance or remodeling of a permanent fixture.

Sometimes such things even as a golf cart that is used to service the premises can be considered under the building property coverage. From a pricing standpoint this is to your advantage to get as much if your property listed under building property coverage versus business personal property coverage. The rates and premiums per hundred dollars for building coverage are much less than the business personal property rates and premiums.

Typically most commercial property policies require that those kinds of property are within 1,000 feet of the building and that you’re specifically insuring them as part of the building limit in order to get coverage. So such things as satellite dishes, towers, canopies, fences, retaining walls etc. can usually be considered as part of the building if it is within 1,000 feet of the building. There normally is plate glass coverage on the policy but it is usually very limited in coverage. Limitation is usually a dollar amount per pane of class and also usually has an aggregate limit per incident.

Signs are another specific item that are usually permanent in nature and are many times included within the definition of building property insurance. On most forms there’s usually a supplement for the amount of coverage for signs whether they are attached to the building or not. Usually limits can be increased for very nominal amount of premium increase. The value for signs varies greatly from business-to-business. Some companies have very exotic expensive signage such as those you see in Las Vegas. We will deal with the business personal property, business income coverage, and extra expense coverage in a forthcoming article.

Otherwise, if each tremor or aftershock is triggering a separate deductible it can cause great financial hardship on the insured. The reason being is the deductibles and coinsurance clauses tend to be very high on this type of coverage. Sometimes you can narrow the earthquake coverage via endorsement on your property policy to cover such things specifically as earthquake sprinkler leakage coverage. This option is usually chosen by many insureds as they are normally not concern about earthquake damage so much as the damage sprinklers will do to their personal contents as a tenant in the building.

Normally the coinsurance provision with regards to insuring to value does not apply under the earthquake coverage provisions. You can typically choose whatever limit that you desire and insure for that amount. Even though the earthquake my start a fire or cause a tidal wave, etc., you still need those coverages in place as this policy typically won’t cover those kinds of losses.

Earthquake insurance is usually written with a percentage as a deductible versus a dollar amount. So if you have earthquake insurance for $1 million with a 10% deductible and you had a total loss your deductible would be $100,000. Many times earthquake insurance is added to a builders risk policy before his construction begins and continues thru the life of the construction project. Clearly the values at risk on day one are much lower than the values of the risk at the end of the project. Therefore, the premiums for earthquake insurance are promulgated based on the completed value with the premiums discounted over the life of the project. Usually builders risk insurance that includes earthquake insurance is on reporting form basis. This means that you must periodically, which could be monthly or quarterly depending on the length of the project, report accurate volumes of the project as it is completed. Failure to report the values timely and accurately will usually result in coinsurance penalties if there was a claim during this period of reporting. On some earthquake insurance policies you can also include business income and extra expense as part of the coverages in addition to the building damages of the property that you’re insuring from earthquake damage.

Sometimes this program is written on a stand-alone basis as a policy or it can be written as an endorsement or it can be written with a DIC, Difference In Conditions policy. Normally most of the flood insurance contracts have a waiting period before coverage begins. The rationale being that it creates adverse selection for the carrier if people wait until the flooding has started and then run out and get a flood insurance policy. Most of the time there’s usually a 72 hour waiting period. Many times the coverage will not provide coverage if the location it’s not specifically listed on the policy, there also might not be coverage for the water damage if the property is not within a designated flood zone as determined by the Federal Government.

Some flood policies have provisions for coverages for ensuing losses. The potential is that flooding could cause electrical sparking and thus possibly a fire ensues. Depending upon whether the fire insurance policy and the flood insurance policy are with the same carrier and/or on the same form, property coverage, can determine whether not there is any coordination of benefits. On most flood insurance policies there is a user option for no coinsurance penalty. Therefore you as the insured can choose lesser amounts for an insured flood insurance limit versus providing hundred percent of value. Depending on the property and the flood zone deductibles can range from very low to very high.

One specific item you need to be aware of is that sometimes under the coinsurance provision within this coverage for the coverage appropriation states that a national flood insurance program policy is in place. Or it could even state that if you were eligible to purchase the national flood insurance policy this policy will only pay excess over and above what you could have collected from the national flood insurance policy program. So even though you might not have purchased that policy from the government this independent flood policy might be coordinating those benefits even though they don’t even exist.

Trying to squeeze coverage out of your insurance contract when a claim happens is almost always a very stressful event. That is usually when everybody runs for their attorney. Typically there are no winners in this type of scenario. Taking the time upfront to make sure that your insurance broker clearly understands what your concerns are and that you have the appropriate coverage and limits to address your risk tolerance is tantamount to you being a satisfied client when a claim arises.

It is the old proverbial saying about trying to make a square peg fit in a round hole. In this case it is trying to make your claim fit the policy forms and coverages that you have purchased. Doing your coverage and limits analysis before you ever purchase and pay the premiums for your policy is the prudent thing to do. That means that in doing your analysis upfront that you must be able to understand the coverages, exclusions, conditions, and limits that are within your insurance policy contract.

It is like the analogy of going to the salon to get a haircut. To go to the salon and asked for a haircut and then once they are done cutting your hair and you’re not satisfied it is usually too late and the damage it is done. Whereas when you going to the salon and you show a picture of what you want your haircut to look like and get detailed descriptions of what you expect the outcome to be you are more apt to be satisfied in the outcome of that process of getting a haircut. Because insurance and the insurance industry is very confusing to the general public and is typically dealing with intangible things, such as insurance contracts it is difficult to get a handle on the transaction. Tangible things such as buying a car going to the doctor or buying a house we usually ask more questions and lay out what our desires and outcomes should be.

Insurance is another ball game; there are rarely two different insurance companies who have the exact same insurance policies and coverages. The reason for that is they want to differentiate themselves in the marketplace. Therefore it is almost impossible to compare apples to apples for each insurance contract by different insurance companies. Doing your coverage analysis upfront is almost always much more beneficial than trying to do your coverage analysis after you have a claim or loss.

An example of a condition precedent would be a safety or warranty condition that the insured has a sprinkler system throughout the building. If the insured has a fire down the road and there is no sprinkler system or the sprinkler system is not working or has not been maintained properly you might have voided any coverage. The carrier would not have to pay the claim because the condition precedent has not been fulfilled by the insured.

A typical condition subsequent usually occurs after a claim happens. Every insurance contract has conditions whereby the insured must cooperate, report the claim as soon as practical, protect property from further damage, etc… So while you may have a legitimate claim that should be paid if you do not comply with the condition subsequent provisions you may find out that your claim will be denied.

Usually not reporting the claim within the appropriate timeframe creates problems for the insurance company. Late reporting of a claim can severely prejudice the insurance carrier’s ability to investigate and adjust the claim properly. Similar to what we see on TV with crime scene investigations, claims scene investigations need to be quickly investigated and evidence determined and verified. As time passes witnesses forget what they saw and evidence become stale and can be little or no use if litigation should ensue with regards to this claim.

Since these insurance documents are legal binding contracts it is extremely prudent for you as the insured to know what conditions are built into your contract. If you do not abide by the conditions you could find yourself with no coverage within a policy that you have paid a lot of premium for because of your lack of fulfillment of the conditions that you agreed to contractually. Usually the conditions subsequent are very common sense type of conditions. As we mentioned earlier cooperating with the insurance carrier, protecting your property from further damage and loss, or just commonsense items that happened to be delineated as a condition subsequent clause.

The problematic conditions are usually the condition precedent that tends to cause problems for the insurance company. If you have conditions precedent that state that there is a working burglar alarm, fire alarm, sprinkler system, the appropriate Ansul fire suppression system in a restaurant, they are all examples of condition precedents that are required in order for a claim to be paid. Basically most of the condition precedents are underwriting considerations that entice the underwriter to insure your risk by having the proper safeguards in place. Many times the conditions precedent will be required before you will receive their pricing that the underwriter promulgates for your risk. Knowing and understanding the conditions within your policy can be beneficial to you and your insurance portfolio.

Another reason exclusions are in the policy is that in some instances certain acts are against the law to provide coverage for. Otherwise crimes would have to be paid for by an insurance carrier and that is against public policy. Most of the time catastrophic events such as nuclear disaster or war are excluded as the costs of indemnity from those types of events could be incalculable. Some other reasons as to why there are exclusions on insurance policies are that not everyone wants to cover broad and enhanced situations. Sometimes basic coverages will suffice.

Since there is a multiplicity of insurance policies coverages from some policies are more suited for certain types of risk. Excluding coverage for certain kinds of risks can help you in choosing which specific policy is better suited for your company and your business situation. Obviously the less exclusion and limitations, the broader the coverage but that comes with a price tag.

Typically intentional acts of the insured are not covered because accountability and responsibility is part of our societal values. The growth of claims and lawsuits from such things as sick buildings has caused many environmental type exclusions to have been developed and are included in modern-day insurance policies.

Most general liability policies have exclusions that have been instituted with regards to employment practices and board of directors’ officers’ exposures to loss. While most of the basic policies exclude these types of the events, there are now specific policies to cover these type events that were typically excluded.

Most of the time exclusions are used by insurance carriers to further clarify what they intend to cover and not so much to take away coverage from the insured. Fraudulent claims are rampant across all lines of business and we as consumers pay for these bogus claims. Exclusions are one tool to clamp down on claims that are not intended to be insured by the carrier.

Most of the terms and verbiage within insurance policies throughout the nation is usually designed by the nonprofit company called Insurance Services Office. That way we do not have 2,000 different insurance companies defining the same word for accident. Most of the insurance companies subscribe to the Insurance Services Office in order to obtain their forms and contracts and definitions of insurance terminology.

The most important definition within the insurance contract is what is called the insuring agreement. Usually this is a broad statement whereby the insurance company agrees to pay claims for the insured and the insured agrees to pay the premium when due. There can be multiple insuring agreements within the contract if there are multiple coverages within the policy that are being purchased. Typically the insuring agreement clause states that the insurable pays the premium and insurance company pays claims based upon the coverages they have purchased. If it is a workers compensation policy, then you would have to go to that particular states insurance codes and regulations which could be hundreds of pages long to see what kind coverages are being provided by law.

Over the past 25+ years changes to the most common terms of all risk and comprehensive coverage have been redefined primarily based upon case law. Since technically it is really an oxymoron to say that a policy is all risk because there are always exclusions and limitations. There is never has been a policy that covers everything. Usually in today’s insurance policies the three basic terms that are used to defined property coverages are basic, broad, and special. We will define these terms in a later article.