Commercial Property Policy
Cause of Loss - Basic Form
CAUSES OF LOSS NOT COVERED
War, Military Action - The policy does not cover losses due to war or
military events including action to resist enemy attack.
Insurrection, Rebellion, Etc. - The policy excludes losses due to such
events, including actions taken by governmental authority in resisting
such occurrences.
Governmental Authority - The policy does not cover seizure or
destruction of property by order of any governmental authority. An
exception is made for actions by governmental authorities in order to
retard or resist the spread of fire.
Utility Services - There is no coverage for loss caused by the failure of a
utility service supplied to the described premises, if the failure occurs
away from the premises. But if loss occurs, the policy will pay for the
resulting loss. Coverage against loss from off-premises utility or power
failure may be purchased for an additional premium.
Nuclear Hazards - Nuclear reaction or radiation or radioactive
contamination, however caused, is excluded. Resulting fire damage is
covered.
Building Ordinance - The policy does not cover loss caused by the
enforcement of any ordinance regulating construction, use or repair, nor
does it cover the demolition and removal costs relating to such demolition.
EXAMPLE: Fire destroys part of a structure. A building ordinance prohibits
the reconstruction with materials of the type used in the original building,
and the remaining structure must be razed. There is no coverage for the
loss sustained due to the forced razing of the undamaged portion of the
building.
NOTE: Coverage against this type of loss is available by special
endorsement discussed here under Building Ordinance Coverage.
Earth Movement - No loss due to earth movement is covered, other than
that due to sinkhole collapse. This would include earthquake, landslide,
mine subsidence, sinking, rising or shifting of the earth, none of which
would be covered. However, loss by fire or explosion which ensues
from one of these perils would be covered. Earthquake insurance may
be purchased separately. Also excluded are volcanic eruption, explosion
or effusion.
Water Losses - There is no coverage under the policy for loss by flood,
surface water, tidal waves, overflow of any body of water, or their
spray, whether driven by the wind or not. Similarly, there is no coverage
for loss by water that backs up from a sewer, drain, sump, or water
under the ground surface that seeps through foundations, walls, floors
or paved surfaces or through basements or through doors, windows or
other openings.
However, if such occurrences result in fire, explosion or sprinkler
leakage, the policy will pay for the resulting loss or damage. There is no
coverage for loss caused by mudslide or mudflow.
Electrical Apparatus Clause - If electrical appliances, devices or wiring
are damaged as a result of electrical injury from artificial causes, the
policy does not cover unless followed by fire, and then only for the
actual loss or damage caused by the fire. But damage to such equipment
caused by lightning would be covered.
Explosion of Steam Boilers - If the steam boiler, pipe, turbine or engine is
owned or operated or controlled by the insured, then any explosion of
such equipment would not be covered (see discussion under the peril of
Explosion here).
Mechanical Breakdown - There is no coverage for mechanical
breakdown, including rupture or bursting caused by centrifugal force.
Vacancy - Definitions are provided to explain what is meant by the term
vacant building when applying to a tenant, building owner, or to property
under construction.
Tenant: When the insured is a tenant and when covering the insured's
interest as a tenant in any covered property, the definition of building is
the unit or suite that has been rented or leased to the tenant. That building
is considered to be vacant when it no longer contains enough business
personal property to conduct the customary operations of the insured.
Building Owner: When the insured is a building owner, building is defined
as the entire building. The building is considered to be vacant when 70%
or more of that building's square footage is not rented or is not used to
conduct the customary operations of the insured.
Buildings Under Construction: Buildings that are under construction or
renovation are not considered to be vacant.
Whenever a building has been vacant as defined for more than 60
consecutive days prior to the onset of any damage or loss, regardless of
whether or not the coverage form has been endorsed to cover any of
the following named causes of loss, there is NO coverage for them:
For any other covered cause of loss, the amount of payment made bythe insurer to the insured will be 15% less than the amount that
otherwise would have been paid had the building been occupied.
In the prior version of the Property coverage form, the definition of
vacancy was when the building does not contain enough business
personal property to conduct customary operations. Although this was a
good concept, it was difficult to adjust. The new version has the same
language for a tenant; but for the building owner, it states that when 70%
or more of the total square footage of the building is not rented or used to
conduct customary operations, it is vacant. (What this means is that only
30% needs be rented or occupied; but if rented, it does not specify that it
must be occupied.)
Cause of Loss - Basic Form
CAUSES OF LOSS NOT COVERED
War, Military Action - The policy does not cover losses due to war or
military events including action to resist enemy attack.
Insurrection, Rebellion, Etc. - The policy excludes losses due to such
events, including actions taken by governmental authority in resisting
such occurrences.
Governmental Authority - The policy does not cover seizure or
destruction of property by order of any governmental authority. An
exception is made for actions by governmental authorities in order to
retard or resist the spread of fire.
Utility Services - There is no coverage for loss caused by the failure of a
utility service supplied to the described premises, if the failure occurs
away from the premises. But if loss occurs, the policy will pay for the
resulting loss. Coverage against loss from off-premises utility or power
failure may be purchased for an additional premium.
Nuclear Hazards - Nuclear reaction or radiation or radioactive
contamination, however caused, is excluded. Resulting fire damage is
covered.
Building Ordinance - The policy does not cover loss caused by the
enforcement of any ordinance regulating construction, use or repair, nor
does it cover the demolition and removal costs relating to such demolition.
EXAMPLE: Fire destroys part of a structure. A building ordinance prohibits
the reconstruction with materials of the type used in the original building,
and the remaining structure must be razed. There is no coverage for the
loss sustained due to the forced razing of the undamaged portion of the
building.
NOTE: Coverage against this type of loss is available by special
endorsement discussed here under Building Ordinance Coverage.
Earth Movement - No loss due to earth movement is covered, other than
that due to sinkhole collapse. This would include earthquake, landslide,
mine subsidence, sinking, rising or shifting of the earth, none of which
would be covered. However, loss by fire or explosion which ensues
from one of these perils would be covered. Earthquake insurance may
be purchased separately. Also excluded are volcanic eruption, explosion
or effusion.
Water Losses - There is no coverage under the policy for loss by flood,
surface water, tidal waves, overflow of any body of water, or their
spray, whether driven by the wind or not. Similarly, there is no coverage
for loss by water that backs up from a sewer, drain, sump, or water
under the ground surface that seeps through foundations, walls, floors
or paved surfaces or through basements or through doors, windows or
other openings.
However, if such occurrences result in fire, explosion or sprinkler
leakage, the policy will pay for the resulting loss or damage. There is no
coverage for loss caused by mudslide or mudflow.
Electrical Apparatus Clause - If electrical appliances, devices or wiring
are damaged as a result of electrical injury from artificial causes, the
policy does not cover unless followed by fire, and then only for the
actual loss or damage caused by the fire. But damage to such equipment
caused by lightning would be covered.
Explosion of Steam Boilers - If the steam boiler, pipe, turbine or engine is
owned or operated or controlled by the insured, then any explosion of
such equipment would not be covered (see discussion under the peril of
Explosion here).
Mechanical Breakdown - There is no coverage for mechanical
breakdown, including rupture or bursting caused by centrifugal force.
Vacancy - Definitions are provided to explain what is meant by the term
vacant building when applying to a tenant, building owner, or to property
under construction.
Tenant: When the insured is a tenant and when covering the insured's
interest as a tenant in any covered property, the definition of building is
the unit or suite that has been rented or leased to the tenant. That building
is considered to be vacant when it no longer contains enough business
personal property to conduct the customary operations of the insured.
Building Owner: When the insured is a building owner, building is defined
as the entire building. The building is considered to be vacant when 70%
or more of that building's square footage is not rented or is not used to
conduct the customary operations of the insured.
Buildings Under Construction: Buildings that are under construction or
renovation are not considered to be vacant.
Whenever a building has been vacant as defined for more than 60
consecutive days prior to the onset of any damage or loss, regardless of
whether or not the coverage form has been endorsed to cover any of
the following named causes of loss, there is NO coverage for them:
 | vandalism | |
| sprinkler leakage (unless the system has been protected against | |
| freezing) | ||
| building glass breakage | |
| water damage | |
| theft | |
| attempted theft |
For any other covered cause of loss, the amount of payment made by
otherwise would have been paid had the building been occupied.
In the prior version of the Property coverage form, the definition of
vacancy was when the building does not contain enough business
personal property to conduct customary operations. Although this was a
good concept, it was difficult to adjust. The new version has the same
language for a tenant; but for the building owner, it states that when 70%
or more of the total square footage of the building is not rented or used to
conduct customary operations, it is vacant. (What this means is that only
30% needs be rented or occupied; but if rented, it does not specify that it
must be occupied.)
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MY Insurance Agency
The materials on this page is meant to be
informative in nature. Due to the ever
changing and varying state laws, and the fact
some insurers offer coverage in slightly
different forms from the Insurance Services
Office (ISO) standard forms, we cannot
guarantee the accuracy of the materials on
this page.
informative in nature. Due to the ever
changing and varying state laws, and the fact
some insurers offer coverage in slightly
different forms from the Insurance Services
Office (ISO) standard forms, we cannot
guarantee the accuracy of the materials on
this page.