Commercial Property Policy
The building and personal property coverage form is one of several
property forms that are used in the Insurance Services Office (ISO)
program. The commercial property policy is designed to cover
commercial buildings, apartment dwellings, hotels, personal property,
loss of business income, builders risks and related exposures.
Coverage under the CPP is available in one of three forms; basic form,
broad form, or special form.
Conditions
In addition to the common CPP conditions and declarations, commercial
property policy, just like other coverage parts, has its individual
declarations and conditions that are common to property forms. The
commercial property conditions section includes the following provisions:
policy period, territory, concealment, misrepresentation or fraud, control
of property, legal action against the company, no benefit to bailee,
transfer of rights of recovery against others to insurance company,
other insurance, liberalization and insurance under two or more
coverages.
Policy Period - All coverages take effect at 12:01A.M. Standard Time.
Cancellation - The cancellation provisions under a commercial property
policy are modified by an endorsement which provides that a policy
covering a building may be canceled by the company by mailing or
delivering notice of cancellation at least five days prior to the effective
date of the cancellation when any of the following situations applies:
1. The building has been unoccupied or vacant for 60 consecutive days.
Exceptions are made for seasonal non-occupancy or buildings under
construction. A building with 65%of the units or floor area vacant or
unoccupied is considered to be vacant.
2. Failure to furnish heat, water, electricity for 30 consecutive days
except during a period of seasonal non-occupancy.
3. After a covered loss has been paid by the insurance company and 30
days have elapsed without repairs having been either started or
contracted for.
4. Fixed and salvageable items whose removal is not necessary to any
renovation are being removed from the building and are not being
replaced.
5. Failure to pay property taxes that are outstanding for more than a year
except where the insured is in a bona fide dispute with the taxing
authorities regarding the payment of the taxes.
6. A governmental authority has declared the building unsafe or has an
outstanding order to vacate or any outstanding demolition order.
Territory - Coverage applies within the United States, Puerto Rico and
Canada.
Concealment or Misrepresentation - The policy is void if the insured
conceals or misrepresents a material fact concerning the coverage or
the insured's interest in the property.
Fraud - The policy is void in the event of fraud relating to the issuance of
insurance.
Control of Property - If the insured violates a condition of the policy, the
insurer will not pay for any loss at the location involved, if the act was
under the direction or within the control of the insured.
Legal Action Against the Company - No legal action may be brought
against the insurer after two years from the date of the loss and unless
the insured has complied with all terms of the policy.
Insured's Duties in the Event of a Covered Loss
The policy imposes a series of requirements on the insured after he has
suffered a loss. Some of these duties fall upon the insured even though
the company makes no special demand for their fulfillment. Other duties
need only to be met if the insurer makes a formal demand.
Duties of an Insured Even Without Insurer's Demand
To protect the property from further losses, the insured is expected to
act as a prudent person would if there were no insurance on the
property - to protect openings, dry out building and property, grease
machinery, etc. Any expense the insured incurs along these lines may
be included in the proof of loss.
NOTE: In New York, notice by or on behalf of an insured to any agent
representing the insured's insurance company, is the same as notice to that
insurance company, as long as the insured has properly identified himself.
Duties That Insured Must Meet Only When Requested By Company:
When Loss Payable - The company must pay the loss within 30 days
after the Proof of Loss form is received by it and the loss is determined
either by agreement between the insured and the company or by an
award arrived at through appraisal (see section on appraisal).
Other Insurance - A policy is liable only for its proportion of all insurance
written on the same property.
EXAMPLE: Three policies cover the same property: Policy 1 -$3,000;
Policy 2 -$7,000; and Policy 3 - $10,000. In any loss, each policy pays its
proportionate (pro rata) share. Thus, if the loss is $10,000: Policy 1 pays
$1,500 (15% of loss); Policy 2 pays $3,500 (35%); and Policy 3, $5,000
(50%).
If there is other insurance on the same loss under a policy written on a
different basis, the first policy will pay any excess of loss over the
amount of coverage in the second policy, whether the latter is collectible
or not.
EXAMPLE: A Commercial Property policy provides fire insurance on an
advertising agency. The agency also insures its camera equipment under a
Commercial Inland Marine form. In the event of loss or damage to the
cameras, the Commercial Property policy will provide coverage only in
excess of the amount due under the Commercial Inland Marine policy.
Liberalization Clause - Insurance policies and endorsements from time to
time are broadened by a company. Where such broadening of the policy
is granted without additional premium charge, the Liberalization clause
extends the broadened coverage to all policies already in force at the
time of the change.
Since the company often prepares renewal policies in advance of the
expiration date, the Liberalization clause further provides that any
liberalization which went into effect within 45 days prior to the inception
of the policy will be extended to policies already written.
Insurance Under Two or More Coverages - The company will not pay
more than the actual amount of the loss even if the loss is covered under
two or more of the policy's coverages.
Standard Fire Insurance Policy - In some states, it is required that any
insurance policy covering the peril of fire include the Standard Fire
insurance policy wording.
The building and personal property coverage form is one of several
property forms that are used in the Insurance Services Office (ISO)
program. The commercial property policy is designed to cover
commercial buildings, apartment dwellings, hotels, personal property,
loss of business income, builders risks and related exposures.
Coverage under the CPP is available in one of three forms; basic form,
broad form, or special form.
Conditions
In addition to the common CPP conditions and declarations, commercial
property policy, just like other coverage parts, has its individual
declarations and conditions that are common to property forms. The
commercial property conditions section includes the following provisions:
policy period, territory, concealment, misrepresentation or fraud, control
of property, legal action against the company, no benefit to bailee,
transfer of rights of recovery against others to insurance company,
other insurance, liberalization and insurance under two or more
coverages.
Policy Period - All coverages take effect at 12:01A.M. Standard Time.
Cancellation - The cancellation provisions under a commercial property
policy are modified by an endorsement which provides that a policy
covering a building may be canceled by the company by mailing or
delivering notice of cancellation at least five days prior to the effective
date of the cancellation when any of the following situations applies:
1. The building has been unoccupied or vacant for 60 consecutive days.
Exceptions are made for seasonal non-occupancy or buildings under
construction. A building with 65%of the units or floor area vacant or
unoccupied is considered to be vacant.
2. Failure to furnish heat, water, electricity for 30 consecutive days
except during a period of seasonal non-occupancy.
3. After a covered loss has been paid by the insurance company and 30
days have elapsed without repairs having been either started or
contracted for.
4. Fixed and salvageable items whose removal is not necessary to any
renovation are being removed from the building and are not being
replaced.
5. Failure to pay property taxes that are outstanding for more than a year
except where the insured is in a bona fide dispute with the taxing
authorities regarding the payment of the taxes.
6. A governmental authority has declared the building unsafe or has an
outstanding order to vacate or any outstanding demolition order.
Territory - Coverage applies within the United States, Puerto Rico and
Canada.
Concealment or Misrepresentation - The policy is void if the insured
conceals or misrepresents a material fact concerning the coverage or
the insured's interest in the property.
Fraud - The policy is void in the event of fraud relating to the issuance of
insurance.
Control of Property - If the insured violates a condition of the policy, the
insurer will not pay for any loss at the location involved, if the act was
under the direction or within the control of the insured.
Legal Action Against the Company - No legal action may be brought
against the insurer after two years from the date of the loss and unless
the insured has complied with all terms of the policy.
Insured's Duties in the Event of a Covered Loss
The policy imposes a series of requirements on the insured after he has
suffered a loss. Some of these duties fall upon the insured even though
the company makes no special demand for their fulfillment. Other duties
need only to be met if the insurer makes a formal demand.
Duties of an Insured Even Without Insurer's Demand
To protect the property from further losses, the insured is expected to
act as a prudent person would if there were no insurance on the
property - to protect openings, dry out building and property, grease
machinery, etc. Any expense the insured incurs along these lines may
be included in the proof of loss.
 | To separate the damaged property from the undamaged. | |
| To put damaged goods in the best possible order. | |
| To call the police if a crime has been committed or if situation | |
| warrants. | ||
| To give immediate notice of loss to the company. | |
| To furnish a complete inventory of the damaged, destroyed, and | |
| undamaged property, showing in detail quantities, costs, actual cash value and amount of loss claimed. | ||
| To furnish proof of loss within 60 days after request by the | |
| company. The form will be provided by the insurer. The Proof of Loss form is to contain a series of statements signed and sworn to by the insured on the following points: the time and origin of loss; the interest of the insured and all others in the property; the actual cash value of each item; the amount of loss; any encumbrances on the property; any other insurance carried; any changes in the title to the property; any changes in the use, occupation, or location of said property; by whom and for what purposes any building was occupied; whether the building stood on leased ground. |
representing the insured's insurance company, is the same as notice to that
insurance company, as long as the insured has properly identified himself.
Duties That Insured Must Meet Only When Requested By Company:
| To furnish verified plans and specifications of any building, | |
| fixtures and machinery destroyed or damaged. | ||
| To exhibit all that remains of the property. | |
| To submit to examination under oath. | |
| To produce for examination all books of accounts, bills, invoices | |
| and other vouchers, and permit copies to be made of such records. |
When Loss Payable - The company must pay the loss within 30 days
after the Proof of Loss form is received by it and the loss is determined
either by agreement between the insured and the company or by an
award arrived at through appraisal (see section on appraisal).
Other Insurance - A policy is liable only for its proportion of all insurance
written on the same property.
EXAMPLE: Three policies cover the same property: Policy 1 -$3,000;
Policy 2 -$7,000; and Policy 3 - $10,000. In any loss, each policy pays its
proportionate (pro rata) share. Thus, if the loss is $10,000: Policy 1 pays
$1,500 (15% of loss); Policy 2 pays $3,500 (35%); and Policy 3, $5,000
(50%).
If there is other insurance on the same loss under a policy written on a
different basis, the first policy will pay any excess of loss over the
amount of coverage in the second policy, whether the latter is collectible
or not.
EXAMPLE: A Commercial Property policy provides fire insurance on an
advertising agency. The agency also insures its camera equipment under a
Commercial Inland Marine form. In the event of loss or damage to the
cameras, the Commercial Property policy will provide coverage only in
excess of the amount due under the Commercial Inland Marine policy.
Liberalization Clause - Insurance policies and endorsements from time to
time are broadened by a company. Where such broadening of the policy
is granted without additional premium charge, the Liberalization clause
extends the broadened coverage to all policies already in force at the
time of the change.
Since the company often prepares renewal policies in advance of the
expiration date, the Liberalization clause further provides that any
liberalization which went into effect within 45 days prior to the inception
of the policy will be extended to policies already written.
Insurance Under Two or More Coverages - The company will not pay
more than the actual amount of the loss even if the loss is covered under
two or more of the policy's coverages.
Standard Fire Insurance Policy - In some states, it is required that any
insurance policy covering the peril of fire include the Standard Fire
insurance policy wording.
 |  |  |  |  |  |
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.