Coverage under the commercial property (CP) policy is for property only. A separate policy form provides liability. The CP policy covers buildings, the insured’s personal property, and under certain circumstances, personal property of others. For coverage to apply, there must be a limit shown in the declarations for that type of property.
Insurance contract interpretation relies on meanings disclosed in common usage dictionaries, unless the term is specifically defined in the policy. Building means the building or structure described in the declarations. Further definition is unnecessary since the only question that would arise in the event of a claim is if the building or structure is described in the declarations.
Coverage under building coverage applies to five other classes of property:
1. Completed additions to any building or structure described in the declarations.
2. Fixtures, including outdoor fixtures.
3. Permanently installed machinery or equipment.
4. Personal property used to maintain the building, structures or premises.
5. Additions under construction or alteration and repairs to the building or structure.
While completed additions to an insured building or structure are automatically covered, it is important to pay attention to the coinsurance requirement in the policy. To make sure that you maintain the proper coinsurance amount, it is important for you to contact us immediately when you start construction.
Fixture means something that is fixed or attached as a permanent attachment or as a structural part. An outdoor light attached to the building would be covered as a fixture. Outdoor furniture would not automatically be covered as a fixture.
Many businesses utilize equipment that is installed permanently. That does not mean that it has to become an integral part of the structure, but that it is installed without the ability to simply move it around without a significant effort to uninstall the piece of equipment. Examples would be a printing press or milling machine.
Personal property used to maintain the premises might include mowers and snow blowers, fire extinguishing equipment, floor coverings, or appliances for refrigeration or cooking. Items of personal property for the maintenance of the premises could be considered part of the building, but again, maintaining coinsurance is important.
Additions under construction or alteration and repairs to the building or structure are covered. Materials, equipment, supplies and temporary structures within 100 feet of the described premises would be covered unless there is other insurance applying. For these items to have coverage, the policyholder must have an insurable interest.
There is nothing simple about making these judgments, so it is important that you have someone who has a good understanding of commercial insurance to help guide you through this maze. Please call Hubbard Insurance Agency to have your commercial insurance questions answered. Representing Rocky River and all of Ohio, we stand ready to help you with any of your insurance needs.