Property

insurance

Chapter 5
Property insurance

• Property insurance is a type of insurance that provides

financial protection to individuals and businesses by covering
their physical assets and property against various risks.

• Property insurance can apply to both personal and

commercial properties.
Why Property Insurance Matters?

• Financial Security: Property insurance offers protection against

large, often unaffordable expenses that may arise from
damages to property, ensuring that individuals and businesses
can maintain financial stability.
• Resilience Against Disasters: For both individuals and
companies, property insurance serves as a safeguard against
catastrophic events
• Economic Continuity for Businesses: Businesses benefit from
property insurance by securing their assets, which helps to
maintain operational continuity even after a disruptive event.
Main contents

• 5.1. Personal
• 5.1.1 Homeowners
• 5.1.2 Automobile
• 5.1.3 Others
• 5.2 Commercial property insurance
5.1.1 Homeowners
insurance

1. Dwelling (Home Structure) Coverage

2. Other Structures Coverage
3. Personal Property Coverage
4. Loss of Use Coverage
5. Additional Coverages
6. Personal Liability Coverage
7. Medical Payments to Others Coverage
8. Factors affect Homeowners insurance
premium
1. Dwelling (Home Structure) Coverage

Dwelling coverage, also known as home structure coverage, helps

protect the physical structure of your home, like the walls and roof.
It can also cover a structure that's attached to your home, like an
attached garage.
Dwelling coverage helps cover a wide variety of losses, including:
• Fire and smoke
• Lightning; Wind
• Hail
• Theft; Vandalism
Exclusions to the Dwelling insurance

Typically damage because of a flood will not be covered

by dwelling insurance and requires a separate flood
insurance policy.
It also does not cover damage as a result of earthquakes.
While most parts of your home will be covered under a
dwelling insurance policy, a detached garage, shed,
above-ground pool, and fences usually won’t be.
2. Other Structures Coverage

Other Structures Coverage insures other structures on the

residence premises
• Includes a detached garage, tool shed…
• Structures that are rented out or used for a business are
excluded
• The amount of coverage is based on the amount of
insurance on the dwelling.
3. Personal property coverage

Personal property coverage helps pay to repair or replace your belongings after
a covered loss, such as theft or fire. Personal property includes:
• Furniture, Clothing
• Stereos, Televisions, Computers, Electronics
• Artwork (with limits)
• Rugs, window treatments and other décor
• Dishes
• Wine and spirits (with limits)
• Sporting goods and toys
Exclusions to the Personal property coverage

The following items may not be automatically covered by your standard

personal property policy:
• Higher-value jewelry such as diamonds, gold, watches and engagement
rings
• One-of-a-kind or expensive artwork
• Fine wine with a high value
• Firearms
• Other types of collectibles such as a coin or baseball card collection
• Pets such as fish or birds
Personal property coverage limit

• The insurance company uses the amount of coverage you have for
your house to determine how much personal property insurance to
provide. It is usually a percentage of the building coverage
amount, generally in the range of 40% to 75%.
• For example (in the picture) : Dwelling coverage of $403,000 while
Personal property coverage of $282,100, which is 70% of $403,000.
4. Loss of Use coverage

Loss of use homeowners' insurance covers living expenses that you incur if
your home is deemed uninhabitable as the result of a covered peril. It also
referred to as additional expenses insurance.
The below items are usually covered to help you maintain your current
standard of living:
• Temporary residence such as a hotel, motel or apartment
• Moving costs, Transportation fees, Parking fees
• Excess of normal grocery or restaurant bills
• Storage costs for household items
• Laundry expenses, Pet boarding
5. Additional coverages

• Removal of debris following an insured peril

• Trees, shrubs, and plants, for a limited set of perils
• Fire department service charge
• Increased costs of construction or repair because of a
law
Duties After a Loss

The insured must perform certain duties after a loss occurs:

• Give prompt notice to insurer
• Protect the property from further damage
• Prepare an inventory of damaged personal property
• Exhibit damaged personal property
• File a proof of loss with 60 days after the insurer’s request
Losses to personal property are paid on the basis of actual cash
value. If the insured purchases a replacement cost endorsement,
there is no deduction for depreciation
6. Personal liability

• The personal liability coverage within your homeowner's

policy provides coverage to pay for claims of bodily injury
and property damage sustained by others for which you or
covered residents of your household are legally responsible.
• For example, if someone falls down your stairs, or your child
accidentally throws a ball through a neighbor's window,
breaking an expensive vase, you may be held legally
responsible for the damages caused.
What Does Personal Liability Insurance Cover?

• Medical bills that result from a visitor’s injury at your home

• Legal expenses resulting from lawsuits that seek to recover
damages that are potentially covered by the policy
• Bodily injury or property damage that results from your negligent
acts or omissions
• Bodily injury or property damage caused by your pets
Exclusions to the Personal Liability Insurance

• Liability that results from a car accident. These claims should be

covered by your car insurance.
• Bodily injury or property damage caused intentionally by you or a
family member.
• Injuries or damages sustained by you or other covered residents in
your home.
• Bodily injury or property damage arising out of any business
conducted by you or arising out of your professional activities.
Claims that arise while you are engaging in any business-related
activities should be covered by a business insurance policy.
7. Medical Payments to Others

• Medical payments coverage is the part of a home insurance policy

that covers you if a guest is injured at your home. This is
regardless of whether you are legally responsible.
• The limit is lower than liability insurance. Personal liability
insurance has much higher limits, but only covers incidents in
which you were legally responsible.
• For example : You invite friends over and one of them cuts his
ankle on your patio. He's not seriously injured, but heads to the
hospital and needs stitches. Medical payments would cover the
medical costs as long as the costs don't exceed the limit.
8. Factors affect Home insurance premium

• The amount of coverage needed

• The quality of coverage (replacement cost on contents insurance versus
actual cash value, the inclusion of inflation protection, etc.)
• Your history of filing claims
• Your credit rating
• Your deductible
• Your location: If you own or rent in an area subject to expensive hazards
such as crime, catastrophic weather, or fire danger, your rates are likely
to be higher. If your neighbors file frequent claims (even if you don't)
your rates may be higher. If your home is not well-maintained or is very
old or in poor condition, you may pay more.
 Liability Coverage

Medical Payments Coverage

5.2.2.
Automobile Uninsured Motorists Coverage

insurance (Car Coverage for Damage to Your Auto

insurance)
Duties After an Accident or Loss

Termination provisions
1. Liability insurance

• Auto liability insurance is a type of car insurance

coverage that's required by law in most country. If you
cause a car accident — in other words, if you are liable
for the accident — liability coverage helps pay for the
other person's expenses.
• Auto liability coverage comes in two forms: Bodily injury
liability coverage and Property damage liability
coverage. Drivers must have both types of coverage.
What Is Covered By Liability Insurance?

Bodily injury liability coverage

• If you're at fault for an accident that injures another
person, bodily injury liability coverage helps pay for
their medical expenses.
• For instance, this coverage can help you avoid paying out
of your own pocket for the injured person’s X-rays and
treatment.
Bodily injury liability coverage

• Medical expenses: This coverage helps pay for

emergency services and hospital care. It’ll also help
cover costs for: Doctors’ visits, Medication, Crutches,
Recovery wheelchairs
• Lost Income: If you injure another person in an accident
and they need time off from work for ongoing care, this
coverage can help pay their lost wages.
Bodily injury liability coverage

• Legal fees: Bodily injury liability coverage can help pay

for your legal defense fees if you cause an accident and
the other driver files a claim against you.
• Funeral costs: If you cause an accident and a passenger
in the other car dies, this coverage can help pay for their
funeral expenses.
What Is Covered By Liability Insurance?

Property damage liability coverage

• If you cause an accident that damages someone else's
property (their car, for example), property damage
liability coverage helps pay for repairs.
• For example, if you rear-end another car, this coverage
can help prevent you from paying out of pocket to repair
the other driver’s vehicle.
Property damage liability coverage

• Repairs for damage caused to the other party's vehicle, including

auto body or replacement parts
• Fixing up damage or destruction to other businesses, houses,
fences, lampposts, mailboxes, etc.
• Attorney, court and other legal defense fees incurred for the
property damage claim (depending on your terms and conditions)
• Lost income from a business closure that your accident was
deemed to cause
• Other recurring expenses from that damage
What Doesn’t Liability Insurance Cover?

• Liability coverage typically doesn't pay to repair damage to your

own car after an accident — collision coverage helps with that.
It also doesn’t pay to repair damage caused by other factors,
such as hail, which may be paid by comprehensive coverage.
• Liability coverage also does not extend to costs associated with
your own injuries after an accident you cause. If you want this
type of coverage, you may want to consider medical payments
coverage.
Liability Insurance Coverage Limits

• The amount the insurer will pay for a covered liability insurance
claim depends on the coverage limits the insured choose.
• Each country sets minimum coverage limits for bodily injury
liability and property damage liability that drivers must
purchase, but the insured may decide to buy additional
coverage.
• Three liability coverage limits on a car insurance policy:
Property damage liability limit, Bodily injury liability limit per
person and Bodily injury liability limit per accident.
Liability Insurance Coverage Limits

• Property damage liability limit : This is the maximum amount your

insurer would pay to repair damage you cause to another party's
property. The maximum payout would not exceed the limit you've
set.
• Bodily injury liability limit per person : This establishes a maximum
payout for each individual who is injured in an accident that you
cause.
• Bodily injury liability limit per accident : This sets a cap on the
total amount that your insurance provider will pay out for all medical
expenses other people incur from a single accident you cause.
Exclusions to the liability coverage

• Intentional injury or damage

• Property owned or transported
• Property rented, used, or in the insured’s care
• Bodily injury to an employee
• Use as a public livery or conveyance
• Vehicles used in the auto business
• Vehicles with fewer than four wheels
• Vehicle furnished for the insured’s regular use
2. Medical Payments Coverage

• Medical payments coverage is part of an auto insurance

policy. It may help pay your or your passengers' medical
expenses if you're injured in a car accident.
• This coverage is optional.
• Coverage is not based on fault.
What Does Medical Payments Cover?

• Health insurance deductibles

• Doctor or hospital visits
• Surgery, X-rays or prostheses
• Ambulance and emergency medical technician fees
• Professional nursing services
Exclusions to the medical payments
coverage
Here are some examples when medical payments will not pay for
medical or funeral expenses caused by an auto accident:
• Injury expenses in excess of your policy’s coverage amount
• Damage done to vehicles or other property
• Injuries to the driver and passengers in another vehicle sustained
in an accident for which you are at fault. (There is separate bodily
injury liability coverage available for this)
What's The Difference Between Liability
Coverage and Medical Payments Coverage?

• Medical payments coverage is optional. So, if you cause a car

accident and don't have medical payments coverage, you would
have to pay out of your own pocket for your medical bills.
• On the other hand, auto liability coverage is required by law in
most country. Your auto liability coverage will not pay for your or
your passengers' medical bills after a car accident.
• If you cause a car accident, the bodily injury liability portion of
your car insurance coverage helps pay for the other party's
medical expenses. Likewise, if another driver is at fault for an
accident that injures you, their auto liability coverage may help
pay for your medical bills.
3. Uninsured and Underinsured Motorists
Coverage
What happens when the driver who hit you doesn't have
enough liability coverage? Or, even worse, what if he
leaves before you can get his information?
Uninsured and underinsured motorist coverage is
insurance protection that helps cover your medical bills
and the cost to repair or replace your vehicle if you are
hit by a driver who is uninsured or underinsured.
Uninsured and Underinsured Motorists
coverage

• Uninsured Motorist : a person with no insurance

• Underinsured Motorist : a person who doesn’t
have “enough” insurance.
• Uninsured/underinsured coverage offers liability
protection as well as property damage.
How Does Underinsured Motorist Coverage
Work?

• Since many people who carry these minimum insurance policies do

so because they cannot afford more coverage, they rarely have
adequate personal resources to contribute to injury settlements or
verdicts out of their own assets or income.
• Even liability policies with more than the minimum coverage can
still be completely inadequate for personal injury victims with
serious injuries, especially in accidents with multiple victims. The
total policy limits must be divided among multiple personal injury
claims.
Uninsured and Underinsured Motorists
coverage

• Uninsured motorist (UM) coverage for uninsured motorist bodily

injury (UMBI):
UMBI can pay for injuries to people protected under your policy
resulting from a car accident caused by an uninsured driver. In
addition to paying medical bills, UMBI may cover lost income as well
as pain and suffering.
• Uninsured motorist (UM) coverage for property damage (UMPD) :
UMPD can pay for damage done to your car by an uninsured driver
you can identify, but rarely a hit-and-run driver.
• Underinsured Motorist (UIM)
This can pay for injuries the same way UMBI does. At fault
drivers who carry only the minimum liability insurance
may come up short in the event of a serious accident.
With UIM auto insurance, you receive protection in the
event that the at-fault driver's insurance fails to cover all
your damages.
Uninsured and Underinsured Motorists
Coverage

The coverage applies to:

• The named insured and family members
• Any other person while occupying a covered auto
• Any person legally entitled to recover damages
(e.g., a surviving spouse)
Exclusions to the Uninsured & Underinsured
Motorists Coverage

Coverage does not apply when

• An insured is injured in, or by, a vehicle owned by the
named insured, but not insured under the policy
• There is primary coverage under another policy
• The vehicle is used as a public livery or conveyance
• Does not apply to a carpool
4. Coverage for Damage to Your Car

Under the coverage for damage to your car, the insurer

agrees to pay for any direct and accidental loss to a
covered car.
Two optional coverages are available:
• Collision coverage
• Comprehensive coverage
Collision Coverage

Collision coverage helps pay to repair your car if it's

damaged in a collision with another vehicle or object.
Pays for damage to your automobile, regardless of who is
at fault
• If you are not at fault, your insurer will try to collect
from the other driver’s property damage liability first.
• Coverage limited to the retail value of your vehicle
Feature Comprehensive Coverage Collision Coverage
Non-collision damage to your
vehicle, such as: Damage to your vehicle from:
•Theft •Collision with another vehicle
What's Covered •Falling objects •Collision with an object, such
•Fire as a fence
•Natural disasters •Single-car rollover accidents
•Animal damage
Deductible Yes Yes
Coverage Limit Actual cash value Actual cash value
Required if leasing or financing Required if leasing or financing
Required or Optional?
vehicle. Otherwise, optional. vehicle. Otherwise, optional.
•Damage to another person's •Damage to another person's
vehicle vehicle
What's Not Covered •Medical bills (yours, your •Medical bills (yours, your
passengers', other drivers', passengers', other drivers',
other passengers') other passengers')
Coverage for Damage to Your Car

The insurer also pays for temporary transportation

expenses, e.g., for train, bus, taxi expenses
• The expense must be the result of a covered loss
• Includes charges from a rental car company for loss of
daily rental
• Coverage for towing and labor costs can be added by
an endorsement
Coverage for Damage to Your Car

Collision and comprehensive car insurance are often sold

together as a package by auto insurers.
A policy with liability, collision and comprehensive
coverage is often referred to as full coverage car
insurance.
Full Coverage Car Insurance Summary
Liability Collision Comprehensive
Pays for others’ damage if you
✓
crash into their cars
Covers your car damage if you hit a
✓
pole, fence, house or other object
Pays other people if you hit their
✓
fence, house or other property
Covers theft of your car ✓
Covers your car for fire, flood,
✓
vandalism and animal collisions
Covers your car damage from
falling objects such as tree ✓
branches
Exclusions to the coverage

• Use as a public livery or conveyance

• Damage from wear and tear, freezing, and mechanical or
electrical breakdown
• Radioactive contamination or war
• Certain electronic equipment
• Permanently installed equipment is covered
• Tapes, records, and disks
• Government destruction or confiscation
• Trailer, camper body, or motor home
• Racing vehicle
Coverage for Damage to Your Car

• For a Total loss, the policy pays the Actual cash value
less the Deductible.
Total loss : the amount of damage to your car which means it’s
uneconomical or unsafe to repair or has been stolen and not recovered
Actual cash value is the market value of the car
• For a Partial loss, the policy pays only the amount
necessary to repair or replace the damaged property of
like kind and quality.
Duties After an Accident or Loss

• After an accident, the insured is required to perform

certain duties, such as:
• Promptly notify the insurance company or agent
• Cooperate with the insurer in the investigation and
settlement of a claim
• Send the insurer copies of any legal notices received in
connection with an accident
• Take a physical exam, if required
Duties After an Accident or Loss

• The police must be notified if a hit-and-run driver is

involved
• The insurer must be allowed to inspect your vehicle if
you are seeking coverage.
• The insurer can deny coverage only if failure to comply is
prejudicial to the insurer.
Termination provisions

Termination provisions include:

• Cancellation: The named insured can cancel at any time by
returning the policy to the insurer or providing written notice.
If a policy has been in force for more than 60 days, the insurer
can cancel only if:
• The premium has not been paid
• The driver’s license of any insured has been suspended, or
• The policy was obtained through material misrepresentation
Termination provisions

• Nonrenewal: if an insurer decides to discontinue

coverage, the insured must be given notice at least 20
days before the end of the policy period
• Automatic termination: a policy is automatically
terminated if the insured decline’s the insurer’s offer
to renew
Factors that affect Car insurance premium

• Vehicle type
• Year, make, model.
• Rating territory
• Accident, auto theft, and vandalism rates in the area
where you live
• Driver classification
• Age, sex, marital status, credit history, driving record,
and driving habits
Vehicle type and Premium

• Higher the cost of your car, higher will be the insurance premium.
• Other variables include the likelihood of theft, the cost of repairs, its engine
size and the overall safety record of the car. Car with high quality safety
equipment might qualify for premium discounts.
• The age of your car has a lot to do with your insurance premiums. That is
because the older your car gets, the more value it loses. The less valuable your
car, the less expensive it may be to repair or replace, making it cheaper to
insure.
• The make and model of your car have a big impact on rates as well. High-end
luxury cars usually cost more to insure. The cost of parts, repairs, or even
replacement in the event of a total lost can be very expensive for the insurance
company. Thus they will charge a higher premium.
• The model also has an effect on insurance rates. Two cars that are from the
same manufacturer but are different models can have different rates.
Rating territory and Premium

• Location: Due to higher rates of vandalism, theft and accidents,

urban drivers pay a higher auto insurance price than those in small
towns or rural areas.
• Where you park your car (on the street or in a secure garage) and
anti-theft features may impact the bottom line as well.
Driver classification and Premium

• Your age – In general, mature drivers have fewer accidents than less
experienced drivers, particularly teenagers. Insurers generally charge
more if teenagers or young people below age 25 drive your car.
• Your gender – Statistically, women tend to get into fewer accidents and
have less serious accidents than men. So all other things being equal,
women often pay less for auto insurance than their male counterparts.
• Your driving record : The better your record, the lower your premium.
You may also pay more if you're a new driver without an insurance track
record.
• How much you use your car : The more miles you drive, the more chance
for accidents so you'll pay more if you drive your car for work, or use it
to commute long distances. If you drive only occasionally—what some
companies call “pleasure use"—you'll pay less.
5.1.3. Other property insurance

Mobile Home Insurance

Inland Marine Floaters
Watercraft Insurance
Government Property Insurance Programs
Title Insurance
5.2 Commercial property insurance

5.2.1 Marine Cargo insurance

5.2.2 Fire insurance

5.2.1. Cargo insurance

• Marine cargo insurance is the most common method used to

protect the value of your goods from physical damage, theft, or
general average.
• Cargo insurance is not always automatically included for all
shipped goods—this often varies by region. Instead, shippers or
consignees can purchase policies in the insurance market from
niche providers, large brokers, local agents, websites, and freight
forwarders.
Scope of Cargo Insurance

1 Risk or Peril 2 Loss and Expense

 1. Risk or Peril
Perils are mainly divided into two kinds:
• Sea Peril • Extraneous risks
(1) Natural calamities (1) General extraneous risks
Heavy weather, lighting, Theft, fresh or rain water
tsunami, earthquake, damage, shortage, leakage,
flood and volcanic breakage, sweating and
eruption etc. heating, intermixture and
(2) Accidents contamination, hook
damage, breakage of
The carrying vessel packing etc.
being grounded, (2) Special extraneous risks
stranded, sunk, burnt or
in collision, fire, War, strike, non-delivery and
explosion etc. rejection etc.
2. Loss and Expense

Total Loss
Actual total loss
Loss Constructive total loss
Total loss
Partial loss
Partial Loss
Loss General Average
Expense
Particular Average

Expense
Sue and labor charges
Salvage charges
 Total Loss

• Actual total loss • Constructive total loss

1. Totally lost; 1. The actual total loss of

cargo is inevitable or
2. So damaged to the extent
unavoidable;
that it is without its
original shape and validity; 2. The cost of salvage or
3. No longer be in the recovery could have
possession of the insured; exceeded that the value of
the cargo;
4. Missing for a certain period
of time without any 3. the insured shall submit to
information. the insurance company the
notice of abandonment
 Partial Loss
• General Average • Particular Average

--- refers to sacrifices voluntarily --- refers to a partial loss of the

made and extraordinary subject matter insured
expenses incurred to rescue a proximately caused by an
ship and its cargo from insured peril, other than a
impeding danger or for the general average loss.
common safety under fortuitous
circumstance while it is at sea
or at anchor in port.
--- The loss should be borne by
the party who suffers.
--- when such a loss occurs, it is
paid on a pro rata basis by the
ship owner and all cargo owners
(General average contribution)
 Distinctions

Usually caused The loss is often borne by

Particular Directly by sea The party whose cargo is

Average perils damaged

General By intentional All the benefited parties

Average measures taken proportionately
 Expenditures

• Sue and labor charges • Salvage charges

--- when the insured cargo --- when the insured cargo
suffers natural calamities or suffers a natural calamity or
fortuitous accidents within a fortuitous accident within
the scope of insurance cover, the scope of insurance cover,
the insured or his agent or the third party who has no
any employees pays the contracted relations with the
expenses caused in saving the insured and the insurer
insured cargo in order to salvages the cargo
prevent the losses from successfully. The insurer shall
further expending. These pay to the salvor.
charges shall be covered by --- Principle:" no cure-no pay”
the insurer.
 Basic Coverage (ICC 1963 )

• Basic coverage is also called main insurance which may be

underwritten independently. It is classified into three
conditions:

F.P.A.
W.P.A. All
Risks
Free from
Particular With
Average P. Average Include
F.P.A.
and W.A.
F.P.A : 8 circumstances

(1) Actual total loss or constructive total loss from natural calamity,
i.e. vile weather, bore, earthquake, flood… The Insured must
authorize the insurer if it is the constructive total loss.
(2) Total loss or partial loss caused by fortuitous accidents, i.e.
stranded, collision with floating ice or other objects, fire or
explosion……
(3) Partial loss caused from natural calamity again before and after
fortuitous accidents
(4) Total or partial loss of one or several pieces of cargo dropping into
the sea when shipment or transshipment.
F.P.A : 8 circumstances

(5) Reasonable expenses to save, protect, or reduce the loss by

insured, but no more than the insured value.

(6) Special expenses of unloading, storage and shipping in

harborage after ship getting perils of the sea.

(7) The sacrifice, sharing and the charges of general average.

(8) If the term of “collision with ships” is involved in transport

contract, the owners of the cargoes should compensate the loss of
the ship’s owner.
W.P.A. and All Risks

• W.A. or W.P.A.
It covers partial loss due to vile weather, lightning, tsunami,
earthquake and/or flood as well as the risks covered under F.P.A.
condition as mentioned above.
• All risks
Aside from the risks covered under the F.P.A. and W.A.
conditions as above, it also covers all risks of losses or damage to
the insured goods whether partial or total, arising from external
causes in the course of transit (extraneous risks) .
Basic Coverage

• W.P.A.(W.A.) = F.P.A. + Particular Average caused by natural

calamity
• All Risks = W.P.A. + General Additional Risks
Basic Coverage
ICC 1982
I.C.C.(B)
I.C.C.(C)
• The newly revised I.C.C.(A)
London Insurance Malicious
Institute Cargo Clauses Damage
(I.C.C - 1982) include 6 Institute
Clause

kinds War Clause Institute

Strikes Clause
5.2.2. Fire insurance

• Commercial Fire Policy reimburses for the damage a fire causes to

a business’s property.
• Depending on the strength of your policy, you might receive
coverage for the incidental fire destruction from smoke, charring,
lost income due to prolonged business closure, and even the
damage caused by firefighters.
What does Commercial Fire Insurance Cover?

Commercial Fire
Commercial Fire
Insurance covers your
Insurance is generally
building, the contents
sold as a component of
of your building, and
commercial property
the property of others
insurance.
in your care.
What does Commercial Fire Insurance Cover?

• Buildings – coverage includes commercial buildings or

offices that your business owns. If a building is rented or
leased, and your rental or lease agreement requires fire
insurance, coverage can be setup for your landlord’s
building. In addition to the building itself, tenant
improvements, outdoor signs, fences, and landscaping
are also commonly included in the buildings coverage.
What does Commercial Fire Insurance Cover?

• Contents – building contents, which include furniture, equipment,

computers, tools, and inventory stored on or near the business premises.
If your business leases equipment, many vendors require you to insure
the leased equipment while it is in your possession, and this equipment
can also be covered by Commercial Fire Insurance.
• Often, the most important items destroyed in a fire are valuable records
and papers. In the event these records are destroyed or damaged,
Commercial Fire Insurance will provide some coverage for their
replacement. For records and papers of significant value, you may
consider additional protection through a separate valuable papers and
records coverage policy.
What does Commercial Fire Insurance Cover?

• Property of others – property that belongs to others that is in

your care can also be covered by Commercial Fire Insurance (e.g.,
a fax machine you borrowed from a neighboring business). The
limit of liability for property of others is separate from your
contents coverage and usually has a very low limit by default. This
limit can be increased by paying additional premiums.
• This coverage is not sufficient for businesses that frequently have
temporary possession of others’ property such as dry cleaners,
valet parking, or computer repair businesses. If you have this kind
of business, you should consider bailee’s customer insurance.
What is not covered by Commercial Fire
Insurance?

• Exclusions to your Commercial Fire Policy depend primarily

on the strength of your property insurance plan. A policy
purchased on a named perils basis will generally have less
coverage and more exclusions than an open perils policy.
• Exclusions to all Commercial Fire Policies typically include
war, nuclear risks, earthquakes, and floods. Note that fires
caused by these perils (e.g., a fire caused by an
earthquake) would generally not be covered by your
Commercial Fire Policy.