The four things a policy actually pays for
Commercial property coverage is built from separate coverage parts, each with its own limit. Leaving one out is the most common gap on a small-business account.
- The building — structure, permanent fixtures and attached signage
- Business personal property — furniture, equipment, stock and tenant improvements the insured paid for
- Property of others — customer or supplier property in the insured's care
- Business income and extra expense — income lost and the cost of operating elsewhere while the space is unusable
Tenant improvements are the gap nobody mentions
A tenant who built out a kitchen, a dental suite or a salon owns that improvement for insurance purposes even though the landlord owns the shell. If the BPP limit only reflects furniture and stock, a total loss leaves the client paying for the build-out twice.
Business income is not automatic
It is a separate coverage part with its own limit, waiting period and period of restoration. Twelve months is a default assumption, not a fact — a specialised space with long permitting or equipment lead times often needs more.
The exclusions clients are surprised by
Standard forms exclude flood and earth movement; both are bought back separately or written on their own policy. Wear and tear, gradual leaks and faulty workmanship are excluded because they are maintenance, not accidents. The extra cost of rebuilding to current code is excluded until ordinance or law coverage is added, which matters a great deal on older buildings.
Turning the conversation into a submission
Once the client has agreed what needs covering, the underwriter needs it stated in ACORD format: premises detail and general information on the 125, values and COPE on the property section, plus the endorsements you discussed. Anything left blank gets assumed rather than skipped.
See the ACORD 125 field reference
Every coverage decision above ends up as a field on the ACORD 125 or its property section. Here is what each field wants and where the data comes from.
Questions this raises
Does commercial property insurance cover theft?
Theft of business personal property is covered under most special-form policies, subject to the deductible and any exclusions or sublimits for money, securities and property in the open.
Does it cover the landlord's building if my client is a tenant?
No — the landlord insures the shell. The tenant insures their own contents and the improvements and betterments they paid for, plus their business income.