Commercial Property Insurance for Law Firms Part 2

Law Firm Property Insurance

Commercial property policies aren’t standardized, and insurance companies must meet minimum state requirements but may create their policies. As a result, coverages, and policy terms will vary by the insurance company and policy.

In a single policy, commercial multi-peril (CMP) policies combine several coverages — such as commercial property, liability, inland marine, and commercial auto. It’s typically cheaper to buy a CMP policy than to buy the coverages individually.

Business owner program (BOP) policies are a common type of commercial policy primarily for small businesses. BOP policies combine property and liability coverage in one policy.

Commercial property policies provide various types of coverage, either as part of the base policy or through policy endorsements. Endorsements expand or amend a policy’s coverages and usually increase your premium. You can buy certain coverages as separate standalone policies.

Following are some typical commercial property insurance coverages:

• The building occupied by the insured coverage insures a building that you regularly use but don’t own. This coverage can be necessary if you lease or borrow a building.
• Newly acquired or constructed building coverage insures a new building if you add it to your policy within a certain amount of time. If you don’t tell your insurance company within the period – usually 30 days – your policy won’t cover the new building. Commercial property policies usually only cover buildings named in the policy.
• Employees’ property coverage insures your employees’ personal property if the property is on your premises. Generally, you must buy this coverage as an endorsement if you need more than a limited amount.
• Off-premises property coverage covers your property located off-site. Some policies might not cover off-premises property or may provide only limited coverage. You can usually buy an endorsement to cover off-premises property. If you can’t buy an endorsement, you may have to buy a separate policy.
• Business interruption coverage pays for the income you’d lose if your business is damaged and you can’t perform your regular business operations.
• Extra expense coverage pays any additional costs to return your business to normal after it’s damaged.
• Valuable papers coverage provides limited coverage for your business records and other valuable papers. You may be able to buy an endorsement to increase this coverage.
• Ordinance or law coverage pays additional costs to repair or rebuild a facility to current building codes after it’s damaged. Many policies provide limited ordinance coverage, but you can increase the coverage with an endorsement.
• Boiler and machinery coverage covers boilers, air conditioning units, compressors, steam cookers, electric water heaters, and similar machinery. Coverage is usually only for machinery listed in the policy and to losses caused by malfunctions of boilers or machinery, such as when a boiler explosion or water heater leak causes damage to other property. You can buy this coverage as an endorsement or a separate policy.
• Inland marine coverage insures goods in transit by land, air, or inland waterways. It also covers projects under construction and transportation and communications structures, such as bridges, tunnels, and communications towers.

Other Coverages to Consider

Depending on the type of business you own and where it’s located, you might want to consider more coverages to protect your business.

Crime Coverage

You can buy several types of coverage to protect your business from crime. Common crime coverages include:

• Loss of glass and money due to theft pays for damage to glass and theft of money resulting from a break-in.
• Robbery and safe burglary (property other than money) is more limited coverage that doesn’t include a loss of money or securities.
• Forgery or alteration protects your business against forgery or alteration of checks, drafts, promissory notes, or other types of payments.
• Theft, disappearance, and destruction coverage insures money, securities, and other property against losses, both on your premises and off-premises, in the custody of an employee or messenger.

A policy may pay losses from crime on either a loss sustained or discovery basis.

• Loss sustained coverage pays for losses that happened during the policy period.
• Discovery coverage pays for losses that happen at any time.

Both types of crime coverage require that you learn about the crime during the policy period or extended reporting period.