Commercial Property Insurance Key Terms

Learn the language of insuring commercial property

If you own commercial property, it's a good idea to insure it. Whether your commercial property is a building, machinery, vehicles or appliances, a solid insurance policy will protect you against devastating losses if the property is damaged or stolen.

Shopping for the right policy can be a confusing and frustrating task. It's important to learn the commonly used commercial property insurance key terms in order to purchase the best policy for your business.

 

Admitted and non-admitted insurance companies

When shopping for commercial insurance, you will encounter the terms "admitted companies" and "non-admitted companies." Admitted companies are regulated by the state insurance board. Non-admitted companies are not licensed by the state and may be able to offer certain lines of coverage that aren't provided by admitted companies. Insurance providers that operate on a national scale can be categorized as non-admitted even though they may have several admitted branches in various states.
Try: Robert E. Underdown, AIC, ARM explains the differences between admitted and non-admitted insurance companies. To learn more about the pros and cons of both admitted and non-admitted companies, visit the Hoffman Brown Company.

Basic named perils

Business owners have the option of purchasing coverage only for specific damages. The covered damages outlined in the insurance contract are known as basic named perils, and may include fire, explosion, vandalism and hail. Because the coverage is limited to specific events, the insurance premium may be lower than a broad coverage policy.
Try: See how a basic named peril insurance policy stacks up against other policies at the Maine Bureau of Insurance.

Combined single limit

When purchasing commercial property insurance, you will be required to select insurance limits. For example, if a customer is injured on the property, the insurance company will make a bodily injury payment. If a customer damages the building, the insurance company will make a property damage payment. If you do not want to set limitations on the specific types of payments, you can purchase a policy with a combined single limit, which will allocate payments however necessary until a total amount is reached.
Try: For a detailed explanation of combined single limits, visit Progressive Commercial.

Off-premises coverage

Off-premises coverage provides protection for commercial property that isn't stored at the place of business. Off-premises coverage may also cover company vehicles and deposits that are en route to the bank.
Try: Read about the different forms of off-premises coverage at Insurance Services Group.

Declaration page

A declaration page, often referred to as a dec page, outlines the important details of the insurance contract between the provider and the customer. A copy of the declaration page is often considered acceptable proof of insurance.
Try: Read about what is included in a typical commercial vehicle declaration page at the Falls Insurance Center. The Bridle Trails Insurance Agency offers additional information about declaration pages.

Cancellation

The cancellation of an insurance policy can fall under the category of flat, pro rata or short rate. With a flat cancellation, the insurance provider returns the full premium to the customer. Pro rata cancellations result in a partial return of the premium, and short-rate cancellation requires the customer to pay an early-termination fee.
Try: The International Risk Management Institute offers detailed definitions of the various types of insurance cancellations.

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