What’s Not Covered Under a Basic Commercial Property Policy? Typical Exclusions

Commercial property policies don’t cover everything that could possibly cause physical or other damage to your business—although many policies cover a lot. Here’s an overview of what you can expect not to be covered under the Basic form.

Earthquakes. Earthquakes are covered under a specific cause-of-loss form that’s separate from most policies.

War. Acts of war are not covered under most commercial properties. This includes damage caused by missiles, even if you have a policy that includes coverage by aircraft. Self-propelled missiles and other spacecraft are usually covered even under Basic policies if they are not part of a war.

Damage by vehicles owned by the insured.While commercial property insurance usually covers damage caused by physical contact with a vehicle or an object thrown from a vehicle, this doesn’t apply to vehicles the insured owns. Damage from those vehicles should be covered under an auto policy.

Some fires. “Fire” is usually not formally defined. However, fire insurance usually only covers damage caused by fires that are in a place where they wouldn’t normally be—so a fire in a stove or fireplace that causes damage wouldn’t be covered. But if the fire escapes from the stove or fireplace, it would be.

Some smoke. Smoke damage under most policies is only covered if it arises suddenly under accidental circumstances. Smoke damage from industrial or agricultural operations isn’t covered.

Glass breakage. Vandalism in general is usually covered, but glass breakage is a pretty noticeable exception in most cases. However, damage to the property that results from broken glass is covered.

Theft. Losses caused by theft under a vandalism incident are not covered, but if the thief caused damage to the building while breaking in, that damage is covered.

Weather. Wind and hail damage is generally covered, but not damage caused by frost, snow, sleet, or other ice events except hail. While wind damage is covered, the same is not true for damage caused by dust, sand, snow, or rain that gets inside the building—unless it caused exterior damage first and the weather got in through the damaged section.

There are, of course, three forms available under most commercial property policies—Basic, Broad, and Special. Insureds have the ability to choose to include or exclude a range of potential problems, and every insured should talk to their insurance agent to determine what the best solution is for them. Be sure you understand exactly what is and isn’t covered under your policy—as your business may depend on it.

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