10 Things to Know About Commercial Property

October 20, 2014
  1. Prices for commercial property insurance fell during the second quarter of 2014, marking the first time in three years that property prices fell, according to a recent Towers Watson survey. The survey showed that over half of commercial property respondents reported price decreases in the second quarter. —Towers Watson’s Commercial Lines Insurance Pricing Survey (CLIPS), Sept. 2014
  2. Competition is rising for commercial property lines, particularly for shared and layered programs, and price increases could fall further and even decline over the year if there are no major catastrophes. —Moody’s Investors Service report, “U.S. P&C Insurers’ Earnings Lower in Q2 2014 on Higher Catastrophe Losses,” Aug. 21, 2014.
  3. With green commercial building construction expected to rise significantly in coming years, a growing number of insurers are offering green commercial property insurance policies and endorsements, some of which are directed at specific segments of the business community such as manufacturers. —Insurance Information Institute
  4. Homeowners’ insurance policies generally do not cover home-based business losses. Depending on risks to the business, home-based small business owners may add riders to the homeowners’ policies to cover normal business risks such as property damage. —U.S. Small Business Administration
  5. Flood and sewer back-up is excluded under most standard commercial property policies. Sewer back-up can be added to a policy as an endorsement. Coverage for flood-caused damage to a business is available through the National Flood Insurance Program (NFIP) and a few private insurers. When used in tandem with private insurance, NFIP coverage can mitigate or “buy down” large deductibles associated with commercial flood policies or simply provide additional coverage. —Insurance Information Institute
  6. The cost of large commercial property and engineering claims is rising with the trend toward ever-higher values and risks concentrated in areas with exposure to natural hazards. Fire is the major cause of property losses, both by number and value (26 percent/28 percent). —Allianz Global Corporate & Specialty, Global Claims Review 2014
  7. A standard commercial flood insurance policy covers direct physical losses caused by flood as well as losses resulting from flood-related erosion caused by heavy or prolonged rain, coastal storm surge, snow melt, blocked storm drainage systems and levee or dam failure. —Insurance Information Institute
  8. There were some 99,500 non-residential structure fires in 2012, causing 65 civilian deaths, 1,525 civilian injuries and $2.6 billion in damages. —National Fire Protection Association
  9. Boiler and machinery/equipment breakdown is an area often overlooked, yet it has the potential to cause significant property damage in the event of an explosion, electrical surge or other equipment-related losses not covered by the standard property forms. —Curtis M. Pearsall, president of Pearsall Associates Inc., a risk management consulting firm
  10. Because most agents insure a fair number of commercial buildings, this is an area in which agents would be wise to dedicate time and resources. Each commercial building has its own complexity and uniqueness — and failing to address this could lead to E&O issues. —Curtis M. Pearsall, Pearsall Associates Inc.

Topics Commercial Lines Flood Business Insurance Property

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