10 Things to Know About Commercial Property Insurance

1. Flood Coverage

Flood coverage is NOT included in the Commercial Property Package (CPP).

2. Vacant v. Unoccupied

“Vacant” and “unoccupied” are not synonymous in the CPP. A building or unit can be “unoccupied” without being “vacant.” If it’s not “vacant,” the vacancy provisions do not apply.

3. Green Endorsement

ISO now offers a green endorsement for commercial package policies (CP 04 02), which companies were allowed to begin adopting in March of this year.

4. Adding Back

Many of the items listed as “Property not Covered” in the commercial property policy can be added back by endorsement.

5. Most Common PPC

ISO’s Public Protection Classification evaluates a community’s public fire protection services, including the fire department, water supply, and fire alarm and communications systems. ISO assigns a PPC from 1 to 10, with Class 1 representing exemplary protection and Class 10 indicating that the fire protection program doesn’t meet minimum criteria. The most common PPC is 9 (28.1 percent); only 1 in every 801 fire districts qualify for a PPC of 1. Nationally, the assignments of PPCs to fire districts across the nation breaks down as follows:

PPC # of Percentage
1 60 0.125%
2 568 1.181%
3 1,970 4.097%
4 4,524 9.408%
5 7,949 16.531%
6 8,850 18.405%
7 5,993 12.463%
8 3,058 6.359%
9 13,512 28.1
10 1,602 3.332%

6. Special Cause of Loss Form

Changes to the CPPÕs Special Cause of Loss Form (CP 10 30) in 2008 (06 07 Edition) took away coverage for nearly all utility failure, including on-premises failure which was covered in prior forms. This increases the need to buy utility coverage.

7. Blanket Margin Clause

The Blanket Margin Clause was introduced in 2007 edition. It limits the amount of coverage available to buildings written under a blanket limit.

8. Ordinance or Law

When/if real commercial property is insured on a functional replacement cost basis, ordinance or law coverage is automatically included.

9. RRGs

The Risk Retention Modernization Act (HR 4802) that has been introduced in Congress would allow RRGs to write commercial property insurance, create uniform governance standards for RRGs, and give the Treasury Department authority to oversee the RRG sector and resolve interstate disputes regarding RRG operating authority.

10. Non-Residential Fires

In 2009, 103,550 fires in non-residential structures took 105 lives and caused $3 billion in damage, according to the National Fire Protection Association. That’s property damage only, not including any lost business income.