Key Takeaways
- Commercial property policies protect business buildings, contents, and business income in Indiana
- Business income coverage pays for lost profits and continuing expenses during suspension of operations
- Coinsurance clauses (typically 80%, 90%, or 100%) require adequate coverage limits to avoid penalties
- Indiana businesses must consider tornado, severe storm, and winter weather exposures
- Equipment breakdown and cyber coverage are important additions for modern Indiana businesses
Indiana Commercial Property Insurance
Commercial Coverage Forms
Building and Personal Property (BPP)
| Coverage | Description |
|---|---|
| Building | Owned structures, fixtures, permanently installed equipment |
| Business Personal Property | Inventory, furniture, movable equipment, supplies |
| Property of Others | Customer property in your care, custody, or control |
Causes of Loss Forms
| Form | Coverage Level |
|---|---|
| Basic | Fire, lightning, explosion, smoke, vandalism, and other named perils |
| Broad | Basic perils plus falling objects, weight of ice/snow, water damage |
| Special | Open perils (all risks) with specific exclusions |
Business Income Coverage
Pays for losses when business operations are suspended due to covered property damage:
- Lost net income during the suspension period
- Continuing normal operating expenses (rent, utilities, salaries)
- Extended period of restoration (time to return to normal operations)
- Extra expenses incurred to continue operations during restoration
Coinsurance
Commercial property policies typically include coinsurance clauses requiring adequate coverage.
Formula:
Insurance Required = Property Value × Coinsurance %
Example: A $1,000,000 building with 80% coinsurance requires $800,000 in coverage. If only $600,000 is carried on a $100,000 loss: \frac{$600,000}{$800,000} \times $100,000 = $75,000
The insured becomes a co-insurer for $25,000.
Indiana-Specific Considerations
Weather Exposures
- Tornado Alley: Indiana experiences 20-25 tornadoes annually
- Severe storms: Hail, wind, and lightning damage common
- Winter weather: Ice, snow, and freezing exposure
Additional Coverages to Consider
- Equipment breakdown coverage
- Cyber liability and data breach coverage
- Ordinance or law coverage for building code upgrades
- Flood insurance (separate policy required)
Exam Tip: Coinsurance penalizes under-insurance. Carry at least the required percentage (typically 80%, 90%, or 100%) of the property's value to avoid becoming a co-insurer and receiving reduced claim payments.
What does business income coverage pay for?
A building valued at $500,000 has 80% coinsurance. The owner carries $300,000 in coverage. What is the insurance required amount?
Which causes of loss form provides the broadest coverage for commercial property?