Nebraska Commercial Property Insurance

Nebraska's economy includes diverse commercial operations from manufacturing to agriculture, all requiring comprehensive property protection against the state's severe weather risks.

Commercial Coverage Forms

Building and Personal Property Coverage Form (CP 00 10)

Causes of Loss Forms

Special Form Exclusions

The Special Form covers all causes of loss EXCEPT:

• Ordinance or law
• Earth movement
• Flood
• Nuclear hazard
• War
• Utility service interruption
• Mechanical breakdown
• Neglect
• Weather conditions (when contributing factor)

Exam Tip: The Special Causes of Loss form provides the broadest coverage but still excludes flood, earthquake, and other specific perils common in Nebraska.

Business Income Coverage

Why Business Income Coverage Matters in Nebraska

Severe weather can force businesses to close for extended periods:

• Tornado damage may require complete rebuilding
• Hail damage to inventory can halt operations
• Flooding can contaminate facilities
• Power outages during storms disrupt production

Business Income Coverage Elements

Coverage Period

Business income pays for the period of restoration:

• Begins when covered loss occurs
• Ends when property should be repaired with reasonable speed
• Extended period option continues coverage for income recovery

Extra Expense Coverage

Pays additional costs to:

• Operate at temporary location
• Rent equipment to continue operations
• Pay overtime to expedite recovery
• Use expedited shipping for materials

Example: A Nebraska manufacturer's roof is destroyed by a tornado. Extra expense pays for:

• Temporary building rental
• Equipment relocation costs
• Overtime labor to set up temporary operations

Coinsurance

How Coinsurance Works

Coinsurance encourages adequate insurance by penalizing under-insurance.

Coinsurance Formula: $\text{Payment} = \frac{\text{Insurance Carried}}{\text{Insurance Required}} \times \text{Loss} - \text{Deductible}$

Insurance Required = Property Value × Coinsurance Percentage

Coinsurance Example

Calculation:

• Payment = ($600,000 / $800,000) × $200,000 - $5,000
• Payment = 0.75 × $200,000 - $5,000
• Payment = $150,000 - $5,000 = $145,000

The insured bears $50,000 of the loss due to inadequate coverage.

Avoiding Coinsurance Penalties

Exam Tip: Coinsurance penalizes under-insurance. Nebraska businesses should regularly review property values to maintain adequate coverage and avoid coinsurance penalties.

Nebraska Agricultural and Farm Property Insurance

Farm Property Coverages

Nebraska's agricultural economy requires specialized insurance:

Farm Insurance Considerations

Federal Crop Insurance

Crop insurance is administered through:

• USDA Risk Management Agency (RMA)
• Federal Crop Insurance Corporation (FCIC)
• Sold by approved private insurers
• Subsidized premium rates available

Note: Crop insurance is federally regulated and not typically covered on state P&C exams, but Nebraska producers should understand the basic program.

Equipment Breakdown Coverage

Coverage Overview

Equipment breakdown (formerly boiler and machinery) covers:

• Mechanical breakdown of equipment
• Electrical damage to machinery
• Operator error causing damage
• Business income from equipment failure

Covered Equipment

Business Income Extension

Equipment breakdown includes business income coverage for:

• Production shutdown from equipment failure
• Spoilage of temperature-sensitive goods
• Service interruption losses

Commercial Property Endorsements

Common Nebraska Endorsements

Selecting Appropriate Endorsements

Nebraska businesses should consider:

• Location (flood plains, tornado-prone areas)
• Building age (ordinance compliance issues)
• Equipment dependencies
• Inventory storage requirements
• Business interruption exposure