Wyoming Commercial Property Insurance

Commercial Property Coverage Overview

Wyoming businesses purchase commercial property insurance to protect:

• Buildings and structures
• Business personal property
• Business income during closures
• Extra expenses after covered losses

Commercial Property Policy Structure

ISO Commercial Property Forms

Wyoming insurers use ISO (Insurance Services Office) standard commercial property forms:

Coverage Form CP 00 10 (Most Common)

Section A: Covered Property

1. Building (if coverage selected)
2. Business Personal Property (if coverage selected)
3. Personal Property of Others (limited)

Section B: Exclusions (property not covered)

Section C: Additional Coverages (automatic coverages)

Section D: Optional Coverages (require activation)

Section E: Definitions

Section A: Covered Property

Building Coverage

What's Covered:

• Building structure
• Completed additions
• Permanently installed fixtures
• Building equipment and machinery
• Personal property used to maintain building
• Outdoor fixtures

Not Covered:

• Land and water
• Growing crops and lawns
• Vehicles licensed for road use
• Property held for sale (unless specified)

Business Personal Property Coverage

What's Covered:

• Furniture and fixtures
• Machinery and equipment
• Stock and inventory
• Tenant improvements (if tenant)
• All other business personal property

Property of Others: Limited coverage for customer property in insured's care

Tenant Improvements and Betterments: If tenant, improvements/betterments to leased premises

Valuation Methods

Commercial property may be valued three ways:

Exam Tip: Replacement Cost is standard for buildings. Actual Cash Value applies to older structures or when replacement cost endorsement is not purchased. Agreed Value suspends coinsurance but requires annual reporting.

Covered Causes of Loss

Three Causes of Loss Forms

Commercial property offers three coverage options:

Basic Form Perils (CP 10 10)

The 11 named perils:

1. Fire
2. Lightning
3. Explosion
4. Windstorm or hail
5. Smoke
6. Aircraft or vehicles
7. Riot or civil commotion
8. Vandalism
9. Sprinkler leakage
10. Sinkhole collapse
11. Volcanic action

Broad Form Perils (CP 10 20)

Basic perils PLUS: 12. Falling objects 13. Weight of snow, ice, or sleet 14. Water damage (from plumbing) 15. All other perils (unless excluded)

Special Form (CP 10 30)

Open Peril Coverage: All causes of loss EXCEPT specifically excluded

Common Exclusions:

• Flood and surface water
• Earthquake and earth movement
• Government action
• War and military action
• Nuclear hazard
• Utility services failure (off premises)
• Wear and tear, deterioration
• Insects, birds, rodents
• Mechanical breakdown

Exam Tip: Special Form (CP 10 30) provides the broadest coverage—all risks except exclusions. This is similar to HO-3 dwelling coverage but for commercial property.

Coinsurance Provisions

Understanding Coinsurance

Purpose: Encourage businesses to insure property to full value

How It Works: Policy specifies coinsurance percentage (80%, 90%, 100%)

Requirement: Must carry insurance equal to coinsurance percentage of property value

Penalty: If underinsured, partial payment even on partial losses

Coinsurance Formula

ext{Payment} = rac{ ext{Insurance Carried}}{ ext{Coinsurance % imes Property Value}} imes ext{Loss} - ext{Deductible}

Coinsurance Example

Property Details:

• Building value: $500,000
• Coinsurance requirement: 80%
• Should carry: $400,000 (80% × $500,000)
• Actually carries: $300,000 (underinsured)
• Fire loss: $100,000
• Deductible: $1,000

Calculation:

ext{Payment} = rac{$300{,}000}{$400{,}000} imes $100{,}000 - $1{,}000 = $74{,}000

Result: Insured receives $74,000, not the full $99,000 (loss minus deductible).

Penalty: $25,000 due to underinsurance

Exam Tip: Coinsurance penalties apply even to partial losses. The only way to avoid coinsurance is to purchase Agreed Value coverage, which requires annual property reporting.

Agreed Value Option

Purpose: Suspend coinsurance requirement

How It Works:

• Insured submits property statement of value
• Insurer and insured agree on value
• Coinsurance suspended for policy period
• Must submit new statement annually

Advantage: No coinsurance penalty if property value increases

Disadvantage: Must complete and submit annual statement of values

Business Income Coverage

Business Income (and Extra Expense) Coverage Form CP 00 30

What's Covered:

• Lost net income during restoration period
• Continuing normal operating expenses
• Extra expenses to minimize business interruption

Coverage Period: From date of loss until property is repaired/replaced OR business relocates

Limit: Based on estimated annual income

Business Income Calculation

Formula:

$ext{Business Income} = ext{Net Income} + ext{Continuing Expenses}$

Net Income: Profit or loss before income taxes

Continuing Expenses: Expenses that continue during shutdown:

• Rent or mortgage payments
• Utilities (minimum)
• Employee salaries
• Loan payments
• Depreciation
• Property taxes

Example:

• Monthly revenue: $100,000
• Variable costs: $40,000
• Fixed costs: $30,000
• Net profit: $30,000
• Fire closes business for 2 months

Business Income Loss:

• Net income: $30,000 × 2 = $60,000
• Continuing expenses: $30,000 × 2 = $60,000
• Total loss: $120,000

Extra Expense Coverage

What's Covered: Additional costs to:

• Continue operations during restoration
• Minimize suspension of business
• Relocate temporarily

Examples:

• Renting temporary space
• Equipment rental
• Overtime labor costs
• Expedited shipping
• Temporary utility connections
• Moving expenses

Extended Business Income

Coverage: Continues beyond restoration period

Purpose: Compensates for slow resumption of business

Typical Period: 30, 60, or 180 days after property restored

Additional Coverages

Automatic Additional Coverages (Included)

Optional Coverages (Must Be Activated)

Wyoming Commercial Property Risks

Weather-Related Perils

Wyoming businesses face significant weather risks:

Wildfire Risk for Businesses

High-Risk Industries:

• Tourism and hospitality (near forests)
• Ranching operations
• Outdoor recreation businesses
• Rural retail

Mitigation Measures:

• Defensible space around buildings
• Fire-resistant construction materials
• Sprinkler systems
• Emergency preparedness plans

Insurance Considerations:

• Higher premiums in WUI zones
• May require inspections
• Possible coverage limitations
• Non-renewal risk in extreme fire zones

Commercial Property Endorsements

Common Endorsements

Equipment Breakdown Coverage

What's Covered:

• Boilers and pressure vessels
• Heating and cooling systems
• Production equipment
• Computer systems and equipment
• Electrical systems

Additional Benefits:

• Business income loss
• Extra expenses
• Spoilage coverage
• Hazardous substance cleanup
• Expediting expenses

Policy Conditions

Key Conditions

Vacancy Provision

Important: If building vacant for 60+ consecutive days:

Reduced Coverage:

• No coverage for vandalism
• No coverage for sprinkler leakage
• No coverage for glass breakage
• No coverage for water damage
• No coverage for theft
• Limited coverage for fire, lightning, windstorm

Vacant vs. Unoccupied:

• Vacant: No people AND no contents
• Unoccupied: No people but contents remain

Exam Tip: The 60-day vacancy provision significantly reduces coverage. Businesses closing temporarily should notify insurers and request vacancy permits or endorsements.

Claims Settlement

Loss Payment Process

1. Immediate Notice: Report loss to insurer
2. Investigation: Insurer inspects damage
3. Proof of Loss: Submit within 60 days
4. Valuation: Determine amount of loss
5. Settlement: Payment within 30-60 days

Settlement Options

Direct Payment: Insurer pays insured directly

Mortgageholder: Payment to insured and lienholder jointly

Repair/Replace: Insurer may elect to repair or replace property

Wyoming-Specific Considerations

Industries Common in Wyoming

Premium Factors

Wyoming commercial property premiums influenced by:

• Location and ZIP code
• Building construction type (frame, masonry, steel)
• Occupancy type and fire protection class
• Distance to fire station and hydrants
• Claims history
• Deductible selected
• Coverage limits and endorsements
• Security systems and sprinklers