The Building and Personal Property form provides five additional coverages, such as the cost a business would incur from the fire department for responding in the event of a fire.
These additional coverages apply no matter which cause of loss form, Basic, Broad or Special, is used in the package. The additional coverages are:
- debris removal
- preservation of property
- fire department service charges
- pollutant clean up and removal
- increased cost of construction
Two key facts about these additional coverages are:
- Each is designed to meet the average commercial insured’s needs. Your particular business may need more dollar protection in one or more of these areas.
- Each relates to losses arising from a covered peril, not to building or personal property value.
Remember the massive cleanup of the World Trade Center? That shows the importance of debris removal and pollutant cleanup coverage.
What happens when you have to remove property in the face of an insured threat or disaster and store it elsewhere? Preservation of property coverage reimburses you for that.
Note. Until a few decades ago, insurance was sold only on the basis of Actual Cash Value (ACV) reimbursement. ACV means losses are paid at current market cost. In other words, original value less depreciation. This makes it hard on a business forced to replace property. Today you can choose between ACV and a Replacement Cost Option (cost to repair or replace).
With that note on recovery in mind, the increased cost of construction coverage makes sense. If you have Replacement Cost on your policy, this pays for the higher cost to rebuild.
Tip. Remember, none of these five coverages are as simple as set out here. You are urged to brush the dust off your policy! Read it. Understand it. And review it with your agent – your trusted advisor.
If you’d like to learn more, contact one of our Licensed Advisors . We’re here to help.