Commercial Property Insurance Definitions – eugenecyates.com

To understand commercial property insurance a little better we’ve created a list of commercial property insurance terms and the definitions to those terms.

Actual cash value:

Actual cash value is the cost to replace your damaged or destroyed property minus depreciation, this is after considering the age and condition of your commercial property. 

Additional living expenses:

Additional living expenses coverage will help to pay for expenses above your typical operating costs. ALE helps to cover hotel stays, eating for meals, and more. This coverage kicks in while the property is being rebuilt or repaired. 

Agent:

Your commercial property insurance agent is the representative from Eugene C Yates Insurance Agency who helps to find you the coverage you need. Our agents are wonderful and will help you to shop around different commercial property insurance providers to find you the best deal for your situation.

Application:

Your commercial property insurance application is your signed request for business property insurance coverage. It will contain your information as the prospective policyholder. 

Appraisal:

The appraisal is the estimated value of your commercial property.

Binder:

The binder in a commercial property insurance policy is a temporary agreement that will help to provide coverage until your policy is written. 

Broker:

Your insurance broker or Eugene C Yates Insurance Agency is a licensed organization that will help you to find the coverage you need. 

Cancellation:

Cancellation is the termination of your policy before it’s set to expire.

Claim:

An insurance claim is your request to the insurance provider to pay an amount which is stated in your commercial property insurance policy. 

Claims Adjuster:

Your claims adjuster is the person from the insurance provider that helps to settle claims. 

Covered expenses:

These are the conditions the policy will pay for losses. 

Deductible:

Your commercial property insurance deductible is the amount you pay out of pocket before your claim is activated. Your deductible also controls the rate you pay. The higher your deductible is the lower your rate is. The lower your deductible is the higher your rate will be. 

Depreciation:

This is the decrease of your property value due to wear and tear and aging. 

Earthquake insurance:

Most standard commercial property insurance policies don’t cover earthquake damage. If this is a risk you believe can be a risk you’ll want to ask one of our amazing agents about earthquake insurance. This is a type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by an earthquake.

Endorsement:

An endorsement is an amendment to your commercial property insurance policy used to add, change, or delete coverage. Also referred to as a “rider.”

Exclusions:

There are certain risks that will not be covered under your standard commercial property insurance policy. Some of the most common exclusions are earthquakes and flooding.

Flood insurance:

As mentioned above flooding is not covered under a standard policy. If this is a risk you may run into, please ask one of our agents about flood insurance. Flood insurance coverage is a type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by rising water.

Full replacement policy:

This type of policy will pay for the replacement cost to repair your damaged commercial property. 

Guaranteed replacement cost coverage:

This is an endorsement that will allow you to replace your property without dealing with depreciation. 

Inflation guard endorsement:

This is an endorsement that will increase the amount of your policy to help compensate for the cost of construction increases.

Insured:

The insured is the policyholder that will be protected by the insurance provider in exchange for a monthly or annual premium. 

Insurer:

This is your commercial property insurance provider.

Lapsed policy:

Your policy becomes lapsed when it’s terminated due to lack of payment.

Liability coverage:

Commercial insurance protection that pays for claims or judgments brought against the insured.

Market value:

Market value is the value of your commercial property. It will include the price of land, but is typically not used when setting an insurance claim.

Non-renewal:

When an insurance provider refuses to renew a policy prior to the end of the term, is considered a non-renewal. 

Peril:

A peril or covered peril is an event causing damage to your property (for example: fire, smoke, theft, or vandalism).

Personal property:

Your personal property is your personal belongings like clothing, electronics, important documents, and furniture. 

Policy:

This is the contract between the insurance carrier and the insured. Your commercial property insurance policy is a legal document.

Premium:

Your premium is the amount the insured pays to the insurance provider to maintain coverage. 

Replacement cost:

Replacement cost is the determination of the cost to replace or rebuild the property with the same materials it was originally built with, without subtracting for depreciation.

Settlement:

This is the amount the insurance provider will provide to you after everything is complete.

Umbrella insurance:

This is a policy that “floats” beyond your standard coverage. Keep in mind you will need to carry a certain amount of standard coverage until you’re able to purchase umbrella coverage. This form of coverage will only kick in after you’ve exceeded your standard policy limits.