Connecticut Commercial Property Insurance

Commercial property insurance protects Connecticut businesses from property damage, business interruption, and related losses. Coverage is highly customizable based on business type, location, and risk profile.

Commercial Property Coverage Forms

ISO Commercial Property Policy Structure

Commercial Property Policy Components:

1. Commercial Property Coverage Form
2. Causes of Loss Form (Basic, Broad, or Special)
3. Coverage for Building and Personal Property
4. Optional Coverages and Endorsements

Building and Personal Property Coverage Form (CP 00 10)

Coverage Structure:

Building Coverage Includes:

• Permanent structures and attachments
• Fixtures (lighting, plumbing, HVAC)
• Permanently installed machinery and equipment
• Building materials and supplies for repairs/alterations
• Outdoor fixtures (fences, signs)

Building Coverage Does NOT Include:

• Land (never insurable)
• Water, underground pipes, drains
• Growing crops or lawns
• Vehicles licensed for road use

Business Personal Property Includes:

• Furniture and fixtures not permanently attached
• Inventory and stock
• Machinery and equipment not permanently installed
• Computers and office equipment
• Tools and supplies
• Leasehold improvements (if tenant)

Exam Tip: Building coverage is purchased by the property OWNER. Business personal property coverage can be purchased by either the owner or the TENANT, depending on who owns the contents.

Causes of Loss Forms

Connecticut businesses select one of three Causes of Loss forms:

CP 10 10 - Causes of Loss - Basic Form

11 Named Perils Covered:

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

When Used:

• Budget-conscious businesses
• Low-value properties
• Limited risk exposure
• Lowest premium option

CP 10 20 - Causes of Loss - Broad Form

Includes all Basic Form perils PLUS:

1. Falling objects
2. Weight of snow, ice, or sleet
3. Water damage (from plumbing, heating, AC, or sprinkler systems)

Additional Coverage Features:

• Collapse (specified causes)
• Glass breakage (100 square feet per plate, $100 per plate limit)

When Used:

• Moderate-risk businesses
• Buildings with exposure to additional perils
• Balance between coverage and cost

CP 10 30 - Causes of Loss - Special Form

Open Peril (All-Risk) Coverage:

• Covers ALL risks of direct physical loss except those specifically excluded
• Most comprehensive option
• Broadest protection

Common Exclusions:

• Ordinance or law
• Earth movement (earthquake, landslide)
• Government action
• Nuclear hazard
• Utility services (off-premises power failure)
• War and military action
• Water (flood, surface water, sewer backup)
• Wear and tear, deterioration
• Insects, birds, rodents

When Used:

• Most businesses seeking comprehensive protection
• Higher-value properties
• Businesses with significant property exposure
• Required by lenders for mortgaged properties

Exam Tip: The Special Form (CP 10 30) is the most comprehensive option and most commonly purchased by Connecticut businesses. It provides open peril coverage subject to named exclusions.

Business Income Coverage

Business Income (and Extra Expense) Coverage Form

Business Income Coverage protects against income loss when property damage forces business interruption:

What's Covered:

Coverage Period:

• Begins 72 hours after direct physical loss
• Continues during period of restoration
• Ends when property is repaired, rebuilt, or replaced
• Ends when business could resume at new location
• Maximum period: Time reasonably needed to repair/replace with due diligence

Period of Restoration:

• Time to repair or replace damaged property
• Restore operations at damaged location or new location
• Begins 72 hours after loss
• Ends when operations could resume with reasonable speed

Exam Tip: Business Income coverage requires a direct physical loss to property. Economic losses without property damage are NOT covered.

Extra Expense Coverage

Extra Expense pays for additional costs to:

• Continue operations during repairs
• Minimize business interruption
• Reduce loss of income

Examples of Extra Expenses:

• Renting temporary location
• Renting equipment
• Overtime labor costs
• Temporary employee housing
• Moving costs
• Equipment rental
• Expedited shipping for materials

Extended Business Income

Extended Period of Indemnity:

• Continues business income coverage after property repairs complete
• Typically 30-180 days beyond physical restoration
• Covers time needed to rebuild customer base
• Helps business return to pre-loss income level

Connecticut-Specific Commercial Considerations

Coastal Commercial Properties

Connecticut coastal businesses face unique property risks:

Coastal Business Risks:

• Hurricane and windstorm exposure
• Storm surge and coastal flooding
• Beach erosion
• Nor'easter frequency
• Tourist season business interruption

Required Coverage Enhancements:

• Higher windstorm coverage limits
• Flood insurance through NFIP or private market
• Extended business income periods (seasonal businesses)
• Accounts receivable coverage
• Off-premises utility service interruption

Hartford Business District

Hartford's concentration of insurance, financial, and professional services firms creates specific needs:

Urban Business Considerations:

• Water damage from aging infrastructure
• Civil authority coverage (access blocked by authorities)
• Tenant coverage for office improvements
• Electronic data and equipment
• Ordinance or law (building code upgrades)

Optional Coverages and Endorsements

Equipment Breakdown Coverage (formerly Boiler & Machinery)

Equipment Breakdown covers mechanical and electrical equipment failures:

Covered Equipment:

• Boilers and pressure vessels
• Air conditioning and refrigeration
• Computer and electronic equipment
• Electrical equipment and machinery
• Mechanical equipment
• Communication equipment

Covered Losses:

• Sudden and accidental breakdown
• Mechanical breakdown
• Electrical arcing
• Steam explosion
• Centrifugal force breakdown

Additional Benefits:

• Business income loss from breakdown
• Extra expense from breakdown
• Spoilage coverage (refrigeration failure)
• Expediting expenses (rush shipment of parts)

Exam Tip: Equipment Breakdown coverage was formerly called Boiler & Machinery (B&M) coverage. The name changed but the coverage remains similar, protecting against mechanical and electrical equipment failures.

Ordinance or Law Coverage

Building Code Upgrade Coverage:

When property damage requires repairs, current building codes may mandate costly upgrades:

Three Coverage Parts:

1. Coverage A - Loss to Undamaged Portion: Pays for demolition of undamaged portions if code requires
2. Coverage B - Demolition Cost: Pays to demolish and clear damaged portions
3. Coverage C - Increased Cost of Construction: Pays increased costs to comply with current building codes

Example:

• Fire damages 40% of building
• Building code requires sprinkler system installation in ANY building repair over 30%
• Ordinance or Law Coverage C pays for sprinkler system installation cost

Connecticut Considerations:

• Coastal building codes for wind resistance
• Energy efficiency requirements
• Accessibility (ADA) compliance
• Seismic requirements for certain structures

Accounts Receivable Coverage

Protects businesses from loss of accounts receivable records:

What's Covered:

• Unable to collect from customers due to destroyed records
• Cost to recreate records
• Collection expenses beyond normal
• Interest charges on loans needed to offset uncollected amounts

When Needed:

• Businesses with significant accounts receivable
• Records stored on-premises
• Complement to electronic data backup

Employee Dishonesty Coverage

Protects against employee theft:

Coverage:

• Employee theft of money, securities, or property
• Forgery or alteration
• Computer fraud by employees
• Fraudulent transfer of funds

Not Employee Dishonesty (separate coverage needed):

• Third-party crime (crime by non-employees)
• Robbery and burglary
• Computer virus attacks from outside sources