Idaho Commercial Property Insurance

Idaho's commercial property insurance market serves diverse businesses from Boise's growing tech sector to rural agricultural operations. Understanding commercial property coverage is essential for producers helping Idaho businesses protect their assets.

Commercial Property Coverage Forms

Building and Personal Property Coverage Form (CP 00 10)

The primary commercial property form covering:

Buildings:

• Owned structures at covered premises
• Completed additions
• Fixtures, machinery, and equipment (part of building)
• Outdoor fixtures
• Personal property used to maintain building

Business Personal Property:

• Furniture and fixtures
• Machinery and equipment
• Stock (inventory)
• Tenant improvements
• Leased personal property

Property of Others:

• Customer property in care, custody, or control
• Subcontractor tools and equipment
• Consigned goods

Causes of Loss Forms

Commercial property coverage is paired with a Causes of Loss form:

Basic Form Perils (11)

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 Additional Perils (3)

1. Falling objects
2. Weight of snow, ice, or sleet
3. Water damage (sudden discharge)

Special Form Coverage

• Covers all perils EXCEPT those specifically excluded
• Exclusions include: earthquake, flood, government action, nuclear, war, ordinance/law, earth movement, utility services
• Broadest protection available

Business Income Coverage

What Business Income Covers

Business Income (BI) coverage replaces lost income when operations are suspended due to covered property damage:

Covered Expenses:

• Net income that would have been earned
• Continuing normal operating expenses
• Payroll (if included)
• Taxes that continue during suspension

Formula: $\text{Business Income Loss} = \text{Net Income Lost} + \text{Continuing Expenses} - \text{Non-Continuing Expenses}$

Period of Restoration

Coverage applies during the period of restoration:

• Begins 72 hours after loss (waiting period)
• Ends when property should be repaired with reasonable speed
• Or when business resumes at new location

Extended Business Income

Provides additional coverage after restoration:

• 30 days additional coverage (standard)
• Covers time to rebuild customer base
• Can extend to 60, 90, or more days by endorsement

Extra Expense Coverage

Covers extraordinary costs to continue operations:

• Temporary relocation expenses
• Expedited shipping costs
• Rental of equipment
• Overtime wages
• Outside services

Exam Tip: Understand the difference between Business Income and Extra Expense. Business Income replaces lost income; Extra Expense covers unusual costs to continue operating. Both may be needed.

Coinsurance

How Coinsurance Works

Coinsurance encourages adequate insurance-to-value:

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

Insurance Required = Property Value × Coinsurance Percentage

Example Calculation

A business has:

• Property value: $500,000
• Coinsurance requirement: 80%
• Insurance carried: $300,000
• Loss: $100,000

Step 1: Insurance Required = $500,000 × 80% = $400,000

Step 2: Apply Formula: \text{Payment} = \frac{$300{,}000}{$400{,}000} \times $100{,}000 = $75{,}000

The business receives only $75,000 of a $100,000 loss due to underinsurance.

Avoiding Coinsurance Penalties

• Carry at least the required percentage (80%, 90%, or 100%)
• Request agreed value endorsement (waives coinsurance)
• Update values regularly as property appreciates
• Consider periodic appraisals for accuracy

Valuation Methods

Property Valuation Options

Idaho Commercial Considerations

1. Agricultural Properties

• Equipment values fluctuate seasonally
• Livestock require specialized coverage
• Crop insurance (separate from commercial property)
• Stored grain and feed coverage

2. Technology Businesses

• Equipment obsolescence
• Data and media coverage
• Electronic data processing (EDP)
• Extra expense for tech continuity

3. Retail and Service Businesses

• Inventory valuation methods
• Seasonal stock fluctuations
• Customer goods coverage
• Signs and glass coverage

Idaho Commercial Property Risks

Wildfire Impact on Businesses

At-Risk Business Types:

• Timber and forestry operations
• Resort and recreation businesses
• Agricultural operations in rural areas
• Remote commercial properties

Coverage Considerations:

• Business income during evacuation orders
• Civil authority coverage (access prohibited)
• Debris removal after fire
• Extra expense for relocation

Weather-Related Exposures

Winter Risks:

• Roof collapse from snow load
• Frozen pipes and sprinkler systems
• Heating system failures
• Access disruption affecting business income

Summer Risks:

• Hailstorm damage to buildings and inventory
• Lightning strikes and power surges
• Flash flooding (excluded, requires separate coverage)

Earthquake Exposure

Commercial earthquake considerations:

• Standard commercial property excludes earthquake
• Separate earthquake policy or endorsement needed
• Typically high deductibles (10-25% of value)
• Business income coverage for earthquake events
• Consider building code upgrade coverage

Commercial Property Endorsements

Essential Idaho Business Endorsements

Peak Season Endorsement

For businesses with seasonal inventory fluctuations:

• Automatically increases limits during peak periods
• Common for retailers (holiday season)
• Agricultural businesses (harvest time)
• Tourism-related businesses (ski season, summer)

Commercial Package Policies

Combining Coverages

Idaho businesses often use Commercial Package Policies (CPP) combining:

• Commercial Property Coverage
• Commercial General Liability
• Commercial Auto
• Commercial Crime
• Inland Marine
• Employment Practices Liability

Advantages:

• Single policy, single renewal
• Premium discount for packaging
• Coordinated coverage
• Reduced coverage gaps

Business Owners Policy (BOP)

Simplified package for small businesses:

• Pre-packaged property and liability
• Automatic coverage features
• Less customization available
• Lower cost for qualifying businesses

Eligibility:

• Typically smaller square footage
• Lower annual revenues
• Certain business classifications
• Lower-risk operations