Montana Commercial Property Insurance

Montana businesses face diverse property risks including wildfire, severe weather, equipment breakdown, and crime. Commercial property insurance provides essential protection for business assets and operations.

Commercial Property Coverage Forms

Building and Personal Property (BPP) Coverage Form

The BPP form is the foundation of commercial property coverage:

Coverage Triggers

Exam Tip: The Special Form (open perils) provides the broadest coverage but costs more. Know the difference between basic, broad, and special forms.

Business Income Coverage

What Business Income Covers

Business income insurance pays for lost income when operations are suspended due to a covered property loss:

Business Income Formula

$\text{Business Income Loss} = \text{Net Profit} + \text{Continuing Operating Expenses}$

Period of Restoration

Coverage continues during the period of restoration:

• Begins 72 hours after loss (standard waiting period)
• Ends when property is repaired or should be repaired
• Subject to policy time limit (usually 12 months)

Extra Expense Coverage

Pays additional costs to:

• Operate from temporary location
• Rent emergency equipment
• Expedite repairs
• Avoid or minimize income loss

Coinsurance

How Coinsurance Works

Coinsurance requires the insured to carry coverage equal to a specified percentage of property value. Failure to meet the requirement results in a penalty.

Coinsurance Formula

$\text{Payment} = \frac{\text{Amount Carried}}{\text{Amount Required}} \times \text{Loss} - \text{Deductible}$

Where:

• Amount Required = Property Value × Coinsurance Percentage
• Coinsurance Percentage typically 80%, 90%, or 100%

Coinsurance Example

Scenario: A Montana business has property worth $500,000 with 80% coinsurance and carries $300,000 coverage. A fire causes $100,000 in damage.

Calculation:

• Amount Required: $500,000 × 80% = $400,000
• Amount Carried: $300,000
• Coinsurance Ratio: $300,000 ÷ $400,000 = 75%
• Payment (before deductible): $100,000 × 75% = $75,000

Result: The business receives only $75,000 for a $100,000 loss because they were underinsured.

Exam Tip: Coinsurance penalizes under-insurance. Always recommend clients carry at least the coinsurance percentage to avoid becoming a co-insurer of their own loss.

Montana Commercial Property Considerations

Wildfire Risk for Businesses

Montana businesses face significant wildfire exposure:

Agricultural Property Coverage

Montana's agricultural economy requires specialized coverage:

Crop Insurance

Federal crop insurance is available through USDA Risk Management Agency:

Equipment Breakdown Coverage

What It Covers

Equipment breakdown (formerly boiler and machinery) covers:

• Mechanical breakdown of covered equipment
• Electrical arcing or damage
• Pressure equipment accidents
• Computer and electronics equipment

Covered Equipment

Montana Winter Considerations

Equipment breakdown is critical for Montana businesses:

• Heating system failures during extreme cold
• Frozen equipment and pipes
• Generator failures during power outages
• Refrigeration for food storage and livestock

Builder's Risk Insurance

Coverage for Construction Projects

Builder's risk covers buildings under construction:

Montana Builder's Risk Considerations

• Winter construction delays and weather damage
• Remote site access limitations
• Wildfire risk during building season
• Theft of materials in rural areas

Inland Marine Insurance

Commercial Inland Marine

Covers property in transit or property of a mobile nature:

Montana Inland Marine Needs

• Agricultural equipment moving between fields
• Construction equipment on job sites
• Goods in transit across long distances
• Contractor tools and equipment

Commercial Property Exclusions

Standard Exclusions

Montana-Specific Exclusions to Note

• Mine Subsidence: Prevalent in historic mining areas
• Volcanic Action: Limited exposure in Montana
• Mudflow: May require endorsement in prone areas

Claims Handling

Commercial Property Claims Process

Proof of Loss

Sworn statement including:

• Description of loss event
• Inventory of damaged property
• Amount of loss claimed
• Other insurance applicable
• Interest of others (mortgagees, lien holders)

Exam Tip: Montana law requires prompt claims handling. Insurers must acknowledge claims timely and communicate clearly throughout the process.