2.2 Illinois Commercial Property Insurance
Key Takeaways
- Illinois commercial property insurance uses file and use rate regulation
- Commercial policies must disclose terrorism coverage options under TRIA
- Illinois allows surplus lines placement after diligent search of 3 admitted insurers
- Surplus lines tax in Illinois is 3.5% of premium
- Business interruption and extra expense coverage follow standard commercial forms
Last updated: January 2026
Illinois regulates commercial property insurance with specific requirements for rates, surplus lines, and coverage availability.
Rate Regulation
Under Illinois file and use system, commercial property insurance rates:
- May be used upon filing with DOI
- Subject to DOI review after implementation
- Must not be excessive, inadequate, or unfairly discriminatory
- Can be disapproved if DOI finds violations
Commercial Rate Filing
| Requirement | Details |
|---|---|
| Filing | Required before use |
| Approval | Not required before use |
| Review | DOI reviews after implementation |
| Disapproval | DOI can disapprove after review |
Terrorism Insurance
TRIA (Terrorism Risk Insurance Act)
- Federal program providing terrorism insurance backstop
- Illinois insurers must offer terrorism coverage
- Policyholder can accept or reject terrorism coverage
- Disclosure of coverage terms required
Required Disclosures
- Coverage limits for terrorism
- Premium for terrorism coverage
- Right to accept or reject
- Exclusions and limitations
Commercial Property Coverage
Illinois commercial property follows standard ISO forms:
Coverage Types
| Coverage | Description |
|---|---|
| Building | Structure and permanently attached items |
| Business Personal Property | Contents, inventory, equipment |
| Business Income | Lost income during restoration |
| Extra Expense | Additional costs to continue operations |
Surplus Lines Insurance
Illinois allows surplus lines insurance for risks not available in the admitted market:
Surplus Lines Requirements
| Requirement | Details |
|---|---|
| Diligent Search | Must contact 3+ admitted insurers |
| Export List | Some risks pre-approved for export |
| Surplus Lines License | Producer must be licensed |
| Surplus Lines Tax | 3.5% of premium |
| Stamping Office | Illinois Surplus Lines Association |
| Disclosure | Must disclose SL status to insured |
Export List Risks
Illinois maintains a list of risks that can be placed directly with surplus lines insurers without a diligent search:
- Aviation liability
- Excess and umbrella liability
- Employment practices liability
- Directors and officers liability
- Environmental impairment liability
- Professional liability for certain classes
Business Interruption Insurance
Illinois commercial policies include business interruption provisions:
Key Provisions
- Coverage for lost income during restoration period
- Waiting/deductible period (often 72 hours)
- Period of restoration clearly defined
- Extended period of indemnity available
- Civil authority coverage for government-ordered closures
Extra Expense Coverage
- Covers costs to continue operations during restoration
- Separate limit from business interruption
- Examples: temporary location, expedited repairs
Builders Risk
Illinois builders risk insurance:
- Covers buildings under construction
- Available on completed value or reporting form
- Theft coverage may require endorsement
- Transit coverage for materials available
- Typically ends when building is occupied
Test Your Knowledge
How many admitted insurers must be contacted before placing a risk in the Illinois surplus lines market?
A
B
C
D
Test Your Knowledge
What is the Illinois surplus lines tax rate?
A
B
C
D