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Commercial Property

Commercial property insured to value.

Coverage for commercial buildings, business property and lost income, including older buildings, mixed-use properties and risks the standard market declines.

By Sam Alishahi · CA Insurance License #4348151 · Reviewed November 2026 · How this page is researched

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How it works

Getting the valuation right matters most

Commercial property policies pay based on the values and terms you choose: replacement cost or actual cash value, limits, and coinsurance conditions.

Underinsuring a building can reduce claim payments. I help set values that reflect the real cost to rebuild.

BuildingThe structure you own, including permanent fixtures.
Business personal propertyEquipment, inventory, furniture and tenant improvements.
Business incomeLost income and extra expense after a covered loss.
Separate policiesEarthquake and flood are typically excluded and bought separately.

Properties I insure

Commercial properties I place

Leased buildings

Lessor’s risk only coverage for owners with tenants. Landlord insurance

Mixed-use

Retail with apartments above.

Older buildings

Documented updates to open more markets.

Vacant commercial

Coverage while between tenants. Vacant home insurance

Under construction

Builder’s risk for new or renovated buildings. See details

Flood exposure

Commercial flood coverage. See details

Before you call

What underwriters will ask

Having these ready means I can go to market on the first call. The quote form asks for the same things, and anything you don’t know yet can wait.

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Building: address, year built, construction and square footage.
Occupancy: tenants or your business operations.
Updates: roof, electrical, plumbing and HVAC years.
Protection: sprinklers and alarms.
Values: building, contents and annual income.
Claims: any in the last five years.

The forms behind the policy: CP 00 10 and the causes of loss

Many commercial property policies use Insurance Services Office (ISO) forms or carrier forms modeled on them. Wording varies by edition and carrier, so treat what follows as the ISO version and check the forms listed on your declarations. IRMI calls the Building and Personal Property Coverage Form, CP 00 10, the key ISO direct damage form. It covers buildings, business personal property and personal property of others, each up to the limit shown on the declarations.

CP 00 10 doesn't list perils. Its Covered Causes of Loss section points to whichever causes of loss form the declarations show, and ISO has three:

Basic, CP 10 10: named perils only. They are fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion, aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse and volcanic action.
Broad, CP 10 20: the basic list plus falling objects, weight of snow, ice or sleet, water damage from leaking appliances, and collapse from specified causes.
Special, CP 10 30: what IRMI calls all risks coverage. It covers loss from any cause except the ones the form specifically excludes.

Under a named-perils form, the claim question is whether a listed peril caused the loss. Under the special form, it's whether an exclusion applies, so read the exclusions as closely as the limits. Two quotes with the same limits can respond to very different events, so the causes of loss form is one of the first lines I compare.

How the coinsurance penalty is calculated

When the declarations show a coinsurance percentage, CP 00 10 won't pay a loss in full if the property's value at the time of loss, times that percentage, exceeds the limit. Here are the form's four steps, using its own Example 1:

Value at the time of loss times the coinsurance percentage: $250,000 × 80% = $200,000, the minimum insurance required.
Limit carried divided by that minimum: $100,000 ÷ $200,000 = .50.
Loss, before the deductible, times that figure: $40,000 × .50 = $20,000.
Minus the deductible: $20,000 – $250 = $19,750.

The insurer pays no more than $19,750, and the remaining $20,250 is not covered. In the form's Example 2, a $200,000 limit meets the requirement and no penalty applies. The test uses the property's value on the date of loss, not the value reported when the policy started, so rising rebuild costs can leave a limit short partway through the term.

Agreed value suspends the penalty

Under CP 00 10's Agreed Value optional coverage, the coinsurance condition doesn't apply to the property it covers, for losses before the agreed value expiration date on the declarations or the policy expiration date, whichever comes first. If that date isn't extended, coinsurance is reinstated. IRMI notes that insurers usually require a signed statement of values first. The form still caps payment at the proportion the limit bears to the agreed value, so read both numbers. The basics are on how coinsurance clauses work.

Ordinance or law: the code-upgrade gap in older buildings

IRMI notes that many communities require a building damaged to a specified extent, typically 50 percent, to be demolished and rebuilt to current code rather than repaired. According to IRMI, unendorsed standard commercial property forms don't cover the loss of the undamaged portion, the cost to demolish it, or the increased cost of rebuilding to code. The 10 12 edition of CP 00 10 adds a small Increased Cost of Construction coverage, only for buildings with the Replacement Cost option and capped at the lesser of $10,000 or 5% of the building's limit.

The ISO Ordinance or Law Coverage endorsement, CP 04 05, has three parts, and each applies only if it's entered on the schedule:

Coverage A: the loss in value of the undamaged portion when a law requires that it be demolished. It falls within the building limit and doesn't increase it.
Coverage B: the cost to demolish the undamaged parts and clear the site.
Coverage C: the increased cost to repair or rebuild to the law's minimum standards, including excavation, foundations, pilings and underground pipes. It isn't paid unless the building is actually repaired or rebuilt, and the rebuilt property must be intended for a similar occupancy unless zoning doesn't allow it.

Coverages B and C can carry separate limits or one combined limit. The 09 17 edition adds an optional post-loss option for a law passed or revised after the loss but before rebuilding starts. Nothing is paid for a law you were required to comply with before the loss and failed to. I look at all of this first on apartment and mixed-use buildings.

The vacancy condition and the 60-day clock

CP 00 10 has a vacancy loss condition. If the building where the loss happens has been vacant for more than 60 consecutive days before the loss, the form won't pay for vandalism, sprinkler leakage (unless the system was protected against freezing), building glass breakage, water damage, theft or attempted theft. For other covered causes of loss, it reduces the payment by 15%.

What counts as vacant depends on who the named insured is:

Tenant: the building means your unit or suite, and it's vacant when it doesn't contain enough business personal property to conduct customary operations. IRMI's example is a seasonal shop that sold off its inventory for the off-season and became vacant without realizing it.
Owner or general lessee: the building means the entire building, and it's vacant unless at least 31% of its total square footage is rented to and used by tenants for their customary operations, used by the owner for its own operations, or both. IRMI points out that simply having a lease in place isn't enough. The space has to be in use.

Buildings under construction or renovation aren't considered vacant. IRMI warns that carrier forms can be stricter than ISO's, so I read the vacancy wording on every quote. For a building between tenants, ISO's Vacancy Permit endorsement (CP 04 50) suspends the condition for the permit period, though the insurer can still exclude vandalism and sprinkler leakage, and Vacancy Changes (CP 04 60) replaces the 31% with a lower figure. If a carrier won't cover a building that's empty, a policy built for vacant buildings is the next place to look.

Questions

Commercial property, answered

What is lessor’s risk only (LRO) insurance?

Lessor’s risk only insurance is for owners of commercial buildings leased to tenants who run their own operations there. It covers the building and your liability as the owner, while each tenant carries its own business insurance.

What is coinsurance?

A condition requiring you to insure to a percentage of value. If you’re underinsured, a claim payment can be reduced.

Replacement cost or actual cash value?

Replacement cost pays to rebuild without deducting depreciation; actual cash value deducts depreciation. Replacement cost usually costs more.

Does commercial property include earthquake?

Usually not. Earthquake is typically separate.

Can you insure a building with older wiring?

Sometimes. Documented updates and inspections improve options, and specialty markets may help.

Does coinsurance apply to ordinance or law coverage?

Not to all of it. The ISO Ordinance or Law Coverage endorsement (CP 04 05) says the coinsurance condition doesn't apply to Coverage B (demolition cost) or Coverage C (increased cost of construction), while Coverage A sits within the building limit. Carrier versions can differ, so check the endorsement on your policy.

Is a building under renovation considered vacant?

Under ISO's CP 00 10, buildings under construction or renovation aren't considered vacant. An Ohio appeals court case discussed by IRMI held that renovation means work actually being done at the building, not just planning it.

Do you offer commercial property insurance outside California?

Yes. Clients across the country send the same quote form. Sam Alishahi is licensed in all 50 states and Washington, DC and places policies there directly. The shopping across carriers works the same way. Rules, minimums and markets differ by state — see insurance requirements by state.

Official sources

Often placed alongside this

Coverage

Landlord insurance

Rentals held personally, in a trust or through an LLC.

See coverage Coverage

Builder’s risk insurance

Coverage for structures and materials during construction.

See coverage Coverage

Lessor’s risk only (LRO) insurance

For owners who lease a whole commercial building to tenants.

See coverage

Questions people ask: What is business interruption insurance? What is equipment breakdown coverage?

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By state: Insurance requirements by state

Commercial property

Send the building details. I’ll take it to market.

Address, occupancy and values are enough to start.

Get a Quote Call (877) 711-4545

Alishahi Insurance · Saman Alishahi, independent insurance broker, California License #4348151. General information, not a quote or a promise of coverage; coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued. Some policies may be placed with nonadmitted (surplus lines) insurers, which are not members of the California Insurance Guarantee Association (CIGA).

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