Direct Damage Overview

Basic Coverage Requirements

Direct Physical Damage

The insurer will pay only for direct physical loss or damage to covered property. Loss other than direct physical loss or damage to covered property—such as income loss suffered by the insured as a consequence of the direct physical damage—is not covered, unless coverage has been added to the policy by endorsement or activation of a coverage option in the policy.

Loss to Covered Property

The insurer will pay only for loss to property that qualifies as covered property. A standard commercial property policy contains fairly detailed descriptions of what property qualifies as covered property and what property does not.

Loss at a Covered Location within the Policy Territory

The loss to covered property must be at premises described in the policy as covered. With only a few exceptions, a standard commercial property policy limits coverage to property at locations that are listed in the policy declarations. Also, the loss must take place within the “policy territory.” In a standard commercial property policy, the coverage territory is the United States, including its territories and possessions, Puerto Rico, and Canada.

Loss from a Covered Cause

The insurer will pay only for loss or damage from a covered cause of loss. In a standard commercial property policy, the covered causes of loss are established in the causes of loss form that is included in the policy.

Loss in Policy Period

The loss must begin during the policy period. The policy period dates and times are shown on the declarations page.

*Click here to download a PDF of the Basic Coverage Requirements.

The Choices of Commercial Property Insurance Policy Forms

Determining a Policy Form

Commercial property policies can be written using one of the forms above. When hired by a client with complex risks, the risk management process plays an integral role in deciding the type of commercial property policy form we will use.