California Property & Casualty Broker-AgentProperty InsuranceMedium
A client owns a commercial building and has a Commercial Property Policy with a Building and Personal Property Coverage Form. They want to ensure that if their business is interrupted due to a covered property loss at a key supplier's location, their policy will provide coverage for the resulting loss of income. Which endorsement should they add to their policy?
- AOrdinance or Law
- BUtility Services – Direct Damage
- CDependent Properties
- DSpoilage Coverage
Show answer & explanationAnswer & explanation
Correct answer: C. Dependent Properties
The Dependent Properties endorsement (also known as Contingent Business Interruption) provides coverage for loss of business income or extra expense resulting from damage to property of another entity, such as a key supplier, customer, or leader location, caused by a covered peril.
Why the other options are wrong
- A. Ordinance or Law covers increased costs due to building code enforcement, not business interruption from a supplier's loss.
- B. Utility Services – Direct Damage covers damage to the insured's property due to utility service interruption, not loss of income from a supplier's damage.
- D. Spoilage Coverage covers perishable goods due to breakdown of refrigeration or power outage, not business interruption from a supplier's property damage.
Dependent Properties Endorsement
An endorsement that provides coverage for loss of business income or extra expense resulting from damage to property of another entity, such as a key supplier, customer, or leader location, caused by a covered peril.
- Also known as Contingent Business Interruption.
- Covers losses due to damage at non-owned locations.
- Requires a covered peril at the dependent property.
Memory trick: Remember 'Dependent' for when YOUR business depends on OTHERS.