Legal Information Notice: This checklist provides general educational information only. It is not legal advice, does not create an attorney-client relationship, and may not apply to your jurisdiction or circumstances. Laws and deadlines vary. Do not rely on this checklist for a specific legal decision or deadline; consult a qualified attorney licensed in the relevant jurisdiction.

The cheapest premium may provide dramatically less protection.
Replacement cost and actual cash value are not the same.
Policy limits can be too low to rebuild the property.
Business personal property may have separate limits.
Equipment may have exclusions or sublimits.
Flood may not be covered by the standard policy.
Earthquake coverage may be excluded.
Wind/hurricane coverage can contain special deductibles.
Ordinance-or-law coverage may be insufficient.
Business interruption coverage can be misunderstood.
“Covered cause of loss” doesn’t mean every resulting loss is covered.
Vacancy can materially affect coverage.
Property under construction may require different protection.
Older buildings can create valuation problems.
Coinsurance provisions can create unpleasant surprises.
Certain valuable items may have sublimits.
Outdoor property may be treated differently.
Signs, fences and landscaping may have limited coverage.
Water damage exclusions can be significant.
Mold coverage may be restricted.
Equipment breakdown may require separate coverage.
Cyber-related property losses may fall outside traditional coverage.
A certificate of insurance does not tell the whole story.
An agent’s summary is not a substitute for reading the policy.
A policy should be evaluated against the worst financially plausible loss, not the monthly premium.

B. PREMIUM COMMERCIAL PROPERTY INSURANCE BUYER CHECKLIST

Mission: Determine whether the proposed commercial property insurance actually protects the business against the losses that could materially damage or destroy it.

Don’t ask whether the policy is cheap. Find out what happens when you actually need it.

How to use: Complete this checklist before purchasing, renewing, or materially changing coverage.

Scoring

☐ 2 points — verified/documented
☐ 1 point — partially verified
☐ 0 points — unknown/unverified

Interpretation

Score	Assessment
90%+	Strongly documented
75–89%	Generally prepared
50–74% Below 50%	Significant gaps High information risk

Important: A high score does not guarantee that a policy is adequate. It means you’ve done a better job investigating it.

SECTION 1 — Know What You’re Actually Insuring

☐ 1. I have a complete description of every property location being insured.

☐ 2. I have verified who legally owns each property.

☐ 3. I have identified leased, rented, borrowed or temporarily occupied property.

☐ 4. I have listed buildings, structures and improvements separately.

☐ 5. I have created an inventory of business personal property.

☐ 6. I have identified major equipment and machinery.

☐ 7. I have identified outdoor property that matters financially.

☐ 8. I have identified signs, fencing, landscaping and exterior installations.

Why this matters: You cannot adequately insure assets that haven’t been properly identified.

SECTION 2 — Determine the Real Replacement Cost

☐ 9. I know the estimated replacement cost of the building.

☐ 10. The valuation reflects current construction costs rather than the property’s purchase price.

☐ 11. I have considered demolition and debris-removal costs.

☐ 12. I have considered increased construction costs following a major disaster.

☐ 13. I have considered architectural and engineering expenses.

☐ 14. I have investigated whether local building-code requirements could increase rebuilding costs.

☐ 15. I have reviewed whether ordinance-or-law coverage is adequate.

Buyer Question

“If this building were completely destroyed tomorrow, what is the maximum amount this policy would actually contribute toward rebuilding it to today’s requirements?”

SECTION 3 — Understand the Valuation Method

☐ 16. I know whether the policy uses replacement cost or actual cash value.

☐ 17. I understand how depreciation affects a claim.

☐ 18. I know whether different classes of property use different valuation methods.

☐ 19. I have asked whether special valuation rules apply to older buildings.

☐ 20. I have reviewed any coinsurance requirement.

☐ 21. I understand the consequences of underinsuring the property.

Red Flag:
The buyer knows the property’s market value but has never calculated its insurance replacement cost.

SECTION 4 — Identify What Can Actually Cause a Loss

Create a Property Loss Threat Inventory:

Threat	Relevant?	Covered?	Deductible	Limit/Sublimit
Fire	☐	☐	$___	$___
Wind	☐	☐	$___	$___
Hurricane	☐	☐	$___	$___
Flood	☐	☐	$___	$___
Theft	☐	☐	$___	$___
Vandalism	☐	☐	$___	$___
Water damage	☐	☐	$___	$___
Earthquake	☐	☐	$___	$___
Equipment breakdown	☐	☐	$___	$___

☐ 22. I have identified the major physical threats to the property.

☐ 23. I have verified whether each major threat is covered, excluded or separately insured.

☐ 24. I have documented the deductible for each major threat.

☐ 25. I have documented relevant sublimits.

SECTION 5 — Investigate Exclusions

☐ 26. I have obtained the actual policy wording.

☐ 27. I have reviewed the exclusions rather than relying solely on the agent’s summary.

☐ 28. I have identified exclusions that could create a catastrophic uninsured loss.

☐ 29. I have asked specifically about water-related exclusions.

☐ 30. I have investigated mold limitations.

☐ 31. I have investigated vacancy provisions.

☐ 32. I have investigated construction/renovation provisions.

☐ 33. I have investigated exclusions affecting specialized equipment.

☐ 34. I have identified coverage that requires endorsements or separate policies.

SECTION 6 — Protect the Business From Losing Its Income

A destroyed building can be only half the problem.

☐ 35. I have calculated the business’s average monthly gross profit/revenue exposure.

☐ 36. I have estimated how long the business could realistically be disrupted after a major loss.

☐ 37. I have reviewed business-income coverage.

☐ 38. I understand the waiting period/time deductible.

☐ 39. I understand the maximum indemnity period.

☐ 40. I have considered whether rebuilding delays could exceed the selected period.

☐ 41. I have considered additional expenses necessary to keep operating elsewhere.

☐ 42. I have considered whether supplier/customer disruption could affect revenue.

Critical Question

“If my building disappeared tomorrow, how long could my business survive before insurance payments stopped?”

SECTION 7 — Check the Deductibles

☐ 43. I have listed every deductible.

☐ 44. I know whether deductibles are flat-dollar or percentage-based.

☐ 45. I understand whether certain catastrophes have separate deductibles.

☐ 46. I have calculated the actual dollar exposure created by percentage deductibles.

☐ 47. I could financially absorb every deductible in the policy.

Red Flag:
A policy looks inexpensive because the deductible transfers a huge portion of the catastrophe risk back to the business.

SECTION 8 — Compare Policies Correctly

Never compare policies using premium alone.

Create a comparison sheet:

Feature	Policy A	Policy B	Policy C
Annual premium	$	$	$
Building limit	$	$	$
Contents limit	$	$	$
Business income	$	$	$
Deductible	$	$	$
Wind deductible	$	$	$
Flood	Yes/No	Yes/No	Yes/No
Equipment breakdown	Yes/No	Yes/No	Yes/No
Ordinance/law	$	$	$
Replacement cost	Yes/No	Yes/No	Yes/No
Major exclusions	___	___	___

☐ 48. I compared equivalent coverage rather than headline premiums.

☐ 49. I compared deductibles.

☐ 50. I compared exclusions.

☐ 51. I compared sublimits.

☐ 52. I compared business-interruption protection.

☐ 53. I compared endorsements.

SECTION 9 — Ask the Insurance Professional the Questions That Matter

Before purchasing, ask:

☐ 54. “What are the five largest uninsured risks you see in this proposal?”

☐ 55. “Where could a claim realistically be denied?”

☐ 56. “Which limits do you think are most likely to be inadequate?”

☐ 57. “Which exclusions should concern me most?”

☐ 58. “What assumptions were used to calculate the property valuation?”

☐ 59. “What would happen if rebuilding costs were substantially higher than expected?”

☐ 60. “Which coverage would you add if this were your own business?”

☐ 61. “What isn’t included that another insurer might include?”

☐ 62. “Which endorsements are available but not currently included?”

SECTION 10 — DOCUMENTATION & CLAIM READINESS

☐ 63. I have current photographs of the property.

☐ 64. I have an inventory of major equipment.

☐ 65. I have receipts/invoices where appropriate.

☐ 66. I have serial numbers for important equipment.

☐ 67. I have copies of relevant leases and ownership documents.

☐ 68. I have stored important documentation somewhere other than the insured premises.

☐ 69. I understand the basic claim-reporting process.

☐ 70. I know whom to contact if a major loss occurs.

SECTION 11 — FINAL RED-FLAG AUDIT

Stop and investigate further if:

☐ The insurer cannot clearly explain a major exclusion.

☐ The valuation was produced without meaningful property information.

☐ The proposed limits appear arbitrary.

☐ You are comparing premiums rather than coverage.

☐ Catastrophic risks have percentage deductibles you cannot comfortably absorb.

☐ Business interruption has never been calculated.

☐ You haven’t obtained the actual policy wording.

☐ The proposal contains numerous endorsements you don’t understand.

☐ The agent says “that’s standard” instead of explaining the provision.

☐ You cannot explain your five biggest uninsured risks.

FINAL COMMERCIAL PROPERTY INSURANCE TEST

Before signing, you should be able to answer YES to these:

☐ I know exactly what property is insured.

☐ I know how its replacement cost was calculated.

☐ I know the major risks facing the property.

☐ I know which risks are excluded.

☐ I know every major deductible.

☐ I know the important sublimits.

☐ I understand my business-income protection.

☐ I have compared policies on an apples-to-apples basis.

☐ I have identified my major uninsured exposures.

☐ I have documented the questions and answers provided by the insurance professional.

The Ultimate Buyer-Beware Question

“If the worst realistic event happened tomorrow, exactly how much of the resulting financial damage would I still have to pay myself?”

If you don’t know the answer, you aren’t finished evaluating the policy.

#21 — COMMERCIAL PROPERTY INSURANCE Buyer Checklist You Need To Know Before You Spend Your Money. 70 Buyer-Beware Intelligence Points.