Study guide
2.2 Arkansas Commercial Property Insurance
Arkansas Property & Casualty Insurance State
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1 Standalone Coverage Map
Standalone Coverage Map
2 Introduction: Arkansas Property & Casualty Insurance Exam Overview
Arkansas Property & Casualty Exam Overview
3 National Portion: Insurance Fundamentals
1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority
4 National Portion: Property Insurance Concepts
2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses
5 National Portion: Dwelling Policies (DP)
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage
6 National Portion: Homeowners Policies - Forms & Section I
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners
7 National Portion: Homeowners Policies - Section II & Endorsements
5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)
8 National Portion: Personal Auto Policy - Liability & Injury
6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists
9 National Portion: Personal Auto Policy - Physical Damage & Duties
7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts
10 National Portion: Liability Insurance Concepts
8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
11 National Portion: Commercial Property Insurance
9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP
12 National Portion: Commercial General Liability - Coverages
10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments
13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions
11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements
14 National Portion: Commercial Auto Insurance
12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements
15 National Portion: Workers Compensation
13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements
16 National Portion: Other Commercial Lines - BOP, Crime & Marine
14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)
17 National Portion: Other Commercial Lines - Specialty & Professional
15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability
18 National Portion: Other Commercial Lines - Surety, Flood & Specialty
16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines
19 National Portion: Insurance Regulation & Market Conduct
17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations
20 National Portion: Ethics & Unfair Trade Practices
18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection
21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing
1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities
22 Chapter 2: Arkansas Property Insurance
2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance
23 Chapter 3: Arkansas Casualty & Auto Insurance
3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance
24 Chapter 4: Arkansas Ethics & Professional Conduct
4.1 Ethical Practices and Consumer Protection
2.2 Arkansas Commercial Property Insurance
Key Takeaways Explain This Topic AI
The Building and Personal Property Coverage Form (CP 00 10) is the core ISO commercial property form, paired with a separate Causes of Loss form (Basic, Broad, or Special).
Business income coverage pays lost net income plus continuing expenses during the period of restoration; extra expense pays to speed reopening.
Coinsurance penalizes under-insurance: payment = (carried ÷ required) × loss − deductible, where required = value × coinsurance %.
The Special Causes of Loss form (CP 10 30) is open-perils, the broadest commercial coverage and the exam's default 'all-risk' answer.
Arkansas Rule 43 claims-handling deadlines and unfair-practice standards apply to commercial property the same as to homeowners.
Last updated: June 2026
Structure of a Commercial Property Policy
A commercial property policy is assembled in modules. You combine a coverage form (what is insured) with a separate Causes of Loss form (which perils apply), then add Common Policy Conditions and the Commercial Property Conditions. The most-tested coverage form is the Building and Personal Property Coverage Form (CP 00 10) .
What CP 00 10 Insures
Coverage What It Includes Common Exclusions
Building Structure, fixtures, permanently installed machinery, owner-supplied appliances Land, foundations below grade
Business Personal Property (BPP) Inventory/stock, furniture, machinery, tenant improvements Vehicles, money, accounts
Personal Property of Others Customer property in the insured's care, custody, control Property the insured owns
The Three Causes of Loss Forms
Basic (CP 10 10): Named perils — fire, lightning, explosion, windstorm, hail, riot, vandalism, sprinkler leakage, and similar listed perils.
Broad (CP 10 20): Basic plus breakage of glass, falling objects, weight of snow/ice/sleet, and water damage.
Special (CP 10 30): Open perils — covered unless excluded. This is the broadest and is the exam's default answer when a question describes "all-risk" or "comprehensive" commercial coverage.
Trap: Flood and earthquake are excluded under all three; they require a separate flood policy or a Difference-in-Conditions endorsement. Equipment breakdown (boiler and machinery) is also excluded and bought separately.
- Business Income, Extra Expense, and Coinsurance
- Business Income (CP 00 30 / CP 00 32)
When a covered direct physical loss suspends operations, business income coverage pays for:
Lost net income (the profit the business would have earned), plus
Continuing normal operating expenses such as rent, loan payments, and key payroll, during the period of restoration .
The period of restoration begins 72 hours after the loss (for the standard form) and ends when the property should be repaired with reasonable speed — not when the business actually chooses to reopen. An extended period of indemnity option continues coverage while the business rebuilds its customer base.
Extra Expense
Extra expense coverage pays the additional costs to keep operating or to reopen faster — renting a temporary location, expediting equipment, paying overtime. A restaurant that leases a food truck after a kitchen fire is claiming extra expense, not lost income.
The Coinsurance Penalty — Worked Example
Commercial property almost always carries an 80%, 90%, or 100% coinsurance clause. The insured must carry insurance equal to at least that percentage of the property's value at the time of loss:
Required = Value × Coinsurance % Payment = (Carried ÷ Required) × Loss − Deductible
Example: A warehouse is worth $1,000,000 with an 80% coinsurance clause. The owner carries only $600,000. A $200,000 fire and a $2,500 deductible:
- Required = $1,000,000 × 0.80 = $800,000
- Payment = ($600,000 ÷ $800,000) × $200,000 = 0.75 × $200,000 = $150,000
- Less the $2,500 deductible = $147,500
The owner becomes a co-insurer for the $50,000 shortfall because they carried only 75% of the required amount.
Exam Tip: If "Carried ÷ Required" is 1.0 or higher, there is no penalty — pay the loss in full up to the limit, minus the deductible. Coinsurance never increases a payment above the policy limit.
Arkansas Rules Applied to Commercial Property
The Arkansas state-section layer for commercial property is the same regulatory framework you learned for homeowners: Rule and Regulation 43, Unfair Claims Settlement Practices , governs how a commercial claim is handled, and the Arkansas Insurance Department enforces it.
- Action Deadline
- Acknowledge the commercial claim 15 working days
- Furnish proof-of-loss forms 20 calendar days
- Affirm or deny after proof of loss 15 working days
- Status letter while investigating every 45 calendar days
The state-law issues that surface most often on commercial questions are form filings, required notices, cancellation and nonrenewal, and fair claim handling — not the definition of covered property, which is national ISO content. Arkansas's bad-faith and 12% penalty exposure for unreasonable delay applies to commercial insureds as well.
Valuation and Optional Coverages
Valuation: The default is actual cash value (ACV) unless the Replacement Cost optional coverage is activated on the declarations. Replacement cost ignores depreciation.
Agreed value option: Suspends the coinsurance clause when the insured files a statement of values and carries 100% — useful so a partial loss is never reduced by a coinsurance penalty.
Ordinance or Law (CP 04 05): Pays the added cost to demolish undamaged portions and rebuild to current Arkansas building codes after a loss.
Inland marine handles property in transit or off-premises (contractor's equipment, signs, fine arts) that the building form does not reach.
A Commercial Scenario
An Arkansas manufacturer suffers a fire that halts production. Read it as layered: the Building/BPP form pays the direct damage; business income replaces lost profit and continuing payroll during the period of restoration; extra expense funds a temporary rented plant; coinsurance reduces the BPP payment if the inventory was under-insured; and Rule 43 governs the acknowledgment, proof-of-loss, and decision deadlines.
Exam Tip: For any commercial loss, first classify the dollars — direct property, income, or extra expense — then apply valuation and coinsurance, and only then check the Arkansas claims-handling deadline the question is really testing.