The building is covered. Now make sure the math is.

Commercial Property Insurance covers physical damage to your business buildings, equipment, inventory, and business personal property from covered perils, plus the income and extra expense you incur while the business cannot operate normally during the repair period. Standard Insurance Services Office forms include the Building and Personal Property Coverage Form (CP 00 10), Business Income Coverage Form (CP 00 30), and Causes of Loss Special Form (CP 10 30). Coverage applies on Replacement Cost Value (RCV) or Actual Cash Value (ACV) basis depending on the endorsement, and is subject to coinsurance, deductibles, and any specific perils excluded by the carrier.

Most Texas commercial property policies apply a separate percentage deductible to wind and hail losses, typically 1 to 5 percent of the building value (not the loss amount). For example, a 1,000,000 dollar building with a 2 percent wind/hail deductible carries a 20,000 dollar out-of-pocket exposure on every wind or hail loss, regardless of how small the loss is. This is fundamentally different from a flat deductible policy in lower-hail states. The percentage applies per building per occurrence. The McDade Review evaluates whether the percentage matches your reserves and whether the carrier offers a lower percentage option.

The coinsurance clause requires you to insure to a stated percentage (typically 80 or 90 percent) of the building's replacement cost at the time of loss. If actual insured value falls short of the required percentage when a loss occurs, the carrier reduces the claim payment proportionally by the underinsurance ratio. A building insured for 700,000 dollars when actual replacement cost is 1,000,000 dollars (and 80 percent coinsurance applies, so 800,000 dollars was required) receives 87.5 percent of any covered loss (700,000 divided by 800,000), not the policy limit. Coinsurance penalties become visible at claim time, not at renewal. McDade audits coinsurance compliance annually as part of the Commercial Property Review.

Replacement Cost Value (RCV) pays the cost to replace damaged property with new property of like kind and quality, without deduction for depreciation. Actual Cash Value (ACV) pays RCV minus depreciation for age, wear, and obsolescence. RCV is the standard endorsement on most Texas commercial property policies for the building itself. ACV is common for personal property older than 10 years, for roofs older than 10 to 15 years, and in some carrier-specific endorsements after recent loss activity. A 15-year-old roof valued at 80,000 dollars new might receive 30,000 to 40,000 dollars under ACV. The roof endorsement on your current policy is one of the highest-impact line items in the entire Commercial Property contract.

Business Income coverage pays lost net profit plus continuing normal operating expenses during the period of restoration (the time required to repair or rebuild the damaged property and resume normal operations). Coverage typically begins 72 hours after the loss (the waiting period). The standard period of indemnity is 12 months. Extended Business Income covers continued reduced revenue after reopening, typically for 30 to 60 days. Calculation of the Business Income limit requires a 12-month projection of net profit plus continuing expenses, which most Texas businesses underestimate. The McDade Review evaluates the Business Income limit against current revenue and operating expense structure.

Equipment Breakdown coverage pays for mechanical and electrical breakdown of boilers, HVAC systems, refrigeration, electrical panels, production equipment, and computer systems. Standard Commercial Property forms typically exclude breakdown (sudden mechanical or electrical failure not caused by an external peril). Equipment Breakdown endorsement (CP 10 50 or carrier proprietary forms) or a stand-alone policy fills the gap. Critical for restaurants (refrigeration), manufacturers (production equipment), property managers (HVAC and elevators), data-dependent businesses (servers and electrical), and any business with capital-intensive equipment. Most Texas Business Owners Policies include limited Equipment Breakdown automatically.

Ordinance or Law coverage is three coverages bundled. Coverage A pays the value of the undamaged portion of the building that must be demolished due to building code requirements after a partial loss. Coverage B pays the demolition cost. Coverage C pays the increased cost of construction to current code. Critical for older Texas buildings (pre-2000 construction), buildings in flood-prone areas where code has changed, buildings in coastal Texas counties with updated windstorm code, and any building where current code requires upgrades the original construction did not include. Without Ordinance or Law, a 60-percent loss may force a full demolition with the un-rebuilt portion at the owner's expense.

Texas wind and hail losses use a separate percentage deductible (typically 1 to 5 percent of building value) rather than a flat dollar deductible. The deductible applies per building per occurrence. Adjustment process is similar to other property losses but with two differences. First, hail-event scoping (counting impact damage versus pre-existing damage on roofs and siding) is contested in many Texas hail claims and uses standardized adjuster methodologies. Second, roof endorsement variants (ACV on roofs, schedule-rated depreciation, cosmetic exclusions) change the payable amount on roof claims. The McDade Review identifies the roof endorsement and the wind/hail deductible structure on your current policy.

The McDade Commercial Property Review is an audit of your existing commercial property policy by Dallas Downey, CLCS. The review evaluates three primary areas. First, the coinsurance compliance ratio against your current replacement cost values, identifying underinsurance exposure that would reduce claim payments. Second, the wind/hail percentage deductible and the roof endorsement variant against your building age, roof age, and Texas county location. Third, the Business Income limit, period of indemnity, and Extra Expense limit against your current 12-month revenue and operating expense projection. About 40 percent of the time the review confirms the current structure is correct. The other 60 percent identifies coinsurance gaps, deductible restructuring opportunities, or Business Income limit shortfalls.

Dallas Downey, CLCS leads the McDade commercial insurance team including Commercial Property. Dallas holds the Certified Lines Coverage Specialist designation and routes commercial conversations through a dedicated commercial meeting calendar. The McDade office serves the Houston metropolitan area including Spring, Klein, Tomball, Cypress, The Woodlands, Conroe, Humble, Katy, and Bridgeland, plus all of Texas through Premier Group Insurance carrier access including 50+ top Texas carriers we know well. McDade Insurance Brokerage Group is licensed by the Texas Department of Insurance (Texas License 2539471). Schedule a commercial review with Dallas through the commercial routing on this page or call the McDade office at 281.378.5002.