What perils are typically covered?

Complete Guide to Commercial Property Perils Covered

Why This Question Matters for Colorado and Utah Residents

Commercial property insurance is a financial safeguard for local businesses that face unique risks in Colorado and Utah. Understanding which perils are covered is essential, as regional hazards like hail, windstorms, and wildfires can lead to devastating, costly losses.

• Regional Storm Hazards: Colorado ranks #2 nationally for hail claims, and both states face frequent windstorms that cause significant building and equipment damage.
• Fire and Wildfire Risks: Dry climates and forested areas—especially in Northern Colorado and parts of Utah—mean fires and wildfire-related perils are ever-present threats to businesses.
• Vandalism and Theft: Urban centers like Denver and Salt Lake City have above-average property crime rates, making theft and vandalism key insured perils.

What Most People Get Wrong

A common misconception is that commercial property insurance covers all types of loss. In reality, flooding is always excluded from standard policies (requiring separate coverage), and some forms of water or mold damage are limited or excluded. Many also assume their policy covers rebuilding to current code (it may not without ordinance/law endorsements).

Another misunderstanding is underestimating certain risks – for example, 42% of businesses in the region incorrectly assume their basic policy covers post-wildfire floods or severe hail impacts on roofing and HVAC systems.

The Complete Picture

Typical Colorado and Utah commercial property policies are built on a list of named perils or special form (all-risk) coverage. Common covered perils include:

• Fire and lightning
• Theft and vandalism
• Windstorms and hail (especially crucial in CO, where hail claims drive 87% of losses)
• Explosion
• Some types of accidental water damage (from plumbing, not flood or surface water)

Perils not typically covered: flooding, earthquakes, wear and tear, equipment breakdown, and ordinance/code upgrades unless added via endorsement or separate policy.

For most Colorado and Utah business owners, confirming your policy's list of covered perils—and reviewing whether additional coverage is needed for floods, earthquakes, or business interruption—is the single most important coverage review you can perform.

Making the Right Decision for Colorado and Utah Residents

Question 1: Have I identified the most likely and severe risks for my property location?

Consider local realities before choosing coverages:

• Is your property located in a hail-prone corridor (e.g., Fort Collins, Denver metro, Utah's Wasatch Front)?
• Are wildfires or post-fire floods common in your region?
• Is vandalism or theft a significant issue based on local crime stats?

Question 2: Does my policy clearly specify which perils are included or excluded?

Ask your FoCoIns advisor for a summary of covered versus excluded perils and review for gaps:

• Are water damage and sewer backup included, or excluded?
• Do you need separate flood, earthquake, or ordinance/law coverage?

Question 3: Am I prepared for business interruption if a covered peril strikes?

Evaluate how a major event would impact your business. Business income coverage can cover lost revenue and ongoing expenses during repairs—essential in rebuild scenarios that can easily last 90+ days in Northern Colorado or Utah post-disaster.