The property coverage supplement. Details building construction, property values, business income, and special exposures like equipment breakdown.
The ACORD 140 supplements the 125 with detailed information about commercial property coverage — the buildings, equipment, inventory, and business income being insured. Property underwriting depends heavily on the physical characteristics of the buildings and the nature of the property being covered.
This form captures building construction type, year built, square footage, roof details, fire protection, replacement cost values, business personal property amounts, business income estimates, and special property exposures like equipment breakdown and ordinance or law coverage.
Accurate property valuation on the 140 is critical. Undervalued buildings trigger coinsurance penalties on partial losses, while overvalued buildings result in unnecessarily high premiums. Getting the replacement cost right — not tax assessment value, not purchase price — is one of the most important steps in the property application process.
Reporting building value below actual replacement cost triggers coinsurance penalties on partial losses. The carrier only pays a proportional share of the loss, leaving the insured to cover the gap. Use a professional replacement cost estimator.
Older buildings may require significant upgrades to meet current building codes after a loss. Without ordinance or law coverage, the carrier pays to restore the building to its pre-loss condition — the policyholder pays the code upgrade difference out of pocket.
Omitting business income coverage to save premium can be devastating. Even a contained fire can make a location unusable for months. If the business cannot pay rent, payroll, and fixed expenses without revenue, business income coverage is essential.
Reporting a building as non-combustible when it's actually joisted masonry changes the rate significantly. If the building has been renovated, note both the original construction and any modifications — mixed construction types need accurate reporting.
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