Commercial Output Policy can protect capital assets

A Commercial Output Policy helps protect businesses from losses involving their assets. Capital assets are real or personal property with a value that is equal to or greater than their capitalization threshold for that specific class of the asset and are expected to last more than one year. A commercial output policy is a type of commercial insurance that gives businesses broad, all-risk insurance protection.

The commercial output policy originally was called a manufacturers output policy when it first was developed back in the 1950s to protect capital assets. The policy provides protection for products while they are in the manufacturing process and while being delivered to their wholesale or retail destinations. The American Association of Insurance Services has forms available for its members so they can standardize their commercial output policy declarations and know the rules. A lot of private insurance companies also have their own commercial output policy forms and rules that are much like the ones from the American Association of Insurance Services.

Premiums for commercial output policies that protect business assets often times are decided based on product classification and a proprietary ratings system that enables commercial insurance companies to give better deals on their commercial output policy insurance plans. A commercial output policy is best for businesses that produce a lot of manufactured goods, have a great deal of retail sales, are involved in a great deal of product transportation and do a lot of equipment installation. The commercial output policy works well for larger businesses and companies heavily involved in manufacturing and transportation and have a highly fluctuating levels of stock and merchandise.

A commercial output policy also protects assets by combining inland marine insurance coverage and commercial property insurance coverage to protect commercial assets but in one form. That makes it more affordable to provide a suitable level of business assets protections with commercial output policy plans. The combined coverages help protect commercial assets by eliminating the likelihood of encountering gaps in insurance coverage when the two types of insurance plans are bought separately.

The insurance plans help protect capital assets against damage to stock while it is being manufactured and later on while it is being transported to business partners. A commercial output policy helps insure equipment that contractors use and other types of property, such as computer equipment and other costly tools of the trade. The insurance coverage can provide protection for the possibility of loss due to the breakdown of office equipment as well as losses incurred during building and installation of facilities and equipment.

A commercial output policy also can protect business assets against losses from criminal activity, dishonest employees and spoilage if refrigerated products are damaged during a power outage or from equipment failure. Capital assets also are protected through commercial output policies by their use of blanket coverages that provide a single coverage for several types of equipment and products that otherwise might need separate insurance plans, which in turn would cost a great deal more. By Mike Heuer