Be Aware of Recent Revisions to ISO Commercial Property Coverage Forms
Specified Causes of Loss — The definition of this term now includes water damage resulting from breaking or cracking of off-premises water or sewer pipes caused by wear and tear.
- ...business suffering a serious property loss may not immediately regain all its customers once it reopens for business. Previous forms limited this coverage to 30 days, but the revised coverage increases it to 60 days.
- Newly Acquired Business Personal Property — Newly acquired business personal property is no longer automatically covered under this provision. In previous forms a $100,000 coverage extension applied to such property. Now insureds will need to notify their agents promptly if they are acquiring new personal property and obtain the necessary endorsement.
- Covered Causes of Loss —The lead-in language to the Causes of Loss – Special Form has undergone significant revision over the years, due in large part to the way in which the courts interpreted the language. At one time the coverage provided was referred to as “all risks,” but that term was often construed by the courts to mean much broader coverage than that intended by the drafters of the policy. Consequently, insurers discouraged the use of that term and instead encouraged the use of the term“open perils” to distinguish it from“all risks.” In addition, ISO revised the lead-in language to “risks of direct physical loss.”That phrase, too, generated litigation and with this latest revision, covered cause of loss means “direct physical loss” unless the loss is excluded or limited in the policy. The new form removes both words “all” and “risks,” with the expectation that the new wording should avoid future action by the courts that interprets coverage beyond that contemplated by the drafters.
- Specified Causes of Loss 1 —The definition of this term now includes water damage resulting from breaking or cracking of off-premises water or sewer pipes caused by wear and tear. In addition, the wear and tear exclusion does not apply to loss caused by a “specified cause of loss” resulting from wear and tear. While this is a broadening of coverage over previous forms, the broadened coverage does not extend to include losses excluded by the water/ flood exclusion.
- Earth Movement —The new wording of this exclusion in the Causes of Loss form is not intended to alter its meaning according to ISO, but rather to clarify that the exclusion applies regardless of the cause; that is, whether it is...
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