Be Aware of Recent Revisions to ISO Commercial Property Coverage Forms
- ...— such as equipment built to operate under internal pressure or vacuum, electrical and mechanical equipment used to generate or use energy, communication equipment and computer equipment. If the insured carries business income and extra expense coverage, those coverages will be available should an equipment breakdown occur. It is important to note, however, that this endorsement is only available with the Special Causes of Loss Form.
- Increase in Rebuilding Expenses Following Disaster (CP 04 09) —The endorsement covers the escalation in construction costs resulting from a catastrophe. For the coverage to respond, the event must be a declared disaster by federal or state authorities. The maximum amount payable is a stated percentage of the limit of insurance for specific insurance and a stated percentage of the statement of values for blanket insurance — both being subject to an annual aggregate limit.
- Specified Business Personal Property Temporarily Away From Premises (CP 04 04) —The endorsement covers business property while off premises in the course of daily business activities, in the regular coverage territory. For coverage to apply, the property must be scheduled by item or category and must be in the care, custody or control of the insured or an employee. The coverage applies to business personal property such as laptop computers or other similar electronic property used for business. The following property is excluded: sales persons’ samples, except at a trade show or exhibition; property in the custody of a carrier or bailee for hire; and waterborne or airborne property.
- Food Contamination (Business Interruption and Extra Expense) (CP 15 05) — Business income and extra expense losses that result from food contamination are now covered if the insured has this optional coverage. This coverage should be of particular interest to restaurant operations. Coverage applies when the insured is ordered to cease operations by a government authority because contamination is discovered or suspected. It covers the cost to clean equipment, cost to replace food, tests to confirm contamination, medical tests and vaccinations for employees, public relations expenses incurred to restore the insured’s reputation, and the loss of business income as a result of the contamination. Costs for fines or penalties imposed on the insured are NOT covered.
- Limitations on Coverage for Roof Surfacing (CP 10 36) —This endorsement, which has generated considerable controversy, provides two options. The first provides coverage for roof damage on an actual cash value (ACV) basis; that is, with deduction for depreciation, whereas most standard property policies provide such coverage on a replacement cost basis. It is expected that the ACV option will be targeted for risks that have older roofs that are approaching the time when they will need to be replaced. The second option is to exclude cosmetic damage caused by wind or hail. Cosmetic damage refers to denting, pitting or marring that affects the appearance of the roof surface but does not prevent the roof from functioning as a barrier to water intrusion. For a...
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