Being a Named or Additional Insured Not Always Necessary for Coverage


in which a landlord has a non-abatement of rents provision in its lease and wants its rents paid even though the property has been partially damaged and is not usable. In such cases, the appropriate coverage is still rental value and can be effective with the above endorsement.

As an endorsement, rental value coverage cannot be activated until it is endorsed to the appropriate coverage form designated by number. The forms are CP 00 30, which is the Business Income (and Extra Expense) Coverage Form or CP 00 32, which is the Business Income (Without Extra Expense) Coverage Form. It is important to note, however, that it is not necessary for the named insured to actually purchase business income coverage under either of those coverage forms in order to activate the rental value endorsement. Rental value can be purchased alone or in conjunction with business income coverage.

Important Questions

Questions that may not arise until after a loss occurs but are important to ponder prior to a loss include the following:

The reason for these questions is that the opinion has been expressed that loss does not become payable to property of others until an insured has first sustained a covered loss and decides to make a claim. In other words, until a claim is made by an insured, the interests of others in the property, including contractors, are not covered even though an insured has assumed liability for loss.

This position or opinion is self-serving and certainly not justified based on the language of policies providing coverage for loss to property of others who are not insureds. Such an opinion, for example, also overlooks the facts that (1) the insurable interests in property under construction or repair may belong solely to contractors, (2) the contractors likely provided some consideration for the protection provided, and (3) the insurer has confirmed by way of specific reference to a policy or endorsement provision that coverage is to apply to the extent of an insured’s promise.

Simply reading through a coverage form granting coverage for loss to property of others defies the opinion that the insured must first sustain a loss and make a claim before loss becomes payable for damage to property of others. Note, for example, ISO Building and Personal Property Coverage Form...