Business Interruption Coverage Times Three

ADJUSTERSINTERNATIONAL.COM

Covered Property and Covered/Excluded Perils

Table entries are paraphrased summaries and not authoritative.

Actual claims must be adjusted on the basis of specific wording in applicable policies.

BI-EE coverage trigger

“Contingent” or “dependent” locations coverage

Perils insured against

Perils excluded

ISO CP 00 30 Business Income (and Extra Expense) Coverage Form

Damage by a covered peril to any property at an insured location.

No coverage, but can be added by endorsement.

Basic, Broad, Special, or other perils (such as earthquake and flood) as indicated in accompanying causes of loss form or endorsements.

Established in chosen cause-of-loss form. NOTE: Causes of loss included in the equipment breakdown definition of “accident” are typically excluded in property cause-of-loss forms; these include boiler explosion, mechanical breakdown and electrical arcing.

HSB Equipment Breakdown Coverage Form 6671

An “accident” to “covered equipment” that generates, transmits, and/or utilizes electricity; or equipment that operates under vacuum or pressure.

Provided under separate sublimits for “interruption of service” and “interruption of supply” caused by an accident to covered equipment at locations other than an insured location.

A fortuitous “accident”within covered equipment that causes direct physical damage to that equipment.

No coverage for any peril other than an accident as described above. Coverage is explicitly excluded for equipment accidents arising from fire, explosion, windstorm, and other property perils.

Summary of provisions in proprietary cyber forms

Inability of a computer system or network to function properly in the wake of a data loss.

Forms don’t typically reference contingent locations explicitly, as networked systems commonly operate through servers in different locations that create the intangible “cloud.”

Expressed in a wide range of ways, most covering loss from some form of external intrusion into a network but differing on whether losses arising from internal causes are covered.

Commonly exclude losses from property perils and losses covered under other policies, including equipment breakdown policies.

Another area of contrast among the three types of coverage is in the nature of the property loss and the perils that can trigger income coverage.

Property claim professionals are familiar with certain well-established distinctions between equipment breakdown insurance and standard property coverage. The former covers only income loss arising from physical damage to “covered equipment” by internal “accidents;” the latter covers income loss resulting from physical damage by an insured peril to any property at an insured or contingent location, whether or not it is covered property for purposes of physical loss coverage.

However, BI coverage under the ISO CP 00 30 and its equivalents does not automatically extend to income losses arising from damage at contingent locations; several endorsement options are available from ISO for providing income and extra expense coverage for BI-EE losses arising from physical loss occurring at contingent locations, which ISO forms refer to as “dependent properties.”

In contrast, a standard equipment breakdown form includes built-in coverage under separate sublimits for income lost due to interruption of“service”or“supply” resulting from an accident to covered equipment at a location other than an insured location.


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