...coverage provided, based on the 120 percent margin clause, would have been $3.6 million before the deductible.
Why the margin clauses had their origin with municipalities is uncer- tain. It could be because they often have many locations that include older buildings and officials are concerned more about price than with the right amount of insurance.
Of course, at the time of loss, insureds do not ask how much their insurance cost. They want to know when they will receive the loss payment check!
One of the most important points to remember about margin clauses is that it can be difficult to deter- mine whether this provision even applies. It is sometimes couched within the policy provisions. The insured may not realize that such a clause exists until there is a close examination of the property policy.
The endorsement adopted by ISO certainly will alleviate having to hunt carefully for a margin clause, since that endorsement should serve as a red flag. A concern, though, is that not all insurers subscribe to ISO and some might have implemented the margin clause before or other- wise apart from the commencement of ISO’s endorsement. Whether...