Online CE Small Business Owners (BOP)

Views:
 
Category: Education
     
 

Presentation Description

No description available.

Comments

Presentation Transcript

Online Small Business Owners (BOP)Property Coverages (3 hours P/C credit) : 

1 Online Small Business Owners (BOP)Property Coverages (3 hours P/C credit) C.E. Solutions With Tracy Young 913-980-CE4U(2348) www.continuingedsolutions.com

Small Businessowners Policy (BOP)Property Coverages : 

2 Small Businessowners Policy (BOP)Property Coverages Review and study this course at your leisure. Once the course is completed, enter the exam through the ClassMarker link at the end of the exam. You must receive a score of 70% or better to pass. You may retake the test at no additional cost as needed. The Insurance Department requires that all exams be taken in the presence of an approved disinterested 3rd party monitor. Course Certificate will be faxed and sent electronically to the insurance department when notification of a passing score and an affidavit signed by the person monitoring the test is received.

C.E. Solutions : 

3 C.E. Solutions The material presented in this course is for educational and informational purposes only. It should not be used to provide guidance to your customers or clients in lieu of competent, certified, legal advice. The parties involved in the development of this course shall not be liable for any inappropriate use of this information beyond the purpose stated above. As a student, you should understand that it is your responsibility to adhere to the laws and regulations pertaining to any aspect of this course and the materials presented within.

Course Objectives : 

4 Course Objectives The function of package policies for small businesses. Basic eligibility requirements. Typical standard and optional coverages. Usual exclusions. Possible conditions & other provisions.

The BOP : 

5 The BOP The programs offered for business can be categorized into: Commercial package-type policy programs (large commercial risks). Business owners-type policy programs (designed specifically for small and medium-sized risks). The Insurance Services Office (ISO) has designed standardized policy forms for the Commercial Package policy (CPP) and the Business owner’s policy (BOP). The forms are widely used by many insurance companies, but some will offer specially tailored packages that may vary greatly from the ISO program.

THE PACKAGE POLICY CONCEPT : 

6 THE PACKAGE POLICY CONCEPT

Programs for Business : 

7 Programs for Business Commercial Package Policy (CPP) For large commercial risks Business owners Policy (BOP) For the small business owner

BOP Typical Eligible Occupancies : 

8 BOP Typical Eligible Occupancies Unless otherwise noted, eligible risks may not exceed 25,000 square feet in total floor area or exceed $3 million in annual gross sales at each location. Apartments (includes residential condominium associations)- Any size building permitted. Permitted occupancies include offices, contractors and eligible wholesaler, mercantile, processing and service occupancies. Building owner’s business personal property in the building is covered.

Package Policy “Eligible Occupancies”(not to exceed 25,000 sq. ft. &/or $3 million in annual gross sales) : 

9 Package Policy “Eligible Occupancies”(not to exceed 25,000 sq. ft. &/or $3 million in annual gross sales) Apartments Condominium Commercial Unit-Owners Mercantile Risks Motels Offices Processing & Service Risks Self-Storage Facilities Wholesale Risks Restaurants & Convenience Stores Contractors

BOP Typical Occupancies : 

10 BOP Typical Occupancies Condominium Commercial Unit-Owners- Business personal property of owners of condominium units used for eligible mercantile, wholesaler, processing, service, office or contractor occupancies. Mercantile Risks- Only certain mercantile risks eligible. Both building and business personal property may be covered.

BOP Typical Occupancies : 

11 BOP Typical Occupancies Motels – Both building and business personal property may be covered. Building cannot exceed 3 stories; no limitation on floor area. Bars & cocktail lounges prohibited. Eligible restaurant occupancies permitted. Seasonal operations that are closed more than 30 consecutive days not eligible.

BOP Typical Occupancies : 

12 BOP Typical Occupancies Offices (including office condominium associations)- Building cannot exceed 6 stories in height or contain more than 100,000 square feet. Permitted occupancies include offices, contractors and eligible wholesaler, mercantile, processing, and service occupancies. Business personal property in offices that do not occupy more than 25,000 square feet in one building are eligible.

BOP Typical Occupancies : 

13 BOP Typical Occupancies Processing and Service Risks- Only certain processing and service risks eligible. No more than 25% of annual gross sales obtained from off-premises operations. Self-storage Facilities- May not exceed two stories in height; no limitation on floor area. Facilities that permit cold storage or storage of industrial materials, pollutants, chemicals, or waste not eligible. Both building and business personal property may be covered.

BOP Typical Occupancies : 

14 BOP Typical Occupancies Wholesale Risks- Both building and business personal property may be covered. Only certain wholesale risks eligible. No more than 25% of annual gross sales derived from retail operations. No more than 25% of total floor area open to the public. Operations of manufacturers representatives or contractors not eligible.

BOP Typical Occupancies : 

15 BOP Typical Occupancies Which of the following would be eligible for an ISO BOP? Bookcases that belong to the owner of a commercial condominium unit that is leased to a wholesaler. A building that contains 30,000 square feet and is occupied by a service business. An apartment building owned by a residential condominium. A ten-story office building. Answers A and B are correct.

Eligibility of Restaurants & Convenience Stores … : 

16 Eligibility of Restaurants & Convenience Stores … A limited-cooking restaurant is defined as a restaurant where foods are prepared cold or cooked using appliances that do not emit smoke or grease-laden vapors that require an exhaust system. Examples of such appliances include… electric sandwich grills toasters warming ovens roller warmers microwave ovens household-type ranges or ovens pizza ovens

Eligibility of Restaurants & Convenience Stores … : 

17 Eligibility of Restaurants & Convenience Stores … Eligible limited-cooking restaurants must have no more than 7,500 square feet of floor area and a seating capacity no greater than 75. Sale of beer or wine may represent no more than 25% of total sales and there may be no sale of liquor. Bars and cocktail lounges are not permitted. Catering service may not exceed 10% of total sales. Seasonal risks closed for more than 30 consecutive days during the year are not eligible. Fast-food restaurants that use appliances that emit grease-laden vapors (grills, enclosed broilers, and deep fat fryers, or open broilers and solid fuel – charcoal or hardwood) are not permitted.

Possible Eligible Restaurant Risks : 

18 Possible Eligible Restaurant Risks cafes drug stores cafeteria-style buffets hot dog or hamburger stands coffee shops Ice cream/yogurt stores concession stands oriental or ethnic restaurants delicatessens/sandwich shops pizza shops donut shops salad bars drive-ins take-out only restaurants

Convenience Stores … : 

19 Convenience Stores … Certain convenience food/gasoline stores are also eligible for ISO BOPs. A convenience store is defined as a retail establishment that carries a limited amount of canned goods, dairy products, prepackaged meats and other grocery items which may include newspapers, magazines, refreshments, cigarettes, beer, wine and novelties. It may also sell gasoline, but gasoline sales may account for no more than 75% of total sales. The business may include auto service or repair, a car wash or tank filing operations for propane or kerosene. Limited cooking or fast food restaurant is permitted.

Restaurants & Convenient Stores : 

20 Restaurants & Convenient Stores Joe’s Place serves cold sandwiches, steamed hot dogs, salads, desserts and soft drinks. It has 7 tables that seat up to 4 people each and a counter that can seat up to 6 more customers. Is Joe’s Place a limited-cooking restaurant or a fast food restaurant under the ISO BOP? It is a “limited-cooking restaurant”.

Restaurants & Convenience Stores : 

21 Restaurants & Convenience Stores Mary’s Highway Stop sells snacks, drinks and novelties but gasoline accounts for 80% of its annual sales. Is Mary’s Highway Stop eligible for an ISO BOP as a convenience food/gasoline store? No – more than 75% or their sales are gasoline sales.

Requirements for ContractorsIneligibility Factors: : 

22 Requirements for ContractorsIneligibility Factors: Annual payroll over $300,000 Subcontracted work exceeding 10% of sales Annual sales over $3 million Renting or leasing equipment to others Working at a height over 3 stories Use of cranes General contracting Left click to proceed

… Requirements for ContractorsIneligibility Factors: : 

23 Demolition, blasting, wrecking, high pressure boiler or liquid petroleum gas work Repair, installation or service of existing boilers, burglar alarm or automatic fire extinguishing systems, elevators, escalators or computers Sales unrelated to installation, service or repair that exceed 25% of annual sales Manufacture or sale of products under the contractor’s name Insulation work Lawn chemical spraying, except for landscape gardeners in compliance with applicable law Sales, service or installation of automatic opening doors or garage doors … Requirements for ContractorsIneligibility Factors:

…Requirements for ContractorsIneligibility Factors: : 

24 Hazardous material or pollution abatement operations, such as asbestos, lead and radon Heavy construction, such as building bridges, dams, dry-docks, levees, piers; laying or installing cable; installing or rigging cranes or derricks; dredging; drilling; excavation; land grading; iron or steel erection; pipeline construction; sandblasting; erecting scaffolding, hoists or towers; or tunneling. Installing or dealing in hot tubs, swimming pools or wood/coal stoves Repairing or painting ships Shop-only carpentry or sheet metal work Tree service or removal Waterproofing …Requirements for ContractorsIneligibility Factors:

Eligible Contractors (If no Ineligibility Factors apply) : 

25 Eligible Contractors (If no Ineligibility Factors apply) Appliances and accessories Carpentry Carpet and furniture cleaning Concrete construction Decorative or artistic metal erection Driveway, parking area or sidewalk paving Drywall or wallboard installation Electrical work inside buildings Fencing Floor covering installation

Eligible Contractors (If no Ineligibility Factors apply) : 

26 Eligible Contractors (If no Ineligibility Factors apply) Furniture or fixtures installation Glass and glazing Heating &/or air conditioning systems Household furnishings installation Interior decorating Landscape gardening Lawn sprinkler installation Masonry Metal ceiling or wall installation Metal door, window or assembled millwork installation Painting Paper hanging

Eligible Contractors (If no Ineligibility Factors apply) : 

27 Eligible Contractors (If no Ineligibility Factors apply) Permanent yards – maintenance and storage Plastering or stucco work Plumbing (not industrial) Refrigeration systems Roofing Septic tank cleaning Siding installation Sign painting Tile or stone work (interior) Window cleaning (3 or fewer stories high)

Eligible Contractors (If no Ineligibility Factors apply) : 

28 Which of the following contractors are eligible for an ISO BOP? A roofing contractor with an annual payroll of $450,000. A heating/air conditioning contractor with annual sales of $5 million. A general contractor. A carpenter who does all his own work building cabinets and shelves in people’s homes and earns $80,000 a year. D is correct. Eligible Contractors (If no Ineligibility Factors apply)

Ineligible Risk Categories : 

29 Ineligible Risk Categories Auto repair or service stations, unless incidental to another otherwise eligible class. Auto, motor homes, mobile home, and motorcycle dealers, unless incidental to another otherwise eligible class. Banks, building and loan associations; savings and loan associations; credit unions; stockbrokers; and similar financial institutions. Bars and pubs Buildings occupied wholly or partially for manufacturing.

…Ineligible Risk Categories : 

30 …Ineligible Risk Categories Condominium associations other than office or residential condominiums. Household personal property. Insureds whose business operations involve one or more locations that are used for manufacturing. One- or two-family dwellings, unless they are garden apartments where multiple units are grouped within a single area and are under common ownership, management and control. Parking lots or garages, unless incidental to another otherwise eligible class. Places of amusement.

Ineligible Risk Categories : 

31 Ineligible Risk Categories Which of the following would be eligible for an ISO BOP under the current program? parking garage an excavation contractor one-family garden apartments under common ownership bank C is correct

Company-Specific Eligibility Rules & Restrictions : 

32 Company-Specific Eligibility Rules & Restrictions Check your own company(s) rules! Additional risks may be eligible such as… service stations restaurants that serve liquor banks processing or service risks that differ from those eligible for ISO BOP.

Company-Specific Eligibility Rules & Restrictions : 

33 There may be specific additional occupancy limitation in your company’s BOP: Apartment complexes may be subject to min. & max. number of living units. While offices are generally eligible, occupancies subject to greater liability hazards might be ineligible. A doctor’s office might be eligible if it does not have an on-site laboratory. A clothing store might be eligible only if its inventory of furs is lower than a stated dollar maximum. A sporting goods store might be eligible if it does not sell or service firearms. A carpenter might be eligible only if work is restricted to residential, not commercial buildings. Company-Specific Eligibility Rules & Restrictions

Company-Specific EligibilityRules & Restrictions : 

34 So, if a business falls into one of the eligible categories of risk types for your company’s policies, you can be sure the business is eligible to purchase the policy, right? FALSE. Within the eligible categories, additional restrictions may apply. Company-Specific EligibilityRules & Restrictions

Company-Specific EligibilityRules & Restrictions : 

35 Which of the following are probably ineligible for a small-business policy? A restaurant that admits no one under age 18 A parking lot used only by customers of an eligible retail risk (eligible because it is incidental to an eligible business) A mobile home sales operation A movie theatre A, C & D are ineligible for BOP. Company-Specific EligibilityRules & Restrictions

Company-Specific Property Value & Dollar Volume Limitations : 

36 Company-Specific Property Value & Dollar Volume Limitations With some companies, eligibility may also be related to the insured’s property values. Limits often apply to either or both the building and the business personal property. Restrictions on the dollar volume of the business are also common. Typical Maximum Property Values: Buildings* $500,000 to $1 million Business personal property $500,000 to $1 million Aggregate $1 million to Unlimited *Insurance companies sometimes stipulate different maximums on different occupancies- for example: $1 million for apartment buildings but only $500,000 for buildings with other occupancies. Typical Maximum Annual Gross Sales or Receipts: $1,000,000-$2,000,000

Other Company-Specific Eligibility Requirements : 

37 Other Company-Specific Eligibility Requirements Quality of building construction Age of the building Condition of the heating, air conditioning, plumbing, and electrical systems Insured’s business experience and financial history Frequency and severity of past insurance claims Some companies have very specific rules for particular risk types. They may write one version of the BOP for contractors, another only for condominium associations and still another for retail stores … with specialized eligibility requirements applying for each type.

Pricing : 

38 Pricing In the ISO BOP, the premiums for the property and liability coverages are computed separately. Among other factors, rates are based on the policy limits for … the property and liability coverages internal policy limits for which the insured has a choice And deductibles. Insureds may purchase some optional coverages and endorsements, and an additional charge is then computed for each of these. There is usually a policy writing minimum premium.

Policy Format : 

39 Policy Format The ISO BOP includes the required property and liability coverages and policy conditions in one form, with certain required information about the insured in separate Declarations. Some companies may include common policy conditions on a separate form instead of incorporated into the policy. Some companies may require a separate form for the particular type of risk be attached to the policy. For example, special provisions might apply for eligible condominium associations. Various endorsements are available to modify the basic coverage.

SMALL-BUSINESS POLICY PROPERTY COVERAGES : 

40 SMALL-BUSINESS POLICY PROPERTY COVERAGES

BOP Property Coverages : 

41 BOP Property Coverages Under BOPs, property insurance is available for both building property and business personal property. Generally, when the insured owns both the building and the business personal property in it, both must be covered under the BOP policy. However, some insurance companies waive this requirement when values exceed certain maximums. When a building owner leases the building and does not own the business personal property in the building, the BOP will cover only the building. The tenant’s policy will cover the tenant’s business personal property in the building.

The Coverage Agreement : 

42 The Coverage Agreement As in any insurance policy, the coverage agreement spells out what will be paid for, where the loss must occur and what must have caused the loss. The ISO BOP states the policy will pay for… “…direct physical loss of or damage to covered property at the premises described in the Declarations caused by or resulting from any covered cause of loss.” Time element coverages protect against indirect business income and extra expense losses when they result from direct physical damage to covered property.

Building Coverage Covered Property … : 

43 Building coverage applies to more than just the structure itself. The ISO BOP covers: Buildings & structures at the premises described in the declarations Completed additions Permanently installed machinery & equipment Fixtures, including outdoor fixtures (lawnmowers, garden hoses & snow removal equipment, etc) Personal property used to maintain or service buildings, structures or the premises (portable fire extinguishing equipment, outdoor furniture, floor coverings, and appliances used for refrigerating, ventilating, cooking, dishwashing or laundering) Building Coverage Covered Property …

Building Coverage Covered Property … : 

44 In addition, personal property furnished by the insured in apartments, rooms or common areas that are rented to others is also covered. What are some examples of this? Furniture Portable appliances Cooking items Other kitchen items Property as part of the building protects the building owner who does not have separate coverage for business personal property. Building Coverage Covered Property …

Building Coverage Covered Property … : 

45 Under the ISO BOP, the following items are also covered if no other insurance applies: Additions under construction Alterations and repairs to the buildings or structures Materials, equipment, supplies and temporary structures that are on or within 100 feet of the premises and being used for additions, alterations or repairs. Building Coverage Covered Property …

Building Coverage CoveredProperty … : 

46 Building Coverage CoveredProperty … Which of the following would typically be covered under the Building coverage of a BOP? Rest room fixtures Carpets and floor tiles Photocopy machines Cans of paint that are stacked near a newly constructed outer wall prior to painting the wall. Furnishings in the insured’s private office Fire extinguishers hanging on various inside walls of the building A, B, D & F are correct

Business Personal Property CoverageCovered Property : 

47 Business Personal Property CoverageCovered Property ISO BOPs specify where business personal property coverage is covered … “property located at the described premises and, in or on a building, in a vehicle or in the open within 100 feet of the premises.”

Business Personal Property CoverageCovered Property : 

48 Under ISO BOP, five different classes of business personal property are covered: Property owned and used by the insured in the business. Property of others in the insured’s care, custody or control. Tenants improvements and betterments. Fixtures, alterations, installations, or additions that tenants make to rented buildings in which they operate their businesses. For coverage to apply, these items must be permanently attached to the building, acquired or made at the insured’s expense and cannot be legally removed. Example: when tenants have new carpeting or light fixtures installed.. Business Personal Property CoverageCovered Property

Business Personal Property CoverageCovered Property : 

49 Leased personal property that the insured has a contractual responsibility to insure. Include photocopiers and computer equipment leased under contracts that require the lessees to insure the leased property Exterior building glass. Is covered as business personal property for insureds who are tenants and do not have building coverage. The glass must be owned by the insured or in the insured’s care, custody or control Business Personal Property CoverageCovered Property

Business Personal Property Coverage Covered Property : 

50 Assume the following property is damaged or destroyed by a covered cause of loss. Which of the following would typically be covered as business personal property? An enclosure an insured tenant built around the entrance to a leased building. Desks, filing cabinets and other office equipment an insured uses in business. Business equipment an insured borrowed and took on an airplane during a business trip. Customer’s clothing in an alterations shop. A, B & D are correct. Business Personal Property Coverage Covered Property

Property Not Covered (under ISO BOP) : 

51 Property Not Covered (under ISO BOP) Aircraft, watercraft and motor vehicles Land (including land on which the property is located), water, growing crops, and lawns. Contraband and property being illegally traded or transported. Outdoor fences, trees, shrubs and plants*. Money and securities* Outdoor signs not attached to buildings*

Property Not Covered (under ISO BOP) : 

52 Property Not Covered (under ISO BOP) Accounts, bills, food stamps, other evidences of debt, accounts receivable and valuable papers and records. Computers that are permanently installed or designed to be permanently installed in an aircraft, watercraft, motor truck, or other vehicle subject to motor vehicle registration. Some companies also exclude rare or valuable coins, stamps or other collections valued for their rarity or antiquity. *except as covered under an optional coverage or coverage extension.

Property Not Covered (under ISO BOP) : 

53 Which of the following are covered under an ISO BOP? A yacht owned by an insured business and used to entertain clients. Stolen designer apparel an insured is having transported to another city to sell on the street. The inventory of an insured’s store. Money in a cash register on an insured’s premises. C is correct. Property Not Covered (under ISO BOP)

Covered Causes of Loss : 

54 Covered Causes of Loss Open Peril: the policy covers any causes of loss that are not specifically excluded. Named Peril: the policy covers only those causes of loss that are specifically named in the endorsement.

Open Perils Limitations : 

55 Open Perils Limitations Steam Equipment – damage that occurs to steam boilers, steam pipes, steam engines, or steam turbines is not covered under the ISO BOP if the damage results from a condition that originates inside the steam equipment. There is coverage, however, that results from explosions of gases of fuel inside the furnace of a fired vessel or within the flues or passages through which gases pass. Water Heating Equipment – damage that occurs to hot water boilers and other water heating equipment is not covered under the ISO BOP if the damage results from a condition that originates inside the equipment. There is coverage for explosions.

Open Perils Limitations : 

56 Open Perils Limitations Missing Property – no coverage for property that is missing for which no physical evidence exists to show what happened to it, such as shortage disclosed from an inventory. This limitation does not apply to money and securities when the Money and Securities optional coverage is added to the policy. Property Transferred by Unauthorized Instructions – no coverage for property transferred to someone or someplace outside the described premises and under unauthorized instructions. Damage to Building Interiors – is covered against damage from rain, snow, sand, sleet, ice or dust only when one of the following conditions apply: The roof or walls are first damaged by a covered cause of loss that allows these elements to enter The loss or damage is caused by or results from thawing of snow, sleet or ice on the building.

Open Perils Limitations : 

57 Open Perils Limitations Fragile Articles – The ISO BOP will not pay for loss or damage to fragile items that are broken unless caused by the specified causes of loss named in the policy or building glass breakage. This includes: Glassware Marbles Porcelains Statuary and …. Chinaware Fragile Articles – Specified Causes of Loss include: Fire * Lightning Explosion * Windstorm or hail Smoke * Aircraft or vehicles Vandalism * Riot or civil commotion Sinkhole collapse * Leakage from fire extinguishing equipment Volcanic action * Falling objects Water damage * Weight of snow, ice or sleet Fragile Articles – this restriction does not apply to the following: Glass that is part of a building. Containers of property held for sale. Photographic or scientific instrument lenses.

Open Perils Limitations : 

58 Open Perils Limitations Theft Losses – Limits apply to the amounts that may be reimbursed for certain types of property when theft is the cause of loss. $2,500 Furs, Fur Garments and Garments trimmed with fur $2,500 Jewelry, watches, watch movements, jewels, pearls, precious and semiprecious stones, bullion, gold, silver, platinum, and other precious alloys or metals. Does not apply to jewelry and watches worth $100 or less per item $2,500 Patterns, dies, molds, and forms.

Ineligible Risk Categories : 

59 Ineligible Risk Categories Which of the following would be subject to specified limits on the amount of reimbursement under the ISO BOP? A tool designer’s dies. Plastic and paste imitations of fine jewelry in a boutique. Timepieces in a watch shop. Fur-trimmed hats in a millinery shop. A, C, & D are correct.

Exclusions : 

60 Exclusions ISO Exclusions are very detailed because the policy covers any loss that is not specifically limited or excluded. Ordinance or Law – enforcement of any ordinance or law that regulates construction, use or repair of property or requires the tearing down of property including the cost of debris removal. Applies whether the loss results from an ordinance or law that is enforced even if the property has not been damaged or the loss results from increased costs incurred to comply.

Exclusions : 

61 Exclusions Earth Movement – earthquake, landslide, mine subsidence, volcanic eruption, or earth sinking (other than sinkhole collapse), rising or shifting, including soil conditions that cause settling, cracking or other disarrangement of foundations other parts of realty. If earth movement results in fire or explosion, the loss caused by that fire or explosion is covered. If volcanic eruption results in fire, building glass breakage or explosion, the loss caused by the fire, building glass breakage or explosion is covered.

Exclusions : 

62 Exclusions Government Action – seizure or destruction of property by government authority. If these actions are taken at the time of a fire to prevent its spread, the loss is covered if the fire would be covered under the policy. Nuclear Hazard – Nuclear reaction or radiation or radioactive contamination. If these result in a fire, loss or damage caused by the fire will be reimbursed. Power Failure – failure of any utility service supplied to the premises if the cause occurs away from the premises. If failure results in a covered cause of loss, the loss that results from that cause of loss will be covered. Does not apply to loss or damage to computers and electronic media and records.

Exclusions : 

63 Exclusions War & Military Action – declared, undeclared or civil war, warlike actions by a military force, insurrection, rebellion, revolution, usurped power, or government responses to any of these. Water – applies to: Floods, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, whether or not wind-driven. Mudslide or mudflow Sewer, drain or sump pump Underground water that presses on, flows or seeps through foundations, walls, floors, or paved surfaces; basements, whether or not they are paved; or doors, windows or other openings. If water results in fire, explosion or sprinkler leakage, loss caused by these things is covered.

Exclusions : 

64 Exclusions Certain Computer-Related Losses – Failure of computers to recognize a particular date or time, such as the year 2000. Includes any advice, evaluation, installation, maintenance, repair, or replacement performed to identify, correct or test for potential or actual problems. If computer failure results in a specified cause of loss, that loss is covered. Electrical Apparatus – Artificially generated electrical current, including electric arcing, that disturbs electrical devices, appliances or wires. If such current results in fire, loss caused by the fire is covered. Loss or damage to computers from artificially generated electrical current is covered if the loss results from an occurrence that took place within 100 feet of the described premises, such as an interruption of electric power supply, power surge, blackout, or brownout.

Exclusions : 

65 Exclusions Consequential Losses – Delay, loss of use or loss of market. Smoke, Vapor, Gas – Smoke, vapor or gas from agricultural smudging or industrial operations. Steam Apparatus – Explosion of any steam boilers, steam pipes, steam engines, or steam turbines the insured leases or owns or is operating under the insured’s control. If such loss occurs as a result of a fire or combustion explosion, the loss caused by the fire or explosion is covered. Also covered is damage caused by or resulting from gas or fuel explosions in any fired vessels, its flues or any passage for combustion gases.

Exclusions : 

66 Exclusions Frozen Plumbing – water, liquids, powder, or molten material that leaks or flows from any equipment other than fire protective systems as the result of freezing unless the insured has done his or her best to maintain heat in the building or has drained the equipment and shut off the supply if heat is not maintained. Dishonesty – or criminal acts by the insured, any partners, employees, directors, trustees, authorized representatives, or others to whom the property is entrusted, whether they act alone or in collusion with others and whether or not it occurs during working hours. Employees’ destructive acts are covered. Theft by employees is not covered.

Exclusions : 

67 Exclusions Which of the following losses are covered under an ISO BOP? Damage to the basement of the insured’s building caused by water seeping through cracks in the foundation. Additional expense incurred when the insured’s damaged building is required by a city ordinance to be completely torn down and rebuilt rather than repaired. Loss caused by a power failure that occurs on the insured’s premises. Damage that occurs during a riot related to a civil war. Vandalism to the insured’s building caused by an angry employee. A, C & D are correct.

More Exclusions for the ISO BOP: : 

68 More Exclusions for the ISO BOP: False Pretense – Use of a fraudulent scheme, trick, device or false pretense to persuade the insured or others to voluntarily part with the covered property. Exposed Property – damage caused by rain, snow, ice or sleet to personal property left in the open. Collapse – any type of collapse other than as provided as an additional coverage under the policy. If collapse results in a covered cause of loss, damage caused by that cause of loss is covered.

More Exclusions for the ISO BOP: : 

69 More Exclusions for the ISO BOP: Pollution – discharge, dispersal, seepage, migration, release, or escape of pollutants, unless caused by a specified cause of loss. If any of these results in a specified cause of loss, loss caused by that cause of loss is covered. Neglect – Failure of an insured to use all reasonable means to save and preserve property from further damage at and after the loss. Errors or Omissions – errors or omissions in programming, processing or storing data or in any computer operations, or in processing or copying valuable papers and records. Loss caused by resulting fire or explosion is covered.

More Exclusions for the ISO BOP: : 

70 More Exclusions for the ISO BOP: Installation, Testing, Repair – Errors or deficiency in design, installation, testing, maintenance, modification, or repair of the insured’s computer system, including electronic media and records. Loss caused by resulting fire or explosion is covered. Electrical Disturbance – Electrical or magnetic injury, disturbance or erasure of electronic media and records, except as provided as a coverage extension under the policy. Damage caused by lightning is covered.

More Exclusions for the ISO BOP: : 

71 More Exclusions for the ISO BOP: Weather Conditions – weather conditions that contribute in any way to causing a loss with another excluded event. Acts or Decisions – any acts or decisions or failure to act or make a decision by any person, group, organization, or government body. Negligent Work – Faulty, inadequate or defective work including, but not limited to, planning, zoning, development, surveying, siting, design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction, materials used, or maintenance of property on or off the described premises.

More Exclusions for the ISO BOP: : 

72 More Exclusions for the ISO BOP: Other Types of Losses – Wear & tear, rust, corrosion, fungus, decay, deterioration, hidden or latent defect, or any quality in property that causes it to damage or destroy itself; smog; settling, cracking, shrinking, or expansion; nesting or infestation or discharge of waste products by insects, birds, rodents, or other animals; mechanical breakdown (does not apply to computers). Also excluded is loss to personal property caused by dampness or dryness of atmosphere, changes in or extremes of temperature, or marring or scratching. If any of these causes of loss results in a specified cause of loss or building glass breakage, loss from that cause of loss is covered.

More Exclusions for the ISO BOP: : 

73 More Exclusions for the ISO BOP: Which of the following are excluded losses under an ISO BOP? Termite damage to the insured’s building. Damage to pianos in an insured’s warehouse caused by dryness during an extremely cold winter. Collapse of an insured’s building caused by an error in the design specifications. All of the above. D is correct.

Additional Coverages : 

74 Additional Coverages Additional coverages provide coverage in specific situations. These coverages may have a separate limit of insurance or require that certain conditions be met for coverage to apply. Debris Removal – additional coverage provides for clean up after a physical damage loss of covered property caused by a covered cause of loss during the policy period.

Additional Coverages : 

75 Additional Coverages Debris Removal … Must be reported to the company in writing within 180 days of the date of loss or end of the policy period, whichever is earlier. The maximum paid is usually a percentage (25%) of the amount paid for the direct physical loss plus the deductible that is applicable to that loss. Ex: An insured has $100,000 of insurance on a building with a $1,000 deductible. A covered $30,000 loss occurs. What is payable? $8,500 for debris removal ($30,000 loss x 25% + $1,000 deductible)

Additional Coverages : 

76 Additional Coverages Debris Removal … The policy specifies that Debris Removal coverage does not cover costs to extract pollutants or remedy polluted land or water. An additional $10,000 for each location in any one occurrence is available for debris removal under these circumstances: The direct physical loss and the debris removal expense together exhaust the limit of insurance. The maximum amount collectible for debris removal is not enough to cover the debris removal expense. The total payment for the direct physical loss and the debris removal expense may be up to – but cannot exceed – the policy limit plus $10,000.

Additional Coverages : 

77 Additional Coverages Preservation of Property - covers direct physical loss or damage from any cause of loss if the property has been removed to another location in order to preserve it from damage by a covered peril. Coverage applies while the property is being moved or while it is temporarily stored at another location but only for 30 days after the property is first moved.

Additional Coverages : 

78 Additional Coverages Fire Department Service Charge – coverage for a charge that might be levied because such liability was assumed by the insured under a contract or agreement before the loss or because these charges are required by local ordinance. Coverage applies when a fire department is called to save or protect covered property from a covered cause of loss. ISO BOP has a $1,000 limit this additional coverage.

Additional Coverages : 

79 Additional Coverages Collapse – applies only when very specific conditions are met. “Collapse” is defined as an abrupt falling down or caving in of the building or part of the building that results in the building being unusable. This definition does not include a building that is in danger of collapsing or a building or part of a building that is still standing but has separated from another part of the structure or shows signs of instability such as bulging, cracking, leaning, or settling.

Additional Coverages : 

80 Additional Coverages Collapse of a building or part of a building is covered only when it is caused by: A specified cause of loss Building glass breakage Hidden decay * Hidden insect or vermin damage * *the insured cannot know anything about the damage before the collapse occurs. Weight of people or personal property Weight of rain that collects on a roof Use of defective materials or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation. If collapse occurs after construction, remodeling, or renovation is completed and is caused by a peril listed above, the loss or damage is covered even if the use of defective materials or methods contributed to the collapse.

Additional Coverages : 

81 Additional Coverages Certain types of properties, even if they are otherwise covered under the policy, are covered for collapse only when they are damaged directly by a collapsed building. This includes: Awnings Gutters and downspouts Yard fixtures Outdoor swimming pools Piers, wharves and docks Beach or diving platforms or appurtenances Retaining walls Walks, roadways and other paved surfaces

Additional Coverages : 

82 Additional Coverages Under certain conditions, loss or damage that occurs when Personal Property falls down or caves in is covered even when there is no building collapse: The property must be inside a building The collapse must result from one of the causes of loss listed in the previous frame. The property that collapses must not be one of the items of outdoor property listed above.

Additional Coverages : 

83 Additional Coverages Coverage does not apply if marring or scratching is the only damage that results from the collapse. Settling, shrinkage, expansion, cracking, bulging, leaning, sagging or bending are not considered to be collapse. Collapse additional coverage is subject to the limits of insurance. It does not provide an additional amount of insurance.

Additional Coverages : 

84 Additional Coverages Water Damage, Other Liquids, Powder, or Molten Material Damage – if the damage is otherwise covered, this additional coverage pays for necessary costs to tear out and replace any part of the building to repair damage to the system from which the material escaped. ISO BOP will also cover repair or replacement of damaged parts of fire extinguishing equipment if the damage results in discharge of any substance from an automatic fire protection system or is directly caused by freezing. The cost to repair the defect that caused the loss or damage is not covered.

Additional Coverages : 

85 Additional Coverages Business Income – this additional coverage pays for loss of business income that occurs when the insured’s business operations have to be suspended after a loss and income cannot be generated. There must be direct physical loss or damage to property at the described premises. Which includes personal property in a vehicle or in the open within 100 feet of the premises. If a tenant, the premises is the portion of the building the insured rents, including all access routes to the premises. The loss must be caused by or result from a covered cause of loss. Payment is for loss during the period the property is being restored that occurs within 12 consecutive months after the date of the direct physical damage.

Additional Coverages : 

86 Additional Coverages Business Income … Business income is defined as net income (net profit or loss before taxes) that would have been earned had the loss not occurred and continuing normal operating expenses, including payroll. The insurance company will only pay for ordinary payroll expenses for 60 days after the direct physical damage. The policy specifies what is included in ordinary payroll expenses. There is NO coverage for increases in loss of income due to: A delay in rebuilding, repairing, or replacing the property or resuming operations due to interfering strikers or others. The suspension, lapse or cancellation of a license, lease or contract. Any other consequential loss.

Additional Coverages : 

87 Additional Coverages Extended Business Income – extends the period for which business income loss will be paid under certain circumstances. This coverage begins after the insured’s operations are resumed and continues until the insured is restored to the previous earning condition or for 30 consecutive days (or the number of days listed in the Dec Page) after operations could have been resumed. Extended Business Income coverage does not apply to losses that result from unfavorable business conditions caused by the impact of the losses in the area where the insured’s premises are located.

Additional Coverages : 

88 Additional Coverages Extra Expense – allow reimbursement for additional costs an insured incurs to avoid or minimize suspending business operations after a covered loss. If an insured spends more money than would otherwise be required in order to reduce a loss, the insurance company will reimburse specified expenses during the period of restoration. The insurance company will pay for extra expense that occurs within 12 consecutive months after the date of the direct physical loss or damage. This coverage is in addition to the insured’s limits of insurance. There is NO coverage for extra expenses resulting from: A delay in rebuilding, repairing, or replacing the property or resuming operations due to interfering strikers or others. The suspension, lapse or cancellation of a license, lease or contract. Any other consequential loss.

Additional Coverages : 

89 Additional Coverages Pollutant Clean Up and Removal – does what the Debris Removal additional coverage does not do: it provides limited coverage of costs to extract pollutants from land or water at the insured’s premises as a result of a covered cause of loss. Coverage applies only under specified circumstances and for not more than a $10,000 limit in each separate 12-month policy period. The insured must report expenses by 180 days after the earlier of the date of the loss or the end of the policy period.

Additional Coverages : 

90 Additional Coverages Civil Authority – is available for losses that result from actions of civil authorities. Covered is business income an insured loses when a civil authority denies the insured access to the described premises because property not at the described premises was damaged by a covered cause of loss. Example: a tornado destroyed a neighboring building, and authorities denied the insured access to the described premises until debris could be cleaned up. The insured lost business income during that clean-up period. Coverage for business income begins 72 hours after the action by the civil authority and remains for up to three consecutive weeks. Coverage for extra expenses begins immediately after the action by the civil authority and ends either three consecutive weeks after that action or when the Business Income coverage ends, whichever is later. This additional coverage is not subject to the limits of insurance.

Additional Coverages : 

91 Additional Coverages During a riot, many businesses were looted. An insured had to rent temporary quarters after the area of the city where the insured’s business is located was closed off by local authorities. Is there coverage under the ISO BOP for those extra expenses because civil authorities denied the insured access to the business? Yes … riot is a covered cause of loss.

Additional Coverages : 

92 Additional Coverages Money Orders and Counterfeit Paper Currency – this provides coverage for loss that results when an insured accepts money orders and counterfeit paper currency in good faith and in exchange for merchandise, money or services as part of normal business transactions. A $1,000 limit applies to this additional coverage.

Additional Coverages : 

93 Additional Coverages Forgery and Alteration- applies to an insured’s loss that results directly from someone forging or altering the following items that an insured or the insured’s agent has issued or that have been issued by someone who impersonated the insured or the agent: Promissory notes Drafts Checks Bills of exchange or similar written promise of payment in money

Additional Coverages : 

94 Additional Coverages Forgery & Alteration: In addition, if the insured is sued for refusing to pay any of these items because it has been forged or altered, and if the insured has the insurance company’s written promise to defend the insured, the company will pay for any reasonable legal expenses the insured incurs in that defense. The most that it will be paid for a loss, including legal expenses, is $2,500 unless a higher limit is shown in the Declarations.

Additional Coverages : 

95 Additional Coverages Increased Cost of Construction – applies only to buildings insured on a replacement cost basis. If a covered cause of loss damages a covered building, the company will pay the additional costs required to comply with an ordinance or law in repairing the damage or replacing damaged parts.

Additional Coverages : 

96 Additional Coverages Increased Cost of Construction: This additional coverage has a limit of $10,000 and is also subject to the following limitations: The ordinance or law must regulate construction or repair of buildings or zoning/land use requirements at the described premises and be in force at the time of the loss. Costs related to an ordinance or law that the insured was required to comply with before the loss and failed to comply with are not covered. Costs of testing for, monitoring, cleaning up, containing, treating, assessing the effects of or in any way responding to pollutants are not covered. Payment will be made only when property is actually repaired or replaced, which must be as soon as is reasonably possible and within two years, unless the company extends that period. The provisions of the Ordinance or Law exclusion do not apply to this additional coverage to the extent they conflict with this coverage.

Additional Coverages : 

97 Additional Coverages Which of the following would be covered under the Increased Cost of Construction additional coverage of the ISO BOP? The increased cost to replace standard glass broken during a fire with safety glass as required by ordinance in a building covered on an actual cash value basis. The increased cost to rebuild a burned staircase according to code specifications established after the original staircase was built. The increased cost to purchase new fire extinguishers that the insured was required, and failed, to install prior to the time a covered explosion damaged the insured’s building. The increased cost to comply with new pollution testing requirements imposed by law. B is the correct answer.

Additional Coverages : 

98 Additional Coverages Business Income From Dependent Properties – for some businesses, income depends on the continuity of relationships with other businesses. When this is the case, a business can suffer business income loss when property damage occurs somewhere other than at the insured’s premises. The insured’s income, therefore, is dependent on the other business being able to operate. The ISO BOP covers loss of business income the insured sustains due to physical loss or damage at a dependent property from a covered cause of loss. A dependent property is a business that delivers materials or services to the insured, accepts the insured’s products or services, manufactures products for delivery to the insured’s customers, or attracts customers to the insured’s business.

Additional Coverages : 

99 Additional Coverages Business Income from Dependent Properties … Coverage is limited to $5,000 unless a higher limit is shown on the Declarations. Coverage begins 72 hours after the loss at the dependent property and continues until the date the damage should be repaired, rebuilt or replaced with reasonable speed and similar quality. The amount paid will be reduced to the extent the insured can resume operations, in whole or in part, by using another source of materials or outlet for its products.

Additional Coverages : 

100 Additional Coverages Business Income From Dependent Properties … An insured operates an ice cream parlor and relies on a nearby toy store to attract many of the shop’s customers. When the toy store closes for two business days to repair damage from a fire, the insured loses $3,000 in income. Would this loss be paid under the Business Income From Dependent Properties additional coverage? No. coverage does not begin until 72 hours after the loss at the dependent property.

Additional Coverages : 

101 Additional Coverages Glass Expenses – this additional coverage covers expenses incurred to put up temporary plates or board up openings if repair or replacement of damaged glass is delayed. It also covers expenses required to remove or replace obstructions (other than window displays) when repairing or replacing glass that is part of the building.

Additional Coverages : 

102 Additional Coverages Fire Extinguisher Systems Recharge Expense – this additional coverage pays to recharge or replace the insured’s fire extinguishers and fire extinguishing systems if they are discharged on or within 100 feet of the premises. It also covers loss or damage to covered property caused by the accidental discharge of chemicals from a fire extinguisher or fire extinguishing system. Coverage does not apply if the system is discharged during installation or testing. The limit for this coverage is $5,000 per occurrence.

COVERAGE EXTENSIONS : 

103 COVERAGE EXTENSIONS

Coverage Extensions : 

104 Coverage Extensions Coverage Extensions permit an insured to extend the insurance for other specified purposes. Like additional coverages, the exact provisions of coverage extensions vary among policy forms and insurance companies. Unless otherwise provided, coverage extensions apply to property located in or on the building covered under the policy or to property located in the open or in a vehicle within 100 feet of the premises.

Coverage Extensions : 

105 Coverage Extensions Newly Acquired or Constructed Property – if the insured acquires a building at another location or builds a new building on the described premises, the newly acquired or constructed buildings are covered under the policy’s Building coverage for up to $250,000 at each location. Business personal property coverage can be extended to property, including newly acquired property, at newly acquired or constructed buildings or to newly acquired property at the described premises. Coverage for newly acquired business personal property is $100,000 at each location.

Coverage Extensions : 

106 Coverage Extensions Newly Acquired or Constructed Property – Coverage applies for 30 days after the new premises or property is acquired or construction has begun on the new premises, until the policy expires, or until the insured reports values to the insurance company, whichever occurs first. The insured is charged additional premium for values reported from the date the premises or property are acquired. Under the policies of some companies, the full limit of insurance is available for this coverage. Some policies allow the Building coverage to be extended to newly acquired or constructed premises and apply a time and dollar amount limit.

Coverage Extensions : 

107 Coverage Extensions Personal Property Off Premises – Most policies also extend Business Personal Property coverage to property that is temporarily off the premises while in transit or at other premises not owned, leased or operated by the insured. Under ISO BOP, this extension of coverage is not available for money and securities, valuable papers and records or accounts receivable. And a $5,000 limit is imposed.

Coverage Extensions : 

108 Coverage Extensions Outdoor Property – Coverage may be extended to apply to outdoor property. In some policies, this may be an extension under either the Building coverage or the Business Personal Property coverage. Under the ISO BOP it extends to: Outdoor fences Signs not attached to buildings Trees, shrubs and plants Radio and television antennas, including .satellite dishes

Coverage Extensions : 

109 Coverage Extensions Outdoor Property –Debris removal expense is also covered. Coverage applies only for certain specified perils: Fire Explosion Aircraft Lightning Riot or civil commotion A dollar limit also generally applies. For the ISO BOP, it is $2,500 maximum and not more than $500 for any one tree, shrub or plant.

Coverage Extensions : 

110 Coverage Extensions Personal Effects – coverage may be extended to include personal effects owned by the insured and the insured’s officers, partners or employees. This coverage extension does not apply to tools or equipment used in the business or loss or damage by theft. The most the company will pay under this extension is $2,500 at each insured premises.

Coverage Extensions : 

111 Coverage Extensions Personal Effects –The insured allows a customer to use the rest room in the back of the insured’s store. A few moments later, the customer runs out of the store with the insured’s purse, which had been hanging on a coat hook near the rest room. Is the loss covered by the Personal Effects coverage extension? No. Loss by theft is not covered. An employee of the insured has to leave an expensive coat behind when a fire suddenly breaks out in the insured’s store. The coat is destroyed. Is the loss covered by the Personal Effects coverage extension? Yes.

Coverage Extensions : 

112 Coverage Extensions Valuable Papers and Records – can be used to cover the costs to research, replace or restore information on lost or damaged valuable papers and electronic or magnetic records for which duplicates do not exist. The Valuable Papers and Records coverage extension does not apply to property held as samples or for delivery after sale or to property in storage away from the premises shown in the Declarations.

Coverage Extensions : 

113 Coverage Extensions Valuable Papers and Records – The only exclusions that apply to this coverage extension are: Governmental action Nuclear hazard War & military action Dishonesty False pretense Weather conditions Acts or decisions Negligent work

Coverage Extensions : 

114 Coverage Extensions Valuable Papers and Records – Under the ISO BOP there is a maximum limit of $10,000 at each described premises, unless a higher limit is shown in the Declarations. For valuable papers and records not at the described premises, the limit is $5,000.

Coverage Extensions : 

115 Coverage Extensions Valuable Papers and Records –An insured lost valuable papers at two buildings when a fire raged through an entire city block. The cost to restore these papers is $700 at one premises and $2,000 at the other. The insured also keeps duplicate records at home that were undamaged. Under the ISO BOP, how much would the insured be able to collect for the entire loss of valuable papers? $2,000 $2,700 $700 Nothing #4 is correct (because duplicate records exist)

Coverage Extensions : 

116 Coverage Extensions Accounts Receivable – if the insured has Business Personal Property coverage, the Accounts Receivable coverage extension may be used to cover amounts due from customers that the insured is unable to collect because of damage from a covered loss, interest charges on loans required to offset those amounts, excess collection expenses incurred because of the loss and other reasonable expenses required to reestablish accounts receivable records. Limits are the same as those for the Valuable Papers & Records coverage extension: $10,000 at the described premises and $5,000 for accounts receivable not at the described premises.

Coverage Extensions : 

117 Coverage Extensions Accounts Receivable – The exclusions apply on the same basis as the Valuable Papers & Records coverage extension. In addition, this coverage extension does not cover loss or damage: Caused by or resulting from alteration, falsification, concealment, or destruction of records to conceal the wrongful giving, taking or withholding of money, securities or other property. Cause by or resulting from bookkeeping , accounting or billing errors or omissions. That can only be proven by an audit or inventory computation.

Coverage Extensions : 

118 Coverage Extensions Accounts Receivable –A sprinkler system malfunction destroyed some of the accounts receivable documents in the billing department of the insured’s business. As a result, $1,500 in accounts receivable could not be collected. It cost the insured another $1,500 to recreate the other accounts receivable documents that were destroyed. What is the total amount the insurance company will pay for this loss? $3,000.

Coverage Extensions : 

119 Coverage Extensions Optional Coverages – most business owners-type policies, including the ISO BOP, have optional coverage included in them. However, these coverages apply only if so designated in the Declarations. Not all insurance companies include optional coverages in their forms. Some offer them only as separate endorsements. Your company may offer options that we do not discuss.

Coverage Extensions : 

120 Coverage Extensions Outdoor Signs – in the ISO BOP provides coverage for direct physical loss or damage to all outdoor signs on the premises that are owned by or in the care, custody or control of the insured. Coverage does not apply to loss caused by the following: Governmental action Ware and military action Hidden or latent defect Corrosion Nuclear hazard Wear and tear Rust Mechanical breakdown

Coverage Extensions : 

121 Coverage Extensions Outdoor Signs –The limit of insurance for this optional coverage is specified in the declarations. When this optional coverage applies, all other references to outdoor signs in the policy no longer apply.

Coverage Extensions : 

122 Coverage Extensions Money and Securities – applies to loss of money and securities used in the insured’s business as a result of theft, disappearance or destruction. Coverage applies while the money and securities are: At a bank or savings institution Within the living quarters of the insured, partner or employee who has custody of the property At the described premises; or In transit between any of these places

Coverage Extensions : 

123 Coverage Extensions Money and Securities –In addition to the limitations and exclusions applicable to Property coverage, there is no coverage for loss: That results from accounting or arithmetic errors or omissions; Due to giving or surrendering property in an exchange or purchase; or Of property in a money-operated device unless the amount deposited in it is recorded by a continuous recording instrument in the device.

Coverage Extensions : 

124 Coverage Extensions Money and Securities - Loss caused by one or more people or involving one or more acts is considered one occurrence. The insured must keep records so the insurance company can verify the amount of loss or damage to money and securities. Someone stole the money from a coin-operated soft drink vending machine the insured furnishes for employees’ use. Is this loss covered under the ISO BOP? No.

Coverage Extensions : 

125 Coverage Extensions Employee Dishonesty – covers loss to business personal property and money and securities from dishonest acts of employees. Coverage applies whether the employees act alone or in collusion with others, except the insured and partners of the insured. There is no coverage for loss where the only proof is an inventory or profit and loss computation. Coverage for an employee is cancelled immediately upon discovery by the insured or any partners, members, managers, officers or directors not in collusion with the employee of any dishonest act committed by that employee before or after he or she was hired by the insured.

Coverage Extensions : 

126 Coverage Extensions Employee Dishonesty – The amount shown in the Declarations is the most that will be paid for all loss or damage in one occurrence no matter whether more than one person or act is involved. Only loss that occurs during the policy period is covered. The limit of insurance is not cumulative from year to year. The insurance company will not pay for a covered loss that is discovered after one year from the end of the policy period. This is known as the discovery period.

Coverage Extensions : 

127 Coverage Extensions Employee Dishonesty – Under certain circumstances, the insured has coverage under the Employee Dishonesty optional coverage of the current policy for losses that occurred during the period of the previous policy that would have been covered by that policy except that the discovery period expired. For the current coverage to apply, it: Must become effective at the time the previous policy terminates; and Would have covered the loss had it been in effect when the loss occurred.

Coverage Extensions : 

128 Coverage Extensions Employee Dishonesty – Records show there is a shortage in an insured’s accounts, but the insured cannot account for the loss. Is the insured covered under the ISO BOP for this loss? No. Three employees acted together and stole money from their insured employer on two occasions during a policy period. They stole a total of $50,000. The insured has a $25,000 Employee Dishonesty optional coverage limit of insurance in an ISO BOP. How much will the insured by paid for the loss? Nothing $25,000 $50,000 $75,000 #2 is correct. (this is the maximum paid no matter how many people are involved)

Coverage Extensions : 

129 Coverage Extensions Mechanical Breakdown – pays for direct damage to covered property caused by a sudden and accidental of an object, as defined by the policy, that damages the object so it needs to be repaired or replaced. The object may be one that is owned by the insured or is in the care, custody & control. It must be at the described premises. The policy definition of object lists equipment in two main categories: certain boiler and pressure vessels and certain types of air conditioning units. The policy also defines exactly what is not considered an accident. There is no coverage for accidents that occur while an object is being tested. The insurance company may suspend this coverage by immediately mailing written notice to the insured if it is discovered that the object is in or is exposed to a dangerous condition. The insured will receive a pro rata refund of the premium.

LIMITS OF INSURANCE : 

130 LIMITS OF INSURANCE

LIMITS OF INSURANCE : 

131 LIMITS OF INSURANCE The most basic rule for applying limits to the insurance coverage is that the policy will pay no more than the applicable limit of insurance shown in the Declarations. The limit applies for any one occurrence. Under the ISO BOP, each coverage shown in the Declarations has its own limits, and the per occurrence rule applies separately to each. One month into the policy period, the insured has a $100,000 loss from a covered cause of loss on a building covered for $300,000. During the final month the policy is in effect, the insured has another building loss from a covered cause of loss that totals $280,000. Will both of these losses be fully covered? Yes.

LIMITS OF INSURANCE : 

132 LIMITS OF INSURANCE Coverages often have internal or inside limits. These limits are stipulated in the limits of insurance provision and also in various other sections of a policy, such as the Covered Property, Additional Coverages and Coverage Extensions sections. An example is the $1,000 fire department service charge limit under the ISO BOP additional coverages. Alternately, when the amount of such limits can be altered for a change in premium payment, the options might be stipulated only in the rules governing the coverage. In such case, the insurance producer, when selling the policy, must explain any such limits to the insured and help select appropriate limits, which are then included in the Declarations.

LIMITS OF INSURANCE : 

133 LIMITS OF INSURANCE The limits of insurance provision in the ISO BOP specifies that a $1,000 per occurrence limit applies to outdoor signs attached to buildings. This provision also specifies that the limits applicable to the coverage extensions, the Fire Department Service Charge additional coverage and the Pollutant Clean Up and Removal additional coverage are in addition to the policy’s limits of insurance.

LIMITS OF INSURANCE : 

134 LIMITS OF INSURANCE Building Limit – Automatic Increase … coverage automatically increases. A percentage, selected by the insured from a number of options the insurance company offers, is indicated in the Declarations for the Building coverage. Over the policy period, the limit of insurance gradually increases until it reaches the full amount by the end of the period.

LIMITS OF INSURANCE : 

135 LIMITS OF INSURANCE $108,000 12 Months $100,000 $120,000 Automatic Increase In The Building Limit

LIMITS OF INSURANCE : 

136 LIMITS OF INSURANCE The ISO BOP explains how to determine the increased amount that is available on any given day during the policy term. The formula for finding how much the limit has increased is as follows: Limit of Insurance x Annual Increase Percentage x.No. of Days Since Beginning of Policy Period / 365 Days of Policy Period. How much insurance is available to an insured with a Building coverage limit of $100,000 and an 8% annual increase when the policy is 180 days into its 12-month policy period? $96,055 $100,000 $103,945 $108,000 #3 is correct. ($100,000 x .08 x 180 / 365 = $3,945…then add to the original limit of $100,000 for the increased limit)

LIMITS OF INSURANCE : 

137 LIMITS OF INSURANCE Business Personal Property Limit – Seasonal Increase - covers seasonal variations in the value of the insured’s business personal property. The ISO BOP offers an automatic increase of 25% of the limit in the Declarations for seasonal variations. The increase applies only if the limit of insurance for Business Personal Property coverage in the Declarations is at least 100% of the insured’s average monthly values during either the 12 months or the period of time the insured has been in business before the loss, whichever is less.

LIMITS OF INSURANCE : 

138 LIMITS OF INSURANCE Business Personal Property Limit – Seasonal Increase -An insured under an ISO BOP has a Business Personal Property coverage limit of $100,000. During a period when the insured’s business normally earns the greatest part of its income from sales of seasonal merchandise, there is an $110,000 loss. Assuming all other requirements have been met, will the full loss be covered? Yes. $100,000+ $25,000.

DEDUCTIBLES : 

139 DEDUCTIBLES DEDUCTIBLES – help eliminate small claims and allows the insured to pay a lower premium (when the deductible goes up, the premium goes down). The standard deductible for the ISO BOP is currently $500. But, the insured may increase or decrease that amount. When a deductible applies, it is noted in the Declarations and generally applies per occurrence.

DEDUCTIBLES : 

140 DEDUCTIBLES DEDUCTIBLES - Under the ISO BOP, the base deductible applies to all Building and Business Personal Property coverages, including both mandatory and optional coverages. No deductible applies to the following additional coverages: Fire Department Service Charge Extra Expense Business Income Civil Authority Fire Extinguisher Systems Recharge Expense A separate $500 deductible applies to the Money & Securities, Employee Dishonesty and Outdoor Signs optional coverages. There is a separate $500 deductible for the Glass Expenses additional coverage. These deductibles are not in addition to the base deductibles.

NAMED PERILS ENDORSEMENT : 

141 NAMED PERILS ENDORSEMENT

NAMED PERILS ENDORSEMENT : 

142 NAMED PERILS ENDORSEMENT Covered Causes of Loss – when the Named Perils endorsement is added to the ISO BOP, Property coverage is provided on a named peril basis instead of an open peril basis. Fire – must be: A rapid oxidation accompanied by a flame or at least a glow Sudden and unexpected; and Hostile (one that has spread beyond its confines or is in a place not intended for it).

NAMED PERILS ENDORSEMENT : 

143 NAMED PERILS ENDORSEMENT Covered Causes of Loss – Lightning – is defined as electricity atmospherically produced by nature. Artificially generated electrical currents are not lightning, which is an important factor in determining whether losses are covered. If lightning causes a fire, damage from both the lightning and the fire is covered. If artificially generated electricity alone is responsible, only the fire damage is covered.

NAMED PERILS ENDORSEMENT : 

144 NAMED PERILS ENDORSEMENT Covered Causes of Loss –Explosion – includes gas or fuel explosions in any fired vessel, its flues or any passage for combustion gases. Certain events are NOT explosions: Rupture, bursting or operations of pressure relief devices Rupture or bursting from expansion or swelling as the result of water. Windstorm or Hail – damage that results from cold weather or frost is not covered nor are ice (other than hail), snow or sleet, whether or not wind-driven. Excluded is – damage to fabric or slat canopies and their supports outside of a building. Damage to the interior of a building or to property inside is covered against rain, snow, sand or dust only when the roof or walls first sustain wind or hail damage through which these elements enter.

NAMED PERILS ENDORSEMENT : 

145 NAMED PERILS ENDORSEMENT Covered Causes of Loss – Smoke – sudden or accidental loss or damage b smoke. In the ISO BOP, smoke is not covered when its source is from an industrial operation or agricultural smudging. Aircraft or Vehicles – covers loss damage from actual physical contact of an aircraft or vehicle with the covered property or with the building containing the covered property. Aircraft includes spacecraft, self-propelled missiles and objects that fall from them. Coverage also applies to damage when a vehicle causes something to be thrown against the insured’s property. Excluded under ISO BOP is damage caused by vehicles the insured owns or that are operated in the course of the business.

NAMED PERILS ENDORSEMENT : 

146 NAMED PERILS ENDORSEMENT Covered Causes of Loss –Riot or Civil Commotion – included are looting that occurs at the same time and place and losses caused by employees on strike on the premises. During a riot, police closed off a district in which an insured has a business. Several hours later, the businesses in the area were allowed to reopen. The insured’s property was not damaged during the riot. However, the evening of the reopening, the insured accidentally left a back door unlocked, and the business was looted during the night. Is this loss covered? NO. The looting did not occur during the riot.

NAMED PERILS ENDORSEMENT : 

147 NAMED PERILS ENDORSEMENT Covered Causes of Loss –Vandalism – is intentional and malicious damage or destruction. Damage that results from theft is not covered under this peril unless the damage is caused by burglars while breaking into or exiting the building. Examples: Leather coats belonging to an insured storeowner were damaged when the thieves who stole them threw them into the street while fleeing the police. Vandals throw bricks through a plate glass window of an insured’s cheese shop, and many glass fragments were embedded into several dozen packages of imported cheeses. Burglars damage an automatic door while breaking into an insured’s building.

NAMED PERILS ENDORSEMENT : 

148 NAMED PERILS ENDORSEMENT Covered Causes of Loss - Sprinkler Leakage – since insurance companies encourage the use of sprinklers, coverage is typically provided under policies for damage to the insured’s property from accidents or malfunctions of the systems. The ISO BOP covers leakage or discharge of any substance from an automatic sprinkler system. Collapse of a tank that is part of the system is also covered. If the insured has coverage for the building or structure that contains the system, the policy will pay for repairs or replacement of damaged parts of the system if the damage results in sprinkler leakage or is directly caused by freezing. Also covered is the cost to tear out and replace any part of the building to repair damage to the system that resulted in sprinkler leakage.

NAMED PERILS ENDORSEMENT : 

149 NAMED PERILS ENDORSEMENT Covered Causes of Loss -Sinkhole Collapse – is covered when damage occurs as a result of sudden sinking or collapse of land. Sinkholes develop where water erodes underlying rock formations and eventually wears away the support for the earth above and any structures that might be built above the hollow space. This description refers to the action of water on limestone or dolomite, rather than to hollow places caused by underground cavities made by people, such as mines. Only property damage is covered; there is no coverage for the cost to fill sinkholes. Left click to proceed

NAMED PERILS ENDORSEMENT : 

150 NAMED PERILS ENDORSEMENT Covered Causes of Loss -Volcanic Action – not to be confused with volcanic eruption, which is not covered. Volcanic action results from the eruption of a volcano, but this peril covers only the damage from certain activities that occur, following the eruption. The ISO BOP (& most other forms) allow coverage when the loss or damage is caused by any of the following: Airborne volcanic blast Ash Particulate matter Airborne shock waves Dust Lava flow While damage caused by these is covered, the cost to remove any of these is not covered when no other damage occurs. Most forms read that all damage for 168 hours after volcanic activity is considered a single occurrence.

NAMED PERILS ENDORSEMENT : 

151 NAMED PERILS ENDORSEMENT Covered Causes of Loss - Transportation – coverage applies to loss or damage of covered property in transit caused by the following: Collision, derailment or overturn of a vehicle Stranding or sinking of vessels Collapse of bridges, culverts, piers, wharves, or docks. Left click to proceed

NAMED PERILS ENDORSEMENT : 

152 NAMED PERILS ENDORSEMENT The following exclusions are the same in the standard ISO BOP and the Named Perils endorsement: Electrical apparatus Steam apparatus Errors or omissions Installation, testing, repair Electrical disturbance Weather conditions Acts or decisions Negligent work Exclusions applicable to Accounts Receivable coverage Exclusions applicable to Business Income and Extra Expense coverage

NAMED PERILS ENDORSEMENT : 

153 NAMED PERILS ENDORSEMENT These exclusions are ADDED by the Named Perils Endorsement: Burst Piping (other than automatic sprinkler systems, unless caused by a covered cause of loss). Water Discharge (other than automatic sprinkler systems or if the system or appliance is damaged by a covered cause of loss). Mechanical Breakdown (unless breakdown is caused by a covered loss) This exclusion does not apply to the breakdown of computers. Accounts Receivable and Valuable Papers and Records Coverage Extensions – excluded when caused by dishonest or criminal acts of the insured, employees, directors, trustees, authorized representatives, or anyone entrusted with the property …

NAMED PERILS ENDORSEMENT : 

154 NAMED PERILS ENDORSEMENT Additional and Optional Coverages -When the Named Perils endorsement is added to the ISO BOP, the Collapse and Water Damage, Other Liquids, Power or Molten Material Damage additional coverages are eliminated. Also eliminated is the optional coverage for Money & Securities. Burglary and Robbery coverage is added as an optional coverage under the Named Perils endorsement. The coverage applies: At the described premises Within the insured’s living quarters While at a bank or savings institution Within the living quarters of the insured’s partners or any employee who has custody of the property

NAMED PERILS ENDORSEMENT : 

155 NAMED PERILS ENDORSEMENT Additional and Optional Coverages – There is no coverage for the following loss or damage: To household & personal effects in living quarters occupied by the insured, or any partner, officer, director, stockholder or any of their relatives. To evidences of debt other than securities From dishonest or criminal acts of the insured, partners, employees, directors, trustees, or authorized representatives Of property that has been transferred outside the premises by unauthorized instructions

NAMED PERILS ENDORSEMENT : 

156 NAMED PERILS ENDORSEMENT Additional and Optional Coverages – There is no coverage for the following loss or damage: To accounts, deeds or manuscripts Of missing property when there is no physical evidence to show what happened to it, such as shortage discovered after taking inventory From voluntarily parting with any property through fraudulent scheme, trick, device or false pretense From delay, loss of use or loss of market During a fire at the described premises

NAMED PERILS ENDORSEMENT : 

157 NAMED PERILS ENDORSEMENT Additional and Optional Coverages -The inside the premises limit shown in the Declarations is the maximum amount payable – while in or on the premises or in a bank or savings institution. The outside-the-premises limit shown in the Declarations applies anywhere else.

NAMED PERILS ENDORSEMENT : 

158 NAMED PERILS ENDORSEMENT The limit for all other covered business personal property is 25% of the Business Personal Property coverage limit, with the following exceptions: Furs, fur garments and garments trimmed with fur - $2,500 Jewelry, watches, watch movements, jewels, precious and semiprecious stones, bullion, gold, silver, platinum, and other precious alloys or metals worth $100 or less - $2,500 Patterns, dies, molds and forms $2,500 Loss or damage caused by one or more people or involving one or more acts is considered one occurrence. A deductible applies to this coverage.

Thank you! : 

159 Thank you! At this time, you may enter the ClassMarker website at http://www.classmarker.com/embedded_quizzes/?quiz=afa3bd018f64f920a6dac3bd22435bca For password type:  ces2010 Click on Enter. Provide the details requested on the following page. Click on “Start Test”. There is no time limit, however if you leave the test for some time, it may require you to begin again. It will show you (and I as the provider) your test results. Upon completion of the test, call me at 913-980-2348, and I will have you fax your signed affidavit to me. My FAX number is 816-987-0461. Upon receipt, I will fax your certificate to you and file the results with the Insurance Department!

authorStream Live Help