(June 2016)
C. LIMITATIONS
Now that what is covered and what is excluded has been
analyzed, four coverage limitations must be reviewed. Each of the four has
multiple subparts.
1. Broad Limitation
Loss or damage to any property
described and limited in this section is excluded. Losses that are a
consequence of loss to such property are also excluded.
a. Steam Boilers, Steam Pipes, Steam
Engines, or Steam Turbines
There is no coverage if a loss is
caused by or results from a condition or an event that occurs inside covered
steam boilers, steam pipes, steam engines, or steam turbines. However, coverage
applies if gases or fuel inside the furnace or within a flue or other passage explode
and cause loss or damage.
b. Water Heating Devices
Loss or damage caused by water-heating
devices such as including hot water boilers caused by a condition or event
within them is excluded. However, coverage applies if an explosion causes the
loss.
c. Interior of Any Building and
Personal Property
The interior of a building and the
personal property inside it is not covered for damage that rain, snow, sleet,
ice, sand, or dust causes. However, there are two exceptions. Coverage applies:
- If the roof or walls of the building are first damaged by a
covered cause of loss that allows the rain, snow, sleet, ice, sand, or
dust to enter
- If snow, sleet, or ice on the building thaws and then causes the
loss
Note: Leaving doors and windows open limits a loss that may
otherwise be covered.
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Example:
Scenario 1: Pamela awakens to drops of water on her nose. She
looks up and notices water dripping from her ceiling. She contacts the
apartment manager who discovers that ice under the snow on the roof has
thawed and is flowing through the roof into Pamela’s bedroom. The apartment's
policy covers the damage to the ceiling and floor coverings because of the
exception to this limitation.
Scenario 2: Pamela steps onto to her carpeting and notices that
her feet are very wet. She awakens quickly when she realizes that she left
her window slightly opened, that snow had entered through the window, and
that it melted on the windowsill and floor. There is no coverage for any
damage this situation caused.
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d. Building Materials Awaiting
Installation in a Building
Theft of building materials that are
awaiting installation and not yet attached to the building is excluded. Under
all coverage forms except for CP 00 20–Builders Risk
Coverage Form, this limitation does not apply if the building materials are
being held for sale. That means that under CP 00 20 theft of building material
is always excluded unless CP 11 21–Builders Risk – Theft of Building Materials,
Fixtures, Machinery, Equipment is attached.
This limitation does not apply to the
business income coverage forms or the extra expense coverage form.
e. Inventory Shortage
Any missing property loss that can be
proven only because an inventory revealed a shortage is excluded. This is
because it really means there is no actual knowledge that something was taken.
The loss could be due to a mathematical or computation error, employee theft,
or a break-in. There is no coverage if there is nothing to physically suggest
what actually happened.
f. Unauthorized Instructions
Coverage does not apply if a loss
occurs because property was given to another person or sent to another place
based solely on unauthorized instructions.
g. Vegetated Roofs (10 12 addition)
Lawns, trees, shrubs, and plants that
are part of vegetated roofs are covered property because they are excepted from 2. Property Not Covered in the
coverage form. This limitation is needed because they are alive and depend on
certain conditions to thrive. They are also outdoors and are not protected from
the elements. There is no coverage if these lawns, trees, shrubs, or plants are
damaged due to:
- The atmosphere or the soil being too damp or too dry
- The temperature changes too often or is considered extreme
- Disease
- Hail, frost, rain, snow, ice, or sleet
2. Coverage Limited to Specified
Causes of Loss
The insurance company does not pay for
loss or damage to any of the following property unless a specified cause of
loss or breakage of building glass causes the loss or damage:
a. Animals
This item has a limitation within a
limitation. In addition to being covered only if specified perils or glass
breakage causes the loss, coverage applies only if the animal dies or must be
destroyed. This means that coverage does not apply to veterinarian bills or
expenses incurred to save the animal.
b. This limitation applies to fragile objects only if they
are broken. Statuary, marbles, chinaware, and porcelains are examples of such
fragile items. Glass and items that contain property for sale are not subject
to this limitation.
c. Builders’ machinery, tools, and equipment that the named
insured owns or has entrusted to it that qualifies as covered property is
subject to this limitation.
Under all coverage forms except for CP 00 20–Builders Risk Coverage
Form, this limitation does not apply if the property is located on or within
100 feet of the described premises. This means that this limitation applies
without exception under CP 00 20.
This limitation does not apply to the
business income or extra expense coverage forms.
3. Limited Theft Coverage for Specific
Types of Property (10 12 change)
The following categories have special
limitations that apply to only theft losses. These are per occurrence
sub-limits that do not increase the limit of insurance available to cover a
loss. These sub-limits can be increased:
- Furs, fur garments, and fur-trimmed garments are subject to a
$2,500 limit.
- Jewelry, watches, watch movements, jewels,
pearls, gold, and similar items are subject to a $2,500 limit. This
limitation does not apply to jewelry or watches that are valued at less
than $100 each.
- Patterns, dies, molds, and forms are subject to a $2,500 limit.
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Printing Dies
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- Stamps, tickets, letters of credit, and lottery tickets held for
sale are subject to a $250 limit.
These limitations do not apply to the
business income or extra expense coverage forms.
Note: Coverage applies for all other causes of loss, subject
to the standard exclusions and the limit of insurance on the declarations.
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Example: Pitta Pat clothing store has a $75,000 business
personal property limit. A break-in takes place and a number of items are
stolen. However, the thieves destroyed many others as they vandalized the
store. The loss was as follows:
- $50,000 clothing
stolen or destroyed
- $25,000 fixtures
destroyed
- $5,000 fine jewelry
stolen
- $1,000 costume jewelry
(under $100 per item) stolen
- $10,000 fur-trimmed
garments stolen
Pitta Pat submits a claim and requests $75,000
for the clothing and fixtures, $2,500 for the fine jewelry, and $2,500 for
the fur-trimmed garments that were stolen.
Her loss settlement is for $75,000 because that
is the policy's limit of insurance. The theft limitations are only sub-limits
within the policy limit.
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4. Defect in Systems or Appliances
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There is no coverage for the cost to repair a defect
in a system or appliance from which water, other liquids, powder, or molten
material escapes. However, fire-extinguishing systems are covered if the
damage results in a discharge from the automatic protection system or if the
damage is caused directly by freezing.
This limitation does not apply to the business
income or extra expense coverage forms.
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