March 2009, Volume 27
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130.9-4

BROCHURE: UNDERSTANDING THE ISO
COMMERCIAL PROPERTY PROGRAM

(December 2008)

Protecting your real and personal property is an important element of your insurance program. Regardless of the size of your business, a large percentage of your assets and resources are tied directly to your property. The commercial Property Program can provide the coverage you need if a loss should occur.

Consult the policy for definitions and limitations. The terms of this brochure do not represent contract terms. The policy is subject to company underwriting practices.

COVERAGE

The policy pays for direct physical loss or damage to covered property. The loss must occur at the premises listed and described on the declarations and must result from the occurrence of a covered cause of loss.

WHAT IS COVERED AS BUILDING?

The insurance policy treats a building as more than just a single building. When a limit of insurance appears on the declarations, the structure described and any of the following are considered, treated and covered as building:

  • Completed additions
  • Fixtures
  • Permanently installed machinery and equipment
  • Personal property you own and used to service or maintain the building or premises

WHAT IS COVERED AS PERSONAL PROPERTY?

The insurance policy treats personal property as more than just the contents of a building. When a limit of insurance appears on the declarations, the following are all considered, treated and covered as personal property if inside the building or outside and within 100 feet of the premises or in or on a vehicle:

  • Furniture and fixtures
  • Machinery, equipment and stock
  • All other personal property you own and use for business
  • Labor, materials or services you furnish or arrange on the personal property of others
  • If you are a tenant, your interest in any improvements and betterments you make or acquire
  • Any leased personal property you are contractually obligated to insure

WHAT IS COVERED AS PERSONAL PROPERTY OF OTHERS?

Personal property of others is covered while in your care, custody or control. However, it must be in the building or outside and within 100 feet of the premises or in or on a vehicle.

WHAT PROPERTY IS NOT COVERED?

Certain types of property, such as the kind listed below, are not usually eligible for coverage and are not covered. In many cases, coverage is available elsewhere or under a different insurance policy or coverage form:

  • Accounts, bills, currency, food stamps, evidences of debt, money, notes or securities
  • Animals
  • Automobiles held for sale
  • Bridges, roadways, walks, patios or other paved surfaces
  • Contraband or any property involved in illegal transportation or trade
  • Costs of excavations, grading, filling or backfilling
  • Foundations below the basement or the surface of the ground where there is no basement
  • Land, water, growing crops or lawns
  • Personal property while airborne or waterborne
  • Bulkheads, pilings, piers, wharves or docks
  • Property insured or covered under another coverage form or policy
  • Retaining walls not making up part of a covered building
  • Underground pipes, flues or drains
  • Electronic data
  • Costs to research, replace or restore information on valuable papers or records
  • Vehicles or self-propelled machines licensed for use on public roads or operated principally away from the described premises
  • Grain, hay, straw, crops, fences, radio or television antennas and satellite dishes including lead-in wires, masts, and towers, and trees, shrubs or plants

WHAT CAUSES OF LOSS ARE COVERED?

Three causes of loss forms are available. The basic and broad causes of loss forms list the covered causes of loss. The special causes of loss form covers any cause of loss not excluded or limited. These forms should be reviewed carefully because each has exclusions that can significantly affect coverage.

  • Causes Of Loss–Basic Form covers direct physical loss or damage caused by or resulting from fire, lightning, explosion, windstorm, hail, smoke, aircraft or vehicles, riot or civil commotion, sprinkler leakage, vandalism, sinkhole collapse and volcanic action.
  • Causes Of Loss–Broad Form is an intermediate level causes of loss form that covers direct physical loss or damage caused by or resulting from glass breakage, falling objects, weight of snow, ice, or sleet and water damage in addition to the causes of loss listed in the Causes Of Loss–Basic Form above.
  • Causes Of Loss–Special Form covers direct physical loss or damage caused by or resulting from risks of direct physical loss or damage not excluded or limited in the form.

WHAT ARE THE ADDITIONAL COVERAGES?

The following additional coverages are provided in the coverage form for specific limits of insurance:

  • Debris removal
  • Preservation of property
  • Fire department service charge
  • Pollutant clean up and removal
  • Increased cost of construction
  • Electronic data

WHAT ARE THE COVERAGE EXTENSIONS?

The following coverage extensions apply when insurance is written subject to 80% or higher coinsurance or on a value reporting form. Each extension is an additional amount of insurance.

  • Newly acquired or constructed property
  • Personal effects and property of others
  • Valuable papers and records–cost of research
  • Property off-premises
  • Outdoor property
  • Non-owned detached trailers

WHAT ARE THE LOSS CONDITIONS?

The loss conditions explain the obligations you and the insurance company owe one another when a loss occurs.

  • Abandoning damaged property is not allowed
  • How appraisals are handled
  • Duties in the event of loss or damage
  • How loss payment is handled
  • What happens if the premises are vacant or unoccupied
  • How valuation is determined

WHAT ARE THE OPTIONAL COVERAGES?

The three optional coverages available in the basic policy are:

  • Agreed value
  • Inflation guard
  • Replacement cost valuation

ENDORSEMENTS

The Commercial Property Program has a number of optional coverage endorsements that can be included with the policy.

Note to subscribers: Please refer to PF&M Section 130.7-3, ISO Commercial Property Program Endorsements Checklist for a list of endorsements to consider.

REPRINT PERMISSION

PF&M subscribers in any manual or electronic form are permitted to reprint any portion of this brochure for their commercial insurance customers. Other uses require permission by The Rough Notes Company, Inc.