BROCHURE: UNDERSTANDING THE ISO COMMERCIAL PROPERTY PROGRAM

(June 2022)

Protecting your real and personal property is an important element of your insurance program. No matter the size of your business, a large percentage of your assets and resources are tied directly to your property. A 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 a covered cause of loss.

COVERED BUILDING

This policy treats a building as more than just a single building. When there is a limit of insurance for building on the declarations, the structure described, and all of the following are covered as building:

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

COVERED PERSONAL PROPERTY

This policy treats business personal property as more than just the contents of a building. When there is a limit of insurance on the declarations, all of the following are covered as personal property if inside the building or structure or within 100 feet of the building or premises and either in the open or in or on a vehicle:

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

COVERED PERSONAL PROPERTY OF OTHERS

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

PROPERTY NOT COVERED

Certain types of property, such as the ones listed below, are not covered. In many cases, coverage is available elsewhere, by endorsement, or under a different insurance coverage form or policy:

• 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 to excavate, grade, fill, or backfill
• Foundations below the basement or the ground's surface if there is no basement
• Land, water, growing crops, or lawns. However, lawns on vegetated roofs are covered.
• Personal property while airborne or waterborne
• Bulkheads, pilings, piers, wharves, or docks
• Property that another coverage form or policy insures or covers
• Retaining walls that do not make 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. Trees, shrubs, or plants that are stock or on vegetated roofs are covered.

COVERED CAUSES OF LOSS

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 that results from fire, lightning, explosion, windstorm, hail, smoke, aircraft, vehicles, riot, 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 that results from glass breakage, falling objects, weight of snow, ice, or sleet, and water damage in addition to the causes of loss in the Causes of Loss–Basic Form.
• Causes of Loss–Special Form covers direct physical loss or damage caused by or that results from risks of direct physical loss or damage that the form does not exclude or limit.

A number of exclusions apply that should be reviewed.

ADDITIONAL COVERAGES

This coverage form provides the following additional coverages for small specific limits of insurance:

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

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
• Business personal property temporarily in portable storage units on the premises

LOSS CONDITIONS

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

OPTIONAL COVERAGES

The four optional coverages available are:

• Agreed value
• Inflation guard
• Replacement cost valuation
• Replacement cost valuation for property of others

ENDORSEMENTS

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

Note to subscribers:

Related Article: ISO Commercial Property Program Endorsements Checklist

REPRINT PERMISSION

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