(December 2022)
This endorsement is used with the Insurance Services Office (ISO) OP 00 01–Capital Assets Program Coverage Form (Output Policy). It covers loss or damage the named insured becomes legally responsible to pay as a bailee or warehouse operator. The loss or damage must be due to direct physical loss or damage to covered property arising out of a covered cause of loss.
Although this is a property coverage form, it has many features of a liability coverage form because coverage exists only when the named insured has a legal obligation to compensate a third party. This endorsement is not a standalone coverage form. All terms and conditions in the OP 00 01 apply unless modified within this endorsement.
The endorsement schedule has spaces to provide the following information for up to three warehouses:
Note: This information may be entered on the declarations if it is not entered on the endorsement schedule.
The insurance company pays amounts the named insured is legally responsible for and obligated to pay because of direct physical loss or damage to covered property from any covered cause of loss. The responsibility/obligation must result from the named insured being either a bailee or warehouse operator.
The insurance company has the right and duty to defend the named insured against suits that seek such damages that this insurance covers but that right and duty ends when the limit is used up in the payment of judgments or settlement.
The most paid by the insurance company is described in the Limit of Insurance Section below. The insurance company is only obligated to defend and/or pay if coverage exists under this endorsement. If coverage does apply, the insurance company has the right to investigate any occurrence and settle any claim or suit that may result. It is not required to consult with the insured before doing so.
The description of the covered property in the policy is deleted and replaced by the following, but only for the coverage this endorsement provides.
Covered property is a tangible property that belongs to others while it is in the named insured's care, custody, or control. It must be stored or maintained in the named insured’s warehouse that is identified on the endorsement schedule.
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Example: Wally's Wonderful Warehouse specializes in storing bulk non-perishable and dry foods at the warehouse listed on the endorsement schedule. As a favor to Carl, a fishing buddy who owns a retail electronics business, Wally stores several pallets of Carl's computers in his warehouse before the Christmas shopping season. A covered loss damages much of the dry goods and Carl's computers. This coverage applies to the computer damage, even though they did not represent the type of property Wally usually stores and even though he did not charge Carl anything or issue Carl a Warehouse Storage Receipt. |
Note: Not every kind of property is covered. The next section lists what is excluded.
The following items are added to Property Not Covered in OP 00 01.
1. Property the named insured assumed liability for in any contract or agreement above and beyond what the law imposes on it as a bailee or warehouse operator. This exclusion does not apply if the Assumed Contractual Liability Option on the endorsement schedule is selected.
Note: This exclusion does not limit to only the excess amount of liability assumed. It completely excludes the property.
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Example: Most bulk foods stored in Wally's Wonderful Warehouse are valued on a cost per pound basis that both parties agree to in written storage agreements. This includes coffee for Clint's Custom Coffees. The government of a major coffee producing country suddenly stops shipping coffee outside of the Southern Hemisphere, and the retail cost of coffee in the United States skyrockets. In addition, dense smoke from a major fire makes the coffee Wally stores for Clint worthless. Clint files a claim based on the dramatically higher value of coffee at the time of the loss. However, the insurance company refuses to settle for more than the cost per pound stated in the storage agreement because Wally did not select the Assumed Contractual Liability Option. |
2. Any property for which the named insured has been released of liability
3. Property better insured under other inland marine coverage forms and policies. Furs, fur garments, garments trimmed with fur, jewelry, jewels, pearls, semi-precious and precious stones, watches and watch movements, bullion, gold, silver, platinum, and other precious metals and alloys and fine arts are excluded for any cause of loss.
Note:
Furs, fur garments, and garments trimmed with fur should be covered under
furriers’ block or furriers’ customers
coverage. Jewelry, jewels, pearls, semi-precious and precious stones, watches
and watch movements, bullion, gold, silver, platinum, and other precious metals
and alloys should be covered by jeweler's block coverage. Fine arts should be
covered under one of several fine arts coverage forms.
4. Property the named insured holds as storage-in-transit under a bill of lading it issued
Note: Storage-in-transit refers to the temporary storage of certain property
pending further transportation. This may be necessary when a new home is not
yet ready for occupancy, and the household items being moved from the previous
home must be stored until the house is ready. This service must be specifically
requested from the moving company, and the amount of time cannot be more than a
set number of days the carrier determines. Additional charges apply in addition
to warehouse handling and final delivery charges. If the warehouse operator acts
as the carrier for hire and issued the bill of lading, the property
stored-in-transit is excluded.
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Example: Wally's Wonderful Warehouse also runs a
trucking operation as a contract carrier for hire. Wally is hired to pick up
merchandise from Walt's Wacky Wickets, transport it to the warehouse, hold it
there awaiting consolidation and then
deliver the consolidated load to a sporting goods manufacturer in another
state. Wally operates under a bill of lading document for the transportation
operations separate from the warehouse storage agreements. If there is a
covered loss to Walt's property while it is in the warehouse, Wally is
responsible to the extent of the transportation bill of lading and not under
the warehouse storage agreement. This endorsement would not provide any coverage for any property Wally’s trucking operation handles in this manner. |
Supplementary Payments
The insurance company pays the following costs, expenses, and interest charges involved with any claim it investigates or settles or any suits against the named insured that it defends. These payments do not reduce the limit of insurance.
a. All expenses the insurance company incurs to defend suits or to investigate and settle claims
b. Costs of appeal bonds and bonds to release attachments. These costs are limited to bond amounts that fall within the limit of insurance that applies. The insurance company is not required to furnish these bonds.
c. Reasonable expenses the named insured incurs to help the insurance company investigate the claim or defend the suit. These costs are paid only when the company requests the named insured to assist. If the named insured takes off work, the insurance will pay the actual lost earnings the named insured sustains but no more than $1,000 per day.
d. All court costs that are assessed against the insured in a suit. Attorneys' fees and expenses that are assessed against the insured are not paid.
e. Prejudgment interest on the part of a judgment the insurance company pays when an award is made against the named insured. This applies to only prejudgment interest accrued before the company's offer to pay the limit of insurance that applies.
f. The total interest on the full amount of a judgment that accumulates after the judgment is entered but before the judgment is paid. Once the insurance company pays or deposits the part of the judgment for which it is liable to the court, its responsibility for the interest of the remaining part of the judgment ends.
The following replaces all of the exclusions in OP 00 01:
1. The first group of exclusions applies whether the loss event results in widespread damage or affects a significant geographical area or not and are essentially absolute. Subject to specific exceptions, each is totally excluded, regardless of any other cause or event that contributes to a loss concurrently or in any other sequence.
a.
Governmental Action
Loss or damage to covered property because of an order by any governmental authority to seize or destroy it is excluded. However, the insurance company does pay for such loss or damage at the time of a fire to keep it from spreading if that fire would be covered under this endorsement.
b.
Nuclear Hazard
There is no coverage for loss or damage caused by or that results from any weapon that uses atomic fusion or fission.
There is also no coverage from a nuclear reaction, radiation, or radioactive contamination, regardless of cause. If a fire results from such nuclear reaction, radiation, or radioactive contamination, coverage applies to the loss or damage that fire causes.
Note: This is different from the corresponding exclusion in the coverage form because of the weapon mention in this endorsement. The coverage form does not mention the use of weapons.
c.
War and Military Action
Coverage does not apply
to loss or damage caused by or resulting from war, undeclared war, or civil war. This includes any warlike action by a
military force or actions to hinder or defend against an actual or expected
attack by any government or sovereign authority that uses military personnel or
other agents. It also includes acts of insurrection, rebellion, revolution,
usurped power, or action any government authority takes to hinder or defend
against any of these actions.
Note: This exclusion does not apply to terrorism.
The exclusions for Earth Movement, Intentional Loss, Utility Services, Water, Certain Computer-related Losses, Ordinance or Law, Fungi or Wet or Dry Rot, and Virus or Bacteria that are part of OP 00 01 do not apply to this endorsement.
2. The second group of exclusions applies to
loss or damage caused by or resulting from any of the following loss events.
Some of these exclusions have exceptions, conditions, or limitations that
should be noted and reviewed carefully.
This list of exclusions is considerably different from the corresponding list of these exclusions in OP 00 01.
a. Indirect losses, such as loss of market, loss of use, delay, or any other type of consequential loss
b. Disappearance that cannot be explained
Note: This is where the covered property is simply gone without any evidence or explanation of what happened to it.
c. Shortage found when taking inventory
Note: This is similar to unexplained disappearance except for the fact that it takes a physical inventory to reveal that the property is missing.
d. Dishonest or criminal acts committed by the named insured, its partners, employees, directors, trustees, authorized representatives, managers, or members of a limited liability company. Such acts committed by any party that has an interest in the property, including their employees and authorized representatives or any other party entrusted with the property for any reason are also excluded. There is no coverage if any of these parties acts alone or in collusion with an outside party and is not affected by whether the act is committed during business hours.
This exclusion does not apply to covered property entrusted to carriers for hire or to acts of destruction by the named insured's employees. However, theft by employees is excluded.
Note: This is the same wording that is in the 10 10 edition of OP 00 01. It was not updated to reflect the wording in the 04 13 edition of OP 00 01.
e. Refrigeration equipment breakdown
f. Forgery as it relates to warehouse receipts, shipping or loading documents, or bills of lading
g. Riot, civil commotion, strikers, locked-out workers, and other persons who participate in labor disturbances
Note: This could conflict with the exceptions in item d. above.
h. Pollution
This is loss or damage caused by or that results from any action of pollutants unless it results from or is caused by a Specified Cause of Loss.
i. Loss or damage to covered property that results from processing or work done on it.
However, coverage applies for direct loss or damage caused by a resulting fire or explosion, provided this endorsement covers those causes of loss.
j. Artificially generated electrical current that creates a short circuit or other disturbance in an object covered by this insurance. This exclusion applies only to the loss or damage to that object. Damage to the object due to resulting fire or explosion is covered if the endorsement covers such fire and explosion.
k. Any voluntarily parting with covered property if the named insured or anyone entrusted with covered property is somehow duped into giving it away
l. Unauthorized instructions to transfer covered property to other persons or places
m. Neglect of, or failure by, any insured to use reasonable means to save and preserve property from further damage after a covered loss, both at the time of loss and also afterward
3. The third group of exclusions applies to loss, damage caused by or that result from any of the following
loss events. In every case, if loss or damage by a covered cause of loss occurs
as a result of one of these excluded events occurring, coverage applies to the
loss or damage the resulting covered cause of loss event causes.
a. Wear, tear, and depreciation
Note: This is loss
or damage that results from the intended use of the property or simply because
it exists. It is considered a maintenance issue, not an insurance issue.
b. Qualities in the property that tend to cause it to damage or destroy itself. This also includes gradual deterioration and hidden or latent defect.
c. Mechanical breakdown
Note: This is excluded because all machines and machinery eventually break down. This includes loss or damage caused by rupture and bursting due to centrifugal force.
d. Insects, vermin, and rodents
Note: This is a much more restrictive exclusion than the standard insect, vermin and rodent exclusion which excludes only damage due to nesting, infestation, or discharge of waste/secretions. However, it does NOT exclude damage by other types of animals which exposes the policy to many other potential losses.
e. Temperature extremes, rust, corrosion, and dampness
This section replaces Limits of Insurance in OP 00 01. The most paid in any one occurrence is the limit of insurance on the endorsement schedule that applies.
Deductible in OP 00 01 is replaced. The insurance company does not pay any loss or damage until it exceeds the deductible amount on the endorsement schedule. Payment is then paid in excess of the deductible up to the limit of insurance that applies.
The following replaces the Duties in the Event of Loss or Damage Loss Condition in the policy:
1. The named insured must promptly notify the insurance company of an accident that might result in a claim. The notice should include how, when, and where it occurred and the names and addresses of any witnesses.
Note: Notification that an accident has occurred is not the same as a notice of a claim.
2. The insurance company must receive prompt notice of any claim made or suit brought.
3. The named insured has other duties. It must:
4. The named insured may not make payments, assume obligations, or incur expenses without the company's permission. If it does, it does so at its own expense.
Note: This condition is more similar to a general liability loss condition than a property one.
Suit is defined. It is a civil proceeding that alleges damages because of property damage that this insurance supposedly covers. It also includes arbitration proceedings that claim such damages and other alternative dispute resolution proceedings the named insured must submit to, either with or without the company's consent.