(December 2022)
This endorsement covers loss or damage for which the named insured is legally responsible because it is a warehouse operator.
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 AG 00 01 apply unless modified within this endorsement.
The endorsement schedule has spaces to enter the following information for up to three warehouses:
This information may be entered on the declarations if it is not 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 be the result of 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 settlements.
The most paid by the insurance company is explained 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 covered property in the policy is deleted, and the following replaces it but only for the coverage that the endorsement provides.
The covered property is a tangible property that belongs to others. It must be in the named insured's care, custody, or control and stored or maintained in its warehouse that is listed in the endorsement schedule above.
Note: Not every kind of property is covered. The next section lists the property specifically excluded.
|
Example: Periwinkle Butchers, LLC
maintains refrigerated family food lockers on its premises. The lockers are
used by nearby Amish families to store the meat from cows butchered for them
by Periwinkle. |
The following are added to Property Not Covered section in the policy:
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 named insured selects the Assumed Contractual Liability Option and there are corresponding entries on the endorsement schedule.
Note: This exclusion does not just limit the excess amount of liability assumed. It totally excludes the property.
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Example: Periwinkle has a unique contract with its Amish customers because of the butchering arrangement. Therefore, the assumed contractual liability option is selected so that coverage will apply. |
2. The livestock and poultry not covered property listing in the policy is replaced. The new property not covered states that livestock and poultry are not covered, with the only exception being when the Livestock and Poultry option is selected on the endorsement schedule.
Note: The AG 00 01 Property not covered being replaced states that livestock and poultry are not covered. However, it contains an exception that livestock or poultry that have been slaughtered for use in either a manufacturing or processing operation are covered. Because replacement wording does not contain the exception, the question must be asked as to whether livestock and poultry that have been slaughtered are covered if the Livestock and Poultry is not selected.
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Example: Periwinkle stores beef for
its customers. Would Periwinkle need to select livestock and poultry option in
order to cover that beef? |
3. If the named insured has been released from liability for any property, there is no coverage for that property.
4. Property that is better insured under inland marine coverage forms and policies. Furs, fur garments, fur-trimmed garments, jewelry, jewels, pearls, semi-precious and precious stones, watches and watch movements, bullion, gold, silver, platinum, other precious metals, and alloys and fine arts are not covered for any cause of loss.
Note: This is needed because these are all covered under the policy. All are subject to special sublimits, but those apply only to theft coverage.
5. Property the named insured holds as storage in transit under its own bill of lading.
Supplementary Payments
Note: These payments are common in the liability
coverage forms.
The insurance company pays the following costs, expenses, and interest charges but only when they are incurred as part of a claim investigation or settlement. They may also be incurred as part of a suit the insurance company is defending. These payments do not reduce the limit of insurance.
a. All expenses the insurance company incurs to defend suits or investigate and settle claims
b. Costs of appeal bonds and bonds that are needed in order for attachments to be released. The cost of the bond is limited to no more than what is needed to purchase bond amounts that fall within the limit of insurance that applies. The insurance company is not required to furnish any of these bonds.
c. Reasonable expenses the named insured incurs to help the insurance company investigate the claim or defend the suit. They are paid only when the company requests the assistance. The named insured will be paid for his or her actual loss earnings but no more than $1,000 per day when time away from work is required.
d. All court costs that are assessed against the insured in a suit. Attorneys' fees and expenses assessed that are 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 earned before the company's offer to pay the limit of insurance that applies.
f. The total interest on the full amount of a judgment when that interest accumulates after the judgment is entered. Once the insurance company offers to pay, pays, or deposits the amount that is its responsibility with the court, its obligation for the interest accumulating of the rest of the judgment ceases.
The following replaces all of the exclusions in the policy for this endorsement only:
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. 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 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 mentioned in this endorsement. The coverage form does not mention the use of weapons.
c.
War and Military Action
Loss or damage caused by
or that results 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 the coverage form do not apply to this endorsement.
2. The second group of exclusions applies to loss or damage caused by or that results 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 very different from the corresponding list of these exclusions in the coverage form.
a. Indirect losses, such as loss of market, loss of use, delay, or any consequential loss
b. Unexplained disappearance
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 when they are committed by the named insured, its partners, employees, directors, trustees, authorized representatives, managers, or members of a limited liability company. Acts that any party that has an interest in the property commits, including that party’s 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. This exclusion also applies whether or not the act is committed during business hours.
This exclusion does not apply to covered property entrusted to carriers for hire. It also does not apply to acts of destruction by the named insured's employees. However, theft by the named insured’s employees remains excluded.
e. Refrigeration equipment breakdown
f. Forgery as it relates to warehouse receipts, shipping or loading documents, or bills of lading
g. Riot or civil commotion. Persons who are part of a labor disturbance such as strikers and locked-out workers.
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. Processing or work done on covered property
While the there is no coverage when the processing or work on the covered property results in loss or damage, there is coverage when a fire or explosion results from that processing and loss or damage ensues. This exception applies only if the resulting fire or explosion are considered covered causes of loss for this endorsement.
j. Artificially generated electrical current that creates a short circuit or other disturbance in an object that this insurance covers but only for loss or damage that occurs within that object. If a fire or explosion results any direct loss or damage from that fire or explosion is covered as long as fire or explosion are covered causes of loss under this endorsement.
k. Any voluntarily parting with covered property if the named insured or anyone entrusted with covered property is tricked or duped into doing so
l. Loss or damage because of unauthorized instructions to transfer covered property to other persons or places
m. Any loss or damage caused by 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 afterward
3. The third group of exclusions applies to loss or damage caused by or that
results 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 caused by the resulting covered
cause of loss event.
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. This is considered a maintenance issue and 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 opens up the policy to many other potential losses.
e. Temperature extremes, rust, corrosion, and dampness
This replaces the Limits of Insurance section in the coverage form. The most the insurance company pays in a single occurrence is the limit of insurance that applies on the endorsement schedule.
This replaces the Deductible section in the coverage form. 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 Condition in the coverage form:
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. Notice of an accident is not the same as notice of a claim.
2. The insurance company must receive prompt notice of any claim made or suit brought.
3. The named insured has additional 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.
Suit is defined. It is a civil proceeding that alleges damages because of property damage that this insurance may cover. Arbitration proceedings that claim such damages and other types of alternative dispute resolution proceedings are also considered suit if the named insured must submit (something is missing here).