CP 15 45–UTILITY SERVICES–TIME ELEMENT

(December 2025)

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INTRODUCTION

Most businesses rely on essential utilities such as water, electricity, heat, air conditioning, and communication to function efficiently. Disruptions in any of these services often lead to significant indirect income losses or extra costs for switching to alternatives or moving to different locations.

Many businesses incur additional costs to resume operations swiftly and reduce income loss. They might switch to an auxiliary power source or temporarily relocate to continue offering services.

The ISO time element coverage forms do not cover indirect (and often expensive) losses resulting from power outages caused by off-premises events. However, this coverage can be added by including form CP 15 45–Utility Services–Time Element. It can be applied to Business Income Coverage Forms CP 00 30, CP 00 32, or the CP 00 50 – Extra Expense Coverage Form.

NOTE: The separate utility exclusion in CP 10 10, CP 10 20, and CP 10 30, previously applying to business income and extra expense utility services, was removed in the 06 07 edition and incorporated into the direct damage utility services exclusion. Now, this exclusion excludes all off-premises utility failures, and it also excludes coverage if a power failure originates on the premises but involves utility equipment. Without this endorsement, lightning damage to a utility-owned transformer—whether on the insured’s premises or not—has no coverage for utility services.

This analysis is based on the 09 17 edition of the endorsement. Changes from the previous edition are in bold print.

SCHEDULE

This endorsement offers great flexibility, enabling the named insured to choose and include the specific types of utility interruption coverage they desire. The available options are:

The Communication Supply Property and Power Supply Property coverage requires the insured to specify whether they want protection for damage to overhead transmission lines. Downed power lines often cause interruptions in communications and power. However, insuring these lines incurs a substantial premium cost.

The causes of loss under this endorsement may differ from those in the basic time element coverage form. The named insured might find the basic causes of loss form adequate for this coverage, even if the special causes of loss form applies to the basic time element coverage.

Coverage is valid only when an insurance limit is specified for the selected coverage and applicable to the scheduled location and building. This limit covers each utility service type and should be based on reasonable estimates of potential service interruption durations that could result in lost income, additional costs, or both. Coinsurance does not apply to this coverage, so the chosen limit is not subject to coinsurance penalties.

A business income waiting period must be entered for each scheduled premises. It can be 0, 12, 24, 48, 72, 96, 120, 144, or 168 hours, and this duration can vary by premises. If no entry is made, the waiting period is considered 0.

NOTE: Under prior editions, the coverage provided on this endorsement was subject to the waiting period specified in the coverage form. In many cases, this was not appropriate because for some businesses a utility service loss can be a very short-term but extremely significant loss, while others may have longer time frames.

Coverage

CP 15 45 expands the scope of the Business Income or Extra Expense Coverage forms by covering the suspension of operations at the insured premises caused by a utility service interruption. This interruption must result from direct physical damage or loss due to a covered cause of loss listed in the endorsement schedule. As previously mentioned, these causes of loss do not need to match those specified in the time element coverage form. The damage must affect utility property located outside a covered building identified in the endorsement schedule.

Examples:

  • Priority Ducks schedules one location on CP 15 45 and chooses Causes of Loss–Basic Form. The selected coverage is for Power Supply Property, excluding overhead transmission lines. When lightning strikes Priority’s building, causing a power outage, the claim is denied because the damaged property is not the utility property specified outside the covered building.  
  • Priority Ducks has requested a review and a second opinion regarding the cause of loss. Strong winds caused power transmission lines to fall, resulting in the outage. However, coverage under CP 15 45 is not applicable because Priority did not purchase coverage for overhead transmission lines.
  • Priority Ducks learns an important lesson and enhances its utility interruption coverage. The company updates its covered causes of loss to include the Causes of Loss–Special Form. Additionally, it introduces coverage for Water Supply Property and Communication Supply Property, which now encompasses overhead transmission lines. It also modifies its Power Supply Property coverage to include these overhead transmission lines.

When a tornado damages the main water pumping station and brings down telephone and electrical transmission lines, Priority’s coverage will apply to the resulting loss of income and extra expenses for its location, up to the limit of insurance.

Waiting Period

The waiting period stated in this endorsement (if any) will begin when the service interruption starts at the premises.

Duration of Coverage

The restoration period language does not apply to the coverage offered by this endorsement, but it is replaced by similar wording in the Duration of Coverage Section.

Losses incurred and expenses paid during the following time period are covered:

·         Business Income coverage begins after the waiting period ends.

·         Extra Expense coverage begins when the interruption occurs at the specified premises. This also includes Business Income without a waiting period.

NOTE: The loss begins only when the insured premises experience an interruption, not when the accident or cause of the interruption occurs at the utility source. These events may be the same or very different, so it is crucial to consider this distinction when applying the waiting period.

Example: The main power plant caught fire, causing Marvin’s Fine Food to lose power. Its backup generators kick in right away, ensuring the business remains operational for 6 hours. The revenue loss period starts only once the generator power stops. Fortunately, Marvin’s incurs immediate extra costs to keep the generator running, which will be reimbursed.

The time period concludes when the insured’s operations resume, which happens at the earliest of either any method of resumption or a quick restart after utility service is restored.

The coverage period is not affected by the policy's expiration date.

Exception

The coverage provided does not apply if the utility service interruption damages, destroys, or corrupts electronic data, as the basic coverage form defines it. Electronic data coverage is available in Electronic Data Processing coverage forms or policies.

Related Articles:

AAIS Electronic Data Processing Equipment and Business Computer Forms

ISO Computer Systems Coverage Form

Utility Services

This section of the endorsement lists and describes the eligible covered property for each utility service.

1.      Water Supply Services

This refers to water mains and pumping stations providing water to the covered premises.

2.      Wastewater Removal Property

This system is not primarily designed for stormwater drainage. Instead, it includes utility properties, such as sewer mains, pumping stations, and other facilities responsible for removing wastewater and sewage from the premises. This endorsement specifically lists and describes these facilities on the schedule. The term also includes any facility that holds, treats, or disposes of wastewater or sewage.

However, heavy rainfall or flooding can lead to water or sewage discharge, causing service disruptions at the premises. In such cases, there is no coverage for these interruptions.

3.      Communication Supply Property

This property supplies communication services to the covered premises. Examples are telephone, radio, microwave, or television services. Communication (including fiber optic) transmission lines, coaxial cables, and microwave radio relays (excluding satellites) are also covered.

Overhead transmission lines are included only if marked as covered on the endorsement schedule.

4.      Power Supply Property

This means property supplying electricity, steam, or gas to the covered premises. It includes transformers, transmission lines, utility generating plants, substations, and switching stations, among others.

Overhead transmission lines are included only if marked as covered on the endorsement schedule.

Transmission Lines

A transmission line is used to transmit communication services or power. When the term “distribution line” is mentioned, it refers to a transmission line as defined by this endorsement.

Coinsurance

This endorsement's coverage is not subject to the Coinsurance Additional Condition.

Limit of Insurance

The insurance limit indicated on the declarations is the only limit that applies to this endorsement. 

NOTE: The limit of insurance is part of (not an addition to) the limit of insurance the basic time element coverage form provides. It is a sublimit within the total insurance limit. As a result, a given business may need to determine whether its overall income limit is sufficient.

Example: Priority Bill's business income coverage limit is $100,000, and the CP 15 45 endorsement provides a $25,000 limit. Priority sustains a covered loss affecting both on-premises and off-site utility services business income, as well as direct property damage. The investigation reveals that Priority's total business income loss is $115,000.

Priority is confident their loss is fully covered due to the two insurance limits. Unfortunately, the insured becomes very unhappy upon learning that the $25,000 limit is part of the $100,000 business income limit, not a separate limit, resulting in only a $100,000 payment.

RATE AND PREMIUM CALCULATION

ISO offers loss costs for various utility property coverages, including water supply, wastewater removal, power supply, communications, and overhead transmission lines. These loss costs are intended exclusively for public utilities.

When private utility services are insured, each insurance provider develops its own loss costs and rates. The final rate is calculated by multiplying these loss costs by the provider’s specific loss cost multiplier and the business income waiting period factor. The coverage's insurance limit is then multiplied by this final rate for each covered cause of loss, and the resulting amounts are summed to determine the total premium for the endorsement.

Depending on the insured’s preferred waiting period, the standard 72-hour waiting period is assigned a factor of 1.00. The insured can modify the waiting period by either reducing or extending it. If less than 72 hours is selected, a factor greater than 1.00 applies. If a waiting period longer than 72 hours is chosen, a factor less than 1.00 applies.