COMMERCIAL OUTPUT
PROGRAM DECLARATIONS AND SCHEDULES OF COVERAGES
(June 2025)
The Commercial Output
Program consists of two parts for the declarations. The first part is the CO
1100 - Commercial Output Program - Declarations, which provides identifying
information. The second part includes either the CO 1050 - Schedule of Coverages
or the CO 1051 - Schedule of Coverages. Both schedules are identical, but the
CO 1051 includes additional spaces to enter necessary information for equipment
breakdown and spoilage coverage.
The CO 1100 is an
advisory declarations that is used to
display vital identifying information. The required entries are:
·
Policy
number
·
Insurance
carrier name and address
·
Producer
name and address
·
Named
insured
·
Named
insured mailing address
·
Policy
period
·
Premium
payment clause
·
Business
description
·
The
mortgage holder's name and address, as well as the location where the mortgage
is held
·
A
listing of endorsements or forms that are attached and apply to all coverages
·
The
premium and payable terms. This declarations
is not a filed form because most insurance carriers develop their own versions.
Additional information may be displayed on those other versions, but the
minimum items described above must be provided.
The Schedule of
Coverages used with the AAIS Commercial Output Program Edition 3.0 is used to display
coverages and limits provided as follows:
The first limit shown is the Catastrophe
Limit. This is the most paid for all losses involving all coverages in any one
occurrence. This caps the amount of loss for all coverages provided on the
Schedule of Coverages. This limit should be adjusted each time an individual
coverage limit is changed. If this is not done, the overall protection limits
under the COP could be insufficient.
|
Example: Zebra Stripes has one location covered
by the COP and a catastrophe limit of $500,000. A second location with total
property values of $450,000 situated a mile away is added during the policy
period. The Building, Personal Property and Business Income limits are all
increased to reflect this addition, but the catastrophe limit is not changed.
A tornado seriously damages both locations, and the combined total loss is
$750,000. Because the catastrophe limit was not changed and remained at
$500,000, the total loss payment is capped at the $500,000 catastrophe limit.
|
The limit for a
building refers to the total amount available to cover all buildings damaged at
a single location. This limit is determined by adding together the values of
all buildings at each individual location. After all locations have been
assessed, the limit reflecting the highest exposure at one location is entered.
The limit for business
personal property is determined similarly to the method used to establish the
building limit. The values of all business personal property in each building
at a covered location, along with business personal property within 1000 feet
of the covered location that is either stored in the open or in or in a
vehicle, must be combined to calculate the per-location business personal
property limit for each covered location. Once all locations have been
assessed, the limit reflecting the highest exposure at a single location is
recorded.
A combined blanket limit for buildings
and business personal property can be used instead of the separate limits for
buildings and business personal property. The blanket limit is the most paid
for a loss at a location for building and business personal property combined.
|
Example: Dollops has five locations with the
following values: |
|||
|
Location |
Building |
Business Personal Property |
Total Combined |
|
1 |
$250,000 |
$750,000 |
$1,000,000 |
|
2 |
$150,000 |
$100,000 |
$250,000 |
|
3 |
$500,000 |
$1,250,000 |
$1,750,000 |
|
4 |
0 |
$1,500,000 |
$1,500,000 |
|
5 |
$600,000 |
0 |
$600,000 |
|
If building and business personal
property limits are scheduled separately, the highest building limit is
$600,000, and the highest business personal property limit is $1,500,000. If
the limits are written on a combined basis, the highest limit is $1,750,000. |
|||
This approach is very
wide open because no individual locations are listed. This means that buildings
are covered wherever they may be within the defined territory, provided they meet
the coverage form’s definition of building.
It also means that all business personal property located in buildings or within
1,000 feet of a building in the open or within a vehicle is covered if located
within the covered territory and meeting the definition of covered property.
This very broad
approach can be restricted by placing a check in the “refer to scheduled
locations” box on this schedule and attaching a completed CO 1052–Location
Schedule to the policy.
Seven Coverage Extensions are listed. The
defaults in the coverage form, along with the items and/or values that can be
entered, are listed below. All limits are occurrences unless marked as
aggregate. When an entry is made, it replaces the default amount.
|
Coverage |
Default in Coverage
Form |
Entry |
|
|
Consequential Loss |
Not a separate limit |
No entry can be made |
|
|
Debris Removal,
Additional Expense |
$50,000 |
$50,000 or higher |
|
|
Emergency Removal |
365 Days |
365 or higher |
|
|
Emergency Removal
Expense |
$5,000 |
$5,000 or higher |
|
|
Fraud and Deceit |
$5,000 |
$5,000 or higher |
|
|
Damage From Theft |
Not a separate limit |
No entry can be made |
|
|
Off Premises Utility
Service Interruption |
$50,000 |
$50,000 or higher Overhead Transmission
Lines can be excluded |
|
|
Example: Dollops determines that the cost to
remove its business personal property in the event of an emergency evacuation
is $25,000, and it is entered on the Schedule of Coverages. If an emergency
requiring removal occurs, the insured has $25,000 available in place of the
$5,000 limit provided by the policy, not in addition to it. |
Thirteen Supplemental Coverages are
listed. The defaults in the coverage form and the items and/or values that can
be increased are listed below. All limits are per occurrence unless marked as
aggregate. When an entry is made it replaces the default amount.
|
Coverage |
Default in Coverage
Form |
Entry |
|
Brands and Labels
Expense |
$50,000 |
$50,000 or higher |
|
Expediting Expenses |
$50,000 |
$50,000 or higher |
|
Fire Department
Service Charges |
$25,000 |
$25,000 or higher |
|
Inventory and
Appraisal Expense |
$50,000 |
$50,000 or higher |
|
Ordinance or Law
(Undamaged) |
Not a separate limit |
No entry can be made |
|
Ordinance or Law
(Increased Cost of Construction plus Cost to Demolish) |
$100,000 |
$100,000 or higher |
|
Personal Effects |
$15,000 |
$15,000 or higher |
|
Pollutant Cleanup and
Removal |
$50,000 aggregate |
$50,000 or higher |
|
Recharge of Fire
Extinguishing Equipment |
$50,000 |
$50,000 or higher |
|
Rewards |
$10,000 |
$10,000 or higher |
|
Sewer Backup and
Water Below the Surface |
$25,000 |
$25,000 or higher |
|
Trees, Shrubs and
Plants |
$50,000 |
$50,000 or higher |
|
Underground Pipes,
Pilings, Bridges or Roadways |
$250,000 |
$250,000 or higher |
|
Example: Dollops
increases Rewards coverage from
$10,000 to $50,000. When a loss occurs, Dollops offers a $60,000 reward. When
the time comes to pay the reward, the insurance company pays only the $50,000
limit shown on the Schedule of Coverages. Dollops must pay the additional
$10,000 from its own funds. |
Eleven Supplemental
Marine Coverages are listed. The defaults in the coverage form and the items
and/or values that can be entered are below. All limits are per occurrence
unless marked as aggregate. When an entry is made, it replaces the default
amount.
|
Coverage |
Default in Coverage
Form |
Entry |
|
Accounts Receivable |
$50,000 |
$50,000 or higher |
|
Electrical or Magnetic Disturbance of Computers |
Not a separate limit |
No entry can be made |
|
Power Supply Disturbance of Computers |
Not a separate limit |
No entry can be made |
|
Virus and Hacking Coverage |
$25,000 occurrence subject to $50,000 12-month aggregate |
$25,000 occurrence or higher $50,000 aggregate or higher |
|
Fine Arts |
$100,000 |
$100,000 or higher |
|
Off Premises Computers |
$25,000 |
$25,000 or higher |
|
Property On Exhibition |
$50,000 |
$50,000 or higher |
|
Property in Transit |
$50,000 |
$50,000 or higher |
|
Sales Rep Samples |
$50,000 |
$50,000 or higher |
|
Software Storage |
$50,000 |
$50,000 or higher |
|
Valuable Papers |
$100,000 |
$100,000 or higher |
Furs and jewelry are
limited to a theft coverage of $10,000 each and are listed on the schedule for
reference only. These limits cannot be changed. In addition, stamps, tickets,
and letters of credit have an overall limit of $5,000, which is also for informational
purposes and cannot be changed.
This section of the
Schedule of Coverages has three coverage options that can be selected:
The policy automatic
default valuation is replacement cost. That valuation can be changed to actual
cash value by checking the box.
Automatic Increase is
explained in the policy section titled “How Much We Pay.” If a percentage
increase is shown on the Schedule of Coverages in the space provided, the
limits on the Schedule of Coverages or the Scheduled Locations endorsement are
increased by that percentage.
When coverage is changed from a blanket
to a scheduled location basis CO 1227–Scheduled Locations Endorsement must be added,
and this substantially changes the coverage. Instead of all locations being
covered, only the locations scheduled on the CO 1052–Location Schedule are
covered. In an attempt to provide some cushion for errors, the following
provisions are added:
|
Coverage |
Default in CO 1227 |
Entry |
|
Newly
Built or Acquired Buildings |
$500,000 |
$500,000 or higher |
|
Personal Property at
Acquired Locations |
$250,000 |
$250,000 or higher |
|
Locations Not
Described |
$50,000 |
$50,000 or higher |
|
Coinsurance |
No default |
80, 90 or 100 are the
most common |
There are two options
for the deductible. One option is that a single deductible amount for each
occurrence can be entered in the space provided. The other option is to check
the box next to “Refer to Deductible Endorsements.” If this option is selected,
the CO 1234–Multiple Deductible–Scheduled Perils or CO 1235–Multiple
Deductible–Scheduled Locations and Property should be completed and attached to
the policy.
Related Article: AAIS
Commercial Output Program Deductible Options
This section must be completed in full and the CO 1001–Commercial
Output Program–Income Coverage Part attached unless the “Income Coverage Does
Not Apply” box is selected.
There are five options
provided, but only one can be selected. They are as follows:
·
Income
Coverage Does Not Apply
·
Earnings,
Rents and Extra Expense
·
Earnings
and Extra Expense
·
Rents
and Extra Expense
·
Extra
Expense Only
A selection must be
made whether coverage applies to all locations or is scheduled. If coverage is for all locations, an income coverage limit for
the highest loss amount at any one covered location must be entered in the
space provided.
If the "Refer to
Scheduled Locations" box is selected, CO 1052–Location Schedule must be
attached, where specific limits must be listed for each location. CO
1227–Scheduled Location Endorsement must also be attached to explain how
scheduled coverage operates.
Two Coverage Extensions are listed. The
defaults in the coverage form and the number of days that can be entered are shown
below. No matter how many days are entered, the coverage remains subject to the
loss of income limit of insurance. All entries are replacements, not additions.
|
Coverage |
Default in Coverage
Form |
Entry |
|
Interruption By Civil
Authority |
30 days |
30 days or higher |
|
Period of Loss
Extension |
90 days |
90 days or higher |
Six Supplemental
Coverages are listed. The defaults in the coverage form and the values or items
that can be entered are below. All entries are replacements, not additions.
|
Coverage |
Default in Coverage
Form |
Entry |
|
Computer Virus and Hacking NOTE: In the
policy, this is located under Supplemental Marine Coverages, Virus and
Hacking Coverage. |
$25,000 occurrence subject to $50,000 12-month aggregate 12-hour waiting
period |
$25,000 occurrence or higher $50,000 aggregate or higher 0 hours or higher |
|
Dependent Locations NOTE: See form CO 1001 |
$100,000 |
$100,000 or higher |
|
Off Premises Utility
Service Interruption NOTE: 12-hour waiting period is listed
under form CO 1286 |
$50,000 12-hour waiting
period |
$50,000 or higher 0 hours or higher Overhead Transmission
Lines can be excluded |
|
Contract Penalty |
$25,000 occurrence subject to $100,000 12-month aggregate |
$25,000 occurrence or higher $100,000 aggregate or higher |
|
Pollutants Cleanup
and Removal |
$50,000 12-month
aggregate |
$50,000 aggregate or
higher |
|
Property in Transit,
On Exhibition or Custody of Sales Rep |
$50,000 |
$50,000 or higher |
This part of the
Schedule of Coverages offers additional coverage options available for
selection:
When coverage is
changed from a blanket to a scheduled location basis, CO 1227–Scheduled
Locations Endorsement must be added and substantially changes the coverage.
Instead of covering all locations, only the scheduled locations are covered. To
provide some cushion for errors, two additional coverages are added.
|
Coverage |
Default in CO 1227 |
Entry |
|
Newly
Built or Acquired Buildings |
$500,000 |
$500,000 or higher |
|
Coinsurance |
No default |
80, 90 or 100 are the
most common |
When the Waiting Period
box is checked, the CO 1281 – Waiting Period – Income Coverage must be included
in the policy. The standard waiting period is 72 hours unless a different
duration is specified in the waiting period schedule. Additionally, the coverage
will cease 30 consecutive days plus 72 hours from the order date. For extra
expense coverage, it begins immediately after the order is placed and ends 30
consecutive days plus 72 hours from the order date.
When the box for
Monthly Limitation is checked, CO 1271–Monthly Limitation–Income Coverage must
be added to the policy. This form states the insurance company does not pay
more during any consecutive 30-day period than the loss of income limit
multiplied by the monthly limitation fraction or percentage entered in this
section. The most common fractions used are 1/3, 1/4 or 1/6.
If one of the flood
coverage options is selected, CO 1223–Flood Endorsement must be attached to the
policy.
This section of the
Schedule of Coverages has three coverage options, and one must be selected:
·
Not Covered
This box is checked if
flood coverage is not provided.
·
Scheduled Flood Coverage
If flood coverage is
provided on a scheduled basis, entries are required for the Catastrophe Limit
and the Flood Deductible. The flood deductible can be expressed as either a
percentage or a flat dollar amount. CO 1063–Flood Schedule must be attached so
that the scheduled locations and coverage limits can be entered.
·
Blanket Flood Coverage
If flood coverage is
provided on a blanket basis, entries are required for the Occurrence, Aggregate, and Catastrophe Limits. The flood deductible,
expressed as either a percentage or a flat dollar amount, must also be entered.
If one of the
earthquake coverage options is selected CO 1221–Earthquake Endorsement must be
attached to the policy.
This section of the
Schedule of Coverages has three coverage options, and one must be selected:
This box is checked if
earthquake coverage is not provided.
If earthquake coverage
is provided on a scheduled basis, entries are required for the Catastrophe
Limit and the Earthquake Deductible. The earthquake deductible can be expressed
as either a percentage or a flat dollar amount. CO 1062–Earthquake Schedule
must be attached so that the scheduled locations and coverage limits can be
entered.
If earthquake coverage
is provided on a blanket basis, entries are required for the Occurrence, Aggregate,
and Catastrophe Limits. The earthquake deductible,
expressed as either a percentage or a flat dollar amount, must also be entered.
The checkbox beside Not
Covered must be marked if coverage for equipment breakdown is not purchased.
If the Equipment
Breakdown Coverage checkbox is checked, the CO 1003 – Equipment Breakdown
Coverage Part must be included. Property Damage limits need to be stated.
Furthermore, if Income Coverage is chosen, a limit must also be specified.
Coinsurance will be applicable to either or both of these coverages if a
coinsurance percentage is entered alongside the insurance limit.
The period of loss is
automatically extended to 30 days. However, if an increase in the number of
extension days is desired, an entry for the additional days may be made in the
Period of Loss Extension. This will increase the days of coverage, but it will
not increase the limit of insurance.
There are four coverage
options, but only one can be selected. They are as follows:
·
Earnings,
Rents and Extra Expense
·
Earnings
and Extra Expense
·
Rents
and Extra Expense
·
Extra
Expense Only
Six Extension/Supplemental Coverages are
listed. There are no defaults within the coverage form. If a limit is not
entered, that particular extension/supplemental coverage does not apply. The
limits are all sublimits of the equipment
breakdown limits or the equipment breakdown income limits.
|
Coverage |
Default in Coverage
Form |
Entry |
|
Expediting Expenses |
No coverage |
A limit must be
entered for coverage to apply. |
|
Pollutants |
No coverage |
A limit must be
entered for coverage to apply. |
|
Ordinance or Law
(Undamaged) |
No coverage |
A limit must be
entered for coverage to apply. |
|
Ordinance or Law
(Increased Cost of Construction plus Cost to Demolish) |
No coverage |
A limit must be
entered for coverage to apply. |
|
Off Premises Utility
Service Interruption |
No coverage |
A limit must be
entered for coverage to apply. |
|
Defense Costs |
Covered without a
limit and not part of the other limits. |
Covered |
NOTE: Entries must be made in the Coverage
Extensions/Supplemental Coverage section because there are no default limits in
the coverage form.
Deductibles are
required for the property coverage and the income coverage if selected. The
property deductible must be expressed as a flat dollar amount. Income
deductibles can be expressed in terms of a flat dollar amount, a waiting period
in hours, Average Daily Value (ADV), a combination, or other as described.
Spaces are provided to
describe Income Coverage Options that apply.
Spaces are provided to describe Other Conditions that apply.
CO 1004-Spoilage
Coverage Part Schedule Coverage or CO 1005–Spoilage Coverage–Blanket Coverage
must be attached if some level of spoilage coverage is selected. This section
of the Schedule of Coverages has three coverage options:
This box is checked if
spoilage coverage is not provided.
If coverage is provided
on a blanket basis, entries are required for the location and catastrophe
limits. The spoilage deductible as a flat dollar amount must also be entered.
There is an option to select Selling Price Valuation and/or
Refrigeration, Maintenance, or Service Agreement.
o
Selling
Price Valuation will value perishable stock based on selling price, excluding
discounts and unincurred expenses.
o
Refrigeration,
Maintenance, or Service Agreement, when checked, indicates an agreement is in
place.
If coverage is provided
on a scheduled basis, the catastrophe limit and spoilage deductible must be
entered on the schedule. CO 1075–Spoilage Schedule must be attached so that the
scheduled locations and coverage limits can be entered.
When scheduled coverage
is selected, perils covered must also be selected. Unlike blanket coverage,
where all five perils are automatically included, the scheduled coverage must
indicate one or more of the perils to be included.
One or more of the
following perils must be selected for coverage to apply:
o
Breakdown,
Malfunction, or Failure (Equipment Breakdown)
o
Refrigerant
Contamination (Equipment Breakdown)
o
Refrigerant
Contamination (Other Causes of Loss)
o
Power
Disruption (Equipment Breakdown)
o
Power
Disruption (Other Causes of Loss)
Any other coverages or
endorsements forming a part of or attached to the policy at inception must be
listed in the spaces provided.
This schedule is identical to the CO
1051 except that there are no spaces to schedule Equipment Breakdown or
Spoilage Coverage Parts information.