AAIS COMMERCIAL OUTPUT PROGRAM (COP) ARCHIVE

(June 2025)

This is a repository of articles and analyses relating to earlier editions of the program indicated above.

Related Article: CO 1000–Commercial Output Program Property Coverage Part Analysis reviews the most current form.

Archive Index
Common Policy Conditions	CL 0100–AAIS Commercial Lines Common Policy Conditions 03 99 edition
Analysis	AAIS Commercial Output Policy Edition 2.0 Analysis
Analysis	AAIS Commercial Output Policy Edition 2.0 Endorsements
Comparison	AAIS COP 2.0 Edition Vs. ISO Special Commercial Property 06 95 Edition
Comparison	AAIS Commercial Output Policy Edition 2.0 Vs. The Manufacturers Output Policy

CL 0100–AAIS COMMERCIAL LINES COMMON POLICY CONDITIONS

INTRODUCTION

Most American Association of Insurance Services (AAIS) commercial lines policy require attaching CL 0100–Common Policy Conditions. It contains five conditions:

1. Assignment
2. Cancellation
3. Change, Modification, or Waiver of Policy Terms
4. Inspection and Surveys
5. Examination

1. ASSIGNMENT

This policy cannot be assigned. The only exception to this condition is when the insurance company provides its consent and even then, that consent must be in writing.

This is a condition necessary in order to guard the integrity of underwriting. The named insured is the starting point of all underwriting. If the named insured changes through assignment, a complete re-underwriting of the account must occur. The exception to this condition allows the insurance company to permit such assignment after it has been able to review the request.

Example: Nancy, Becky, and Lyla own a business named NBL, LLP.

Scenario 1: Their financial manager is recommending that they incorporate and change the name to NBL, Inc. No other change is occurring but NBL, LLP would like to assign its policy to NBL, Inc. The underwriter reviews the request and agrees to the assignment without any change in the policy.

Scenario 2: Nancy, Becky, and Lyla want to walk away from the business and Charlie has offered to buy it. In order to make the deal happen quickly, he asks that they assign the NBL, LLP policy to him. Because of this condition, any assignment NBL, LLP makes is not valid and will void coverage.

2. CANCELLATION

This condition explains how cancellations are handled. Many states require using a mandatory state form in place of this cancellation condition, but this is a good starting place.

The named insured can cancel the policy. If there are multiple named insureds, each one has the right to cancel because there is no condition limiting that right to a specific named insured.

The named insured can cancel coverage by returning the policy to the insurance company. It can also cancel it by writing to the insurance company and providing the date on which cancellation is to take place.

Example: Heidi and Jack are partners, and both are shown as insureds on their insurance policy. Heidi sends a request to the insurance company to cancel the policy without telling Jack. When a loss occurs and there is no coverage, Jack has no recourse against any party except Heidi.

The insurance company can cancel by mailing or delivering a written notice to the named insured. It must be mailed to the latest mailing address the insurance company had been given. The notice must state the exact date on which the cancellation is to be effective. Proof of mailing is required but a signed receipt is not.

The insurance company notice must give the named insured at least ten days’ notice when the reason for cancellation is nonpayment of premium.

If the cancellation is for a reason other than nonpayment, the insurance company must give the named insured at least 30 days’ notice.

Example: Dravens, Inc. receives a notice of cancellation from its insurance carrier. It was mailed on 3/1/16 with the cancellation to become effective on 3/28/16.

Scenario 1: The reason for cancellation is nonpayment of premium. The cancellation is effective 3/28/16.

Scenario 2: The reason for cancellation is failing to resolve loss prevention recommendations. The cancellation cannot go into effect because the notice period is too short. The policy continues in force.

The named insured receives a return premium when the policy is cancelled. The return premium is based on the insurance company rules. This means it may be prorate, short rate, or another type of calculation but it must be consistent for all named insureds.

The cancellation is in effect even if the named insured did not receive the return premium.

3. CHANGE, MODIFICATION, OR WAIVER OF POLICY TERMS

The policy that the insurance company issues represents the agreement it makes with the named insured. If the named insured requests a change to that policy, the insurance company has the right to accept or reject the request. Because the insurance policy writes the policy it also determines what changes can be added to the policy. However, these changes are not meant to be kept secret. Therefore, any change made must be in writing and issued by the insurance company.

Example: Nellie sends an email to her agent notifying him that she just bought a new tractor and asks that it be added to her policy. She assumes the email was received and never follows up. The tractor is destroyed in a windstorm and Nellie sends a claim notice to the insurance company. The company denies the claim because the tractor is not on the policy.

4. INSPECTIONS

The insurance company is not obligated to make inspections of the named insured’s property, but it has the right to do so and the named insured is expected to cooperate.

Any inspection conducted is intended solely for the insurance company’s benefit.

The insurance company may provide recommendations or advice, but nothing provided is to be considered a statement that the named insured’s operation comply with any specific laws or regulations.

Example: Pretty Interested Insurance Company inspects Unity Plus. The loss prevention specialist is very impressed with the many innovations in the building and overlooks some of the very basic life safety features that were compromised by the innovations. When a fire occurs and lives are lost, Pretty Interested Insurance cannot be held liable because its employee failed to notice the life safety failures.

5. EXAMINATION OF BOOKS AND RECORDS

The insurance company has the right to review the named insured's books and records. However, this right is restricted to only the ones that relate to this policy. This right extends throughout the policy term and for up to three years after.

AAIS COMMERCIAL OUTPUT POLICY EDITION 2.0 ANALYSIS

AGREEMENT

When "you" pay your premiums "we" provide the coverage described in the policy, subject to the terms of the policy. The Declarations Page is considered a part of this policy along with the policy conditions relating to assignment, transfer of rights, cancellation, policy changes, inspections and examinations of books and records.

Any endorsements and schedules become part of the policy and these are identified on the Declarations Page. Words that are specifically defined are shown in quotations or are emboldened.

DEFINITIONS

Defined words are used throughout the policy, but their meaning is consistently the same as defined here, thus limiting the company’s, the insured’s, and the courts’ focus on what the company intended each word to mean. (See Defined Words at the end of this analysis.)

1. "You" and "Your" define who is being insured. "You" and "Your" are the persons or organizations named in the Declarations Page and identified as insureds. Therefore, it is critical that all insureds be positively identified. If a business should purchase, sell, or create new entities during the course of the policy period, it is imperative that these new entities be added. Using et al, for all entities that may be acquired during the policy period, or similar omnibus language, is not acceptable. Define each covered entity and add or delete as necessary during the policy period.

2. "We", "us" and "our" are the insurance company providing coverage.

3. "Computers" are "hardware" in your care, custody or control, and “software.” Hardware" and "Software" are later specifically defined. Note that hardware must be in your care, custody or control including owned hardware and hardware belonging to others, but software can be a product you own but lease or lend to others, or software of others in your possession.

4. "Covered locations" are any location or premises where "you" have buildings, structures or business personal property covered under this coverage. Unless the Locations Endorsement COP-227 and Scheduled Locations Endorsement COP-226 are added to the policy, covered locations are defined by policy language and include virtually any place within the coverage territory that the insured has property, or is working. Exceptions are—radio and TV antennas, satellite dishes and accompanying equipment, awnings and fences are only covered within 1000 feet of a covered structure or building. Other property may have special limits of liability that can be less than the blanket policy limit of insurance.

With the Scheduled Locations Endorsement, coverage is narrowed to specifically described locations and some off premises locations.

5. "Declarations" include pages labeled either "Declarations," Supplemental Declarations or schedules.

6. "Fine arts" are defined as: paintings, etchings, pictures, tapestries, art glass windows, and other bona fide works of art of rarity, historical value, or artistic merit. With some items, this definition is specific. With items like sculptures, the interpretation of whether the work is a "fine art" depends upon an expert declaration that the work is bona fide or a legitimate work of art. Bona fide, rarity, historical value, and artistic merit will be subject to interpretation in any dispute. "Fine arts" coverage is limited to $50,000 and cannot be increased by any standard COP endorsement; therefore, any artwork, collectibles, stained glass windows, and antiques should be carefully valued. If coverage needs exceed $50,000, then a commercial fine arts policy should be considered.

Valuation of "fine arts" is important and at the time of a loss, "fine arts" are valued at actual cash value without depreciation. Certain items may be scheduled for a predetermined agreed value using the Agreed Amount Endorsement COP-254.

7. "Hardware" means: a network of electronic machine components capable of accepting instructions and information, processing the information according to the instructions, and producing desired results. Computers, network, peripherals, printers, fax machines, photocopiers, calculators, hand held or laptop computers are included within this definition. Telephone systems and other electronic communication networks would also come under the definition of "hardware."

8. "Limit" is the amount of coverage that applies. For most insureds under this policy, coverage will be blanket. That means that a limit combining buildings, owned personal property, and property of others will be combined into one limit of insurance and that limit will be listed on the Declarations Page. Using other endorsements, like the Scheduled Locations Endorsement COP-226, or the Agreed Amount Endorsement COP-254, will set specific limits of coverage for defined locations, buildings or personal property. Within the policy, certain property will carry specific limits per item (see ADDITIONAL COVERAGES, SUPPLEMENTAL COVERAGES, SUPPLEMENTAL MARINE COVERAGES, ADDITIONAL PROPERTY NOT COVERED OR SUBJECT TO LIMITATIONS, for property with predetermined policy limits). Most items with predetermined policy limits can be increased by endorsement.

9. "Mobile equipment" includes contractors’ equipment—mobile or floating, self propelled vehicles designed to carry and are primarily used to transport mounted equipment, and vehicles that normally are designed for highway use but are unlicensed and do not operate on public roads.

Though contractors’ equipment is not specifically defined, it would include bulldozers, cranes, graders, shovels, dredges, mining equipment, logging machinery, well drilling equipment (including on and off shore but subject to continental U.S. boundaries).

Vehicles that carry mounted equipment can include cherry pickers, welding trucks, and towed compressors. Logging trucks with cranes to load and unload lumber, and redi-mix trucks would not be "mobile equipment" because their primary use is to transport product. Also, a flatbed designed to carry a bulldozer would not be "mobile equipment" because the bulldozer is not permanently attached to the flatbed. A self-propelled crane would be considered "mobile equipment." Dump trucks, snowplows, farm-type tractors and other vehicles used to service the premises or the building site are considered "mobile equipment" if they are not licensed. A licensed dump truck that is used only on the job site and is transported to the job site on a flatbed trailer would not be considered "mobile equipment" unless the dump truck was not designed for road use.

10. "Pollutant" is virtually any kind of solid, gas, thermal, electromagnetic, or sound contaminant or irritant. Wastes, including recycled, reclaimed or reconditioned materials, are also considered "pollutants." Electromagnetic pollution can mean stray voltage, microwave radiation, excessive light from lamps, or high tension wire radiation. Sound pollution can include loud music, machinery noise and the resulting damage done by excessive vibration due to sound. This policy is inappropriate for any company that deals in the cast-offs of others, including waste haulers, recyclers, used materials dealers, or used oil reclaimers.

11. "Sinkhole collapse" is a sudden collapse of earth due to the action of water creating holes or caverns in limestone or other rock formations. Sinkholes are often created by subterranean rivers, excessive flow of water after rains that seep into the ground, or burst pipes that cause subsidence of the land. The cost of filling the land, or the land itself is not covered by the policy.

12. "Software" is both the material on which the data is stored (media) and the data itself. Software can include tapes, disks, cards, films, drums, cartridges or cells used with computers or other electronic data processing operations. The data is the coded instructions on the media. Information hard coded into a computer chip such as in a non-programmable calculator would be considered part of "hardware." A font card for the laser printer would be considered "software."

13. "Specified perils": There are certain types of property—animals, glassware/fragile articles—where risks of physical loss coverage will be too broad for most insurance companies to insure. Covered "specified perils" are limited to: aircraft, civil commotion, explosion, falling objects, fire, hail, leakage from fire extinguishing equipment, lightning, riot, "sinkhole collapse," smoke, sonic boom, vandalism, weight of ice snow or sleet, and windstorm. Falling objects can include buildings, trees, objects dropped from airplanes or aerial cranes; but damage to personal property in the open, or through openings in the building not first opened by the falling object (open windows or doors) breaking through a wall or roof, are not covered. Water damage is limited to water or steam that leaks or discharges from an accidentally cracked or broken system or appliance that contains the water or steam. Systems and appliances can include water pipes, heating pipes, water heaters, sprinkler systems, water boilers, dishwashers, ice makers, defrosting freezers. Under PERILS EXCLUDED—g. Water, back-up of sewers or drains or flood are not considered water damage. PERILS EXCLUDED—2. g. Explosion, the loss caused by boiler explosion (other than due to an explosion of accumulated fuel in the fire box or flue) is not covered, but the resulting damage from water release would be covered. PERILS EXCLUDED—2. h. Freezing, limits the damage from burst pipes due to freezing conditions unless the water system was shut off, steps were taken to maintain heat, or the system was appropriately winterized. PERILS EXCLUDED—2. n. Seepage—water damage due to repeated or continuous leaking over a period of 14 days or more is not covered.

14. "Terms" include: provisions, limitations, exclusions, conditions, and definitions that apply to a particular type property or situation described in the policy. "Terms" is another way of suggesting to the insured that he/she review all portions of the policy to find terminology that applies.

15. "Valuable papers and records" can be handwritten or printed documents or material on films. Included within the definition of "valuable papers and records" are manuscripts, motion picture and other films, blueprints, charts and graphs, books and manuscripts, deeds, abstracts and mortgages, maps and other paper records. Operations manuals, sketches of ideas, patents also would be "valuable papers."

16. "Volcanic action" is not volcanic eruption. Volcanic eruption involves earth movement. Volcanic action includes the airborne blast of ash, dust, or particles and includes airborne shock waves. Lava flow is also considered volcanic action. Damage caused by the volcanic action is covered, including cleanup of the damaged building and business personal property, but the cost to remove ash, dust or particles from undamaged property is not covered.

PROPERTY COVERED

Property first must sustain direct physical loss to be covered.

Consequential loss, such as loss of business income from the damage is not covered unless Business Income coverage is added. Also not covered is indirect loss, including loss of product value or sales as a result of sabotage or tampering to select stock.

PROPERTY COVERED—BUILDING PROPERTY

Buildings and structures include:

1. Completed additions to existing buildings and structures.

2. A permanent part of a covered building or structure, the fixtures, machinery and equipment. Within the ISO rating structure, it is important to distinguish between buildings and personal property, for personal property usually carries a higher base rate. The COP looks at cumulative exposure points based upon the entire range of covered property, so assigning value to either building or personal property is less important. The distinction only becomes important if the Scheduled Locations Endorsement COP-226 is added and separate limits of insurance are selected. In that event, determining what is a building and what is personal property becomes an important consideration.

3. Outdoor fixtures. The word fixtures implies permanence; therefore, lawn furniture and other moveable items would not be considered fixtures. Permanent fountains, street lights, sprinkler irrigation systems and the like would be considered fixtures. Keep in mind though, that property in the open is not covered for the perils of rain, snow, ice or sleet, and underground pipes, flues and drains are limited to $250,000 coverage included with foundations and piers and wharves.

4. "Your" personal property used to maintain or service a covered building, structure, or the premises. This would include lawn and garden tractors, snow removal equipment, and water hoses. Property specifically named includes: air conditioning equipment, fire extinguishers and sprinkler systems, floor coverings. Refrigeration, cooking, dishwashing and laundering equipment for the service of the building is covered. Employee cafeteria refrigerating, cooking, dishwashing and laundry equipment would be considered part of the building. Hotel guest, patient, or other customers of restaurants or laundries would not be considered part of the building.

5. a. Buildings under construction, renovation or repair as long as they are not covered by other policies. The COP policy will substitute for a builders risk policy. Buildings covered by another policy—a builders risk policy, or "your" customer's own policy would not also be covered by the COP policy.

5. b. Contractors’ equipment used in conjunction with and materials and supplies and temporary structures intended for the construction, renovation or repair of a building or building additions is covered while at or within 1000 feet of the "covered locations." "Covered locations" has no meaning unless the Scheduled Locations Endorsement COP-226 is added to the policy. Without the Scheduled Locations Endorsement, materials intended for building construction, repair or installation would be covered at the insured's premises, at the site of construction, in storage in a nonowned warehouse, or at another processor (lumber owned by the insured being milled into cabinets or trusses). The COP policy will substitute for an installation policy for property to be installed while at the site of construction or renovation. The COP also will replace a contractors equipment policy giving full coverage for tools, equipment, and machinery owned by the insured while that contractors equipment is on a premises owned by the insured, or at a job site. Property intended for installation or contractors equipment while in transit is limited to $50,000 coverage. Coverage for in transit goods and equipment can be increased by using the Supplemental Limits Endorsement COP-229.

6. Building glass. Building glass includes glass building blocks, windows, door glass whether on exterior or interior walls. Glass objects, glass dials on equipment not connected with the building, and glass stock are not considered building glass.

7. Radio, TV towers and satellite dishes, lead-in wiring, support wires, their foundations and any equipment attached to any of this property (transmitters, transponders, back-up generators) are covered only if they are within 1000 feet of a covered building or structure. Fences and awnings or canopies must also meet the 1000 feet from a covered structure or building rule. A television station's antenna on the top of a mountain that is miles from the station would not be covered and cannot be added by a standard COP endorsement. Coverage for distant antennas can be covered using an inland marine or specialty property form. A question does arise if the antenna is connected to a shed or housing associated equipment. Is that shed a covered structure under the blanket coverage provided by the base policy? Extensive fencing around a premises is only covered for the length of fencing that remains within 1000 feet of the closest covered building.

8. Signs are covered under the policy wherever they are located—attached, detached, away from the premises or on the premises. Owned billboards are covered.

PROPERTY COVERED—BUSINESS PERSONAL PROPERTY

Business personal property can be in buildings, in the open, in vehicles or within 1000 feet of "covered locations."

1. As a tenant, business personal property includes "your" use interest in improvements to the building or structures "you" occupy, or do not own and make or acquire at "your" expense, and are of the kind that "you" cannot legally remove when you vacate the premises. Improvements are limited to fixtures, alterations, installations or additions. Improvements do not include personal property you acquire that must remain with the property—free standing refrigerators, nonfixed shelving. Improvements can be to the occupied structure, garages or any outbuildings. Common improvements include false ceilings, internal walls, light fixtures, improved wiring, telephone switching systems, cooking equipment, HVAC improvements, carpeting, built-in shelving, and common renovation such as new roofs by a company who has a lengthy lease. Improvements paid for by the landlord are not covered, and if improvements can be legally removed by "you" they would be covered under other business personal property provisions. Valuation of improvements is based upon use interest which is based upon a prorata portion of your original cost as it relates to the length of time between the date of installation and the expiration of "your" lease or any renewal option period. (See VALUATION 8—Tenants Improvements for more information.)

2. If "your" contract for leased personal property requires that "you" insure the property, the leased property is covered by COP. Common leased personal property includes computers, photocopiers, printing equipment, machine tools, diagnostic equipment. Leased mobile equipment would be covered as business personal property. The word lease is not defined and generally a lease can be of any duration. A crane leased (rented) for three days to perform tasks at a construction site where a contractual responsibility to insure exists is covered. Automobiles are not covered as personal property unless physical damage coverage is added by Schedule of Vehicles Endorsement COP-224.

3. When you repair, improve, process, modify or enhance property of others, your labor, materials and other services are considered insurable personal property. Taking a truck or van chassis and adding a body, modifying a customer's machine to add machine guards, screen printing slogans on a customer's tee shirts, adding fragrance to a detergent, packaging product for others all are examples of processes where "you" have coverage for your services. Your interest includes the labor at your rate for anyone involved in the process, the raw materials consumed including power, chemicals and any other services expended or provided for which a value can be determined.

4. "Computers" are covered if not insured by another policy. However, there is a provision in HOW MUCH WE PAY 5. that says that property covered by another policy will be covered by the COP policy on an excess basis. Because "computers" coverage is limited to this policy, the excess provision does not apply to computers. While "computers" are covered for many of the perils that plague electronic equipment (breakdown, humidity change and mold in ventilation after a loss), power surges, brownouts, and electrical shorts are not covered perils. The insured should consider purchasing endorsements COP-265—Additional Computer Coverages and COP-257—Off Premises Computer Coverage where AAIS has tried to provide coverage equivalent to an EDP policy for computers.

5. Personal property which will become a part of "your" installation, fabrication or erection project while on site or in temporary storage awaiting the installation. Personal property intended for installation is not restricted to a building or within 1000 feet of "covered locations."

Coverage is available for building or renovation contractors, millwrights, machine installers, and others who work on real or personal property away from their premises. Covered materials include, but are not limited to the following: lumber, steel erection, machines, HVAC and plumbing supplies, signs, machine parts, carpeting, flooring, brick, fencing, cement slabs. Trees, shrubs, lawns and plants coverage perils are limited to fire, lightning, explosion, riot or civil commotion and falling objects for a maximum of $50,000 per any one occurrence.

6. "Mobile equipment" is covered if not insured by another policy, and coverage is not limited at or within 1000 feet of "covered locations." There is a provision in HOW MUCH WE PAY 5. that says that property covered by another policy will be covered by the COP policy on an excess basis. Because "mobile equipment" coverage is limited to this policy, the excess provision does not apply to computers.

7. Personal property of others in your care, custody or control while on "your" property or elsewhere, includes personal property sold under an installation agreement for which "your" responsibility continues until the property is accepted by the buyer. Examples of coverage include: "your" dry cleaners bailee exposure; machinery and equipment of others you are processing, repairing, modifying at your plant; machines belonging to others at their plant while "you" are repairing or servicing; appliance repair person while working on a residential customer's major appliance. This provision does not apply to real property like buildings, including machinery, equipment, HVAC and plumbing that is considered to be part of the building. Payment for any covered loss will be made only for the benefit of the property owner, not to "you." Coverage for real property is available through specific property insurance in the case of leased buildings, or fire (and other perils) legal liability coverage under a general liability policy. Note, the liberalized care, custody or control provision of the CG 00 01 general liability policy does not provide coverage for personal property in your care, custody or control. Adequate coverage under the COP policy should be purchased to cover the value of the personal property in your care, custody or control. If "your" business involves the on site repair of multi-million dollar machines, appropriate limits should be selected based upon the possible maximum loss.

PROPERTY NOT COVERED

1. Airborne and waterborne property is covered only while being transported by regularly scheduled airlines or ferry service. Property in transit is limited to $50,000 coverage. Coverage can be increased by using the Supplemental Limits Endorsement COP-229. The coverage territory for the COP includes the USA, its territory and possessions, and Canada, and in the air or sea between the U.S. mainland and USA possessions. Ferries generally transport people and property over narrow bodies of water, thus passenger liners, and great lakes cargo ships, whether regularly scheduled or not, would not be considered ferry service. Regularly scheduled airlines do not include charter services. A question arises whether a regularly scheduled air freight forwarding firm is considered an airline. Without further definition of the term airline, it would appear that goods carried by companies like Fed-Ex, UPS, Emery and others are covered airborne property.

2. Aircraft and watercraft, including motors, equipment and accessories "you" manufacture, process, warehouse or hold for sale are considered covered personal property. This includes your property and property of others whether on "your" premises or at another's premises. In transit coverage is limited to $50,000. Property in the custody of sales personnel is limited to $50,000. The $50,000 limit on transportation can be increased by using Supplemental Limits Endorsement COP-229.

All other aircraft or watercraft including equipment and accessories that are operated principally away from "covered locations" are not covered. Rowboats and canoes at "covered locations" are covered while out of water.

Boat dealers, marinas, boat repair, boat hauling, dry docks, aircraft manufacturers, aircraft parts manufacturers, aircraft repair or sales are businesses for which coverage would apply. Airports and air hangar operations or berth-only marinas (no repair) involved in only parking (not warehousing) are not the kinds of business for which this coverage applies.

3. Animals "you" own and hold for sale, or owned by others and boarded by "you" are covered. All other animals, birds and fish are excluded. Animal boarders, pet stores, zoo and dairy replacement, feed lots, and beef, lamb, fish and pork farms are examples of businesses that own and sell or board animals. Covered animals do not include: veterinary services provided for the nonboarded animals, pet and guard animals, zoos, slaughter houses (resulting food products are covered), dairies, or laboratory animals (bred for "your" experiments, but bred for sale would be covered). COP eligibility does not include primarily agriculture businesses and animal coverage is limited as a result of eligibility restrictions.

4. Automobiles that are not "mobile equipment" are not covered. Excluded vehicles: automobiles, motor trucks (as opposed to hand trucks), tractors (over-the-road), trailers, and similar vehicles designed for over-the-road transportation of people and property.

Automobiles and vehicles, including motors, equipment and accessories "you" manufacture, process, or warehouse are considered covered personal property (automobile manufacturers, remanufacturers, van conversions). Automobiles or vehicles held for sale are not covered; thus, coverage is inappropriate for car dealers. Adding physical damage coverage for automobiles using Vehicle Coverage Endorsement COP-224 can provide specific or blanket coverage for vehicles, but no coverage is provided for vehicles held for sale. However, there is no comparable COP endorsement to the ISO Commercial Auto False Pretense Coverage CA 25 03. "Mobile equipment" considered to be personal property that is owned, manufactured, processed, warehoused, or held for sale is covered.

5. Contraband or property involved in illegal transportation or trade is excluded.

6. Outdoor crops such as grain, hay or straw are not covered. Covered crops would include wheat and corn in a grain elevator or in bins waiting to be processed into flour, indoor gardens, nurseries, or laboratories that create hybrid strains. Outdoors is generally defined as being outside a building or shelter. A question arises as to whether coverage would be extended to crops in transit in enclosed trailers, or property in enclosed vehicles while on a "covered location."

7. Exports and imports that are covered under an ocean marine cargo or similar policy are not covered. It doesn't matter who provides the coverage, "you" or another. The term covered is used rather than the word insured. Thus, if the ocean marine cargo policy excluded a particular loss that the COP policy did not, there would be coverage provided by the COP policy, but only while the property was within the COP's covered territory. The COP policy will not cover property while it is outside of the U.S. (or in air or water between U.S. and possessions) or Canada.

8. Any land, any underground or surface water, or the cost of any excavation grading or filling, will not be covered. The COP policy provides coverage for foundations and underground pipes, flues or drains (see SUPPLEMENTAL COVERAGES 4 for more information), but only for covered damage to the foundations or pipes, not the cost of excavation. Debris removal coverage (ADDITIONAL COVERAGES 1.) pays for the removal of covered property damaged by a covered peril. The lifting from the ground and the transportation of the underground pipe would be a covered debris removal expense, but the digging out of the pipe would not be a covered debris removal expense.

9. Money, notes. securities, accounts, bills, currency, food stamps, evidence of debt, lottery tickets not held for sale are not covered. Lottery tickets held for sale are considered covered property. Consult individual state lottery statutes for laws governing vendors’ responsibility for lost, stolen or wrongfully converted lottery instruments.

10. Property that is more specifically insured by another insurance policy is covered only on an excess basis. However, the excess coverage does not apply to "Computers" and "Mobile Equipment" if covered under another policy. Again, the word is covered and not insured. If the computer policy excludes a particular peril that the COP policy covers, then the COP will provide primary insurance.

11. If, at the time of the loss, "you" are responsible for the property of others and you are acting as a carrier for hire or an arranger of transportation, there is no coverage for property of others. Situations where "you" are considered a carrier for hire include: car-loading, freight forwarding, brokering, backhauling, or shipping association. A properly prepared Motor Truck Cargo or Transportation Policy is recommended to provide coverage.

12. Property "you" have sold after it has been delivered is not covered. Under PROPERTY COVERED, BUSINESS PERSONAL PROPERTY 7, personal property sold under an installation agreement for which "your" responsibility continues until the property is accepted by the buyer is covered. However, the clause in this provision does not restrict property sold under an installation agreement to personal property. Coverage is then available for buildings and other real property sold under an installation agreement.

ADDITIONAL COVERAGES

1. DEBRIS REMOVAL

The cost of removing the debris of covered property after a covered loss is limited to 25% of the amount paid for the direct loss plus $5,000. The combined loss due to damage of covered property and debris removal cannot exceed the limit of insurance plus $5,000.

Example (1): The limit of insurance is $1,000,000. After a total loss, the damage to the building was $300,000, to owned business personal property—$400,000, to property of others- $200,000, and the debris removal expense of $200,000 was expended. The total loss was $1,100,000. The amount paid by the insurance company was $1,005,000. (The debris removal loss was 22% of the loss, but the total amount of loss exceeded the limit of insurance.)

Example (2): The limit of insurance is $1,000,000. The loss to the property was $500,000, but the debris removal cost was $300,000, for a total claim of $800,000—which is comfortably within the limit of insurance. However, debris removal coverage is limited to 25% of the paid loss. 25% of the paid loss is $125,000, and the supplemental $5,000 coverage is available, thus $130,000 of the $300,000 debris removal loss is paid.

Debris removal does not include extracting pollutants from land or water or the cost of removing, restoring or replacing polluted land or water. (Limited pollutant cleanup and removal is provided for up to $25,000—see ADDITIONAL COVERAGES 4.)

Debris removal due to the operation of ordinance or law is limited to $50,000 (see SUPPLEMENTAL COVERAGES 7 for more information about ordinance or law coverages.)

Debris removal expenses must be reported, in writing, to the insurance carrier within 180 days of direct physical loss to the covered property.

Examples of covered expenses include: demolition, use of a wrecking ball, transportation of debris, blasting to the ground a damaged structure, removing damaged inventory or equipment. Repairs made to shore up an undamaged building or shelter machinery, equipment and inventory during the debris removal process would not be considered debris removal, but would be covered as direct property damage under the clauses dealing with protecting the property from further damage and emergency removal after a loss.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Debris Removal can be increased by using endorsement COP-268—Increased Limits Endorsement.

2. EMERGENCY REMOVAL

Emergency removal covers property (for up to 10 days) while in transit and while it is at another location or in storage for any covered peril if it is moved in order to prevent or reduce the amount of damage to property that was originally threatened by an insured peril. For example, the machine shop roof blew off in a storm, the company moved the machines to a temporary you-store-it location, but the storage location burns down and destroys the machinery—coverage exists. Emergency removal coverage under the COP increases transportation coverage to the limit of insurance (from $50,000). If the Scheduled Locations Endorsement COP-226 is added to the policy, for emergency removal, the policy reverts to blanket location coverage.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Emergency Removal can be increased by using endorsement COP-269—Increased Limits Endorsement.

3. FIRE DEPARTMENT SERVICE CHARGE

Up to $5,000 is available to pay fire department service charges incurred when property is threatened by an insured peril. Any covered service charge must be required by contract or agreement with the fire departments that respond. No deductible applies to this coverage.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Fire Department Service Charge can be increased by using endorsement COP-269—Increased Limits Endorsement.

4. POLLUTANT CLEANUP AND REMOVAL

$25,000 aggregate annual and per site coverage is available to extract "pollutants" from land or water that are caused by a covered peril. The incident must occur during the policy period and be reported, in writing, to the insurance company within 180 days of the date the covered peril occurs. Extracting pollutants includes digging, dredging, well drilling, scraping land or water and then the transportation of the pollutants to an approved disposal site. Any form of testing soil, test wells, chemical analysis, well analysis, laboratory studies is not covered by the policy. Expenses do not include any court or defense costs associated with a pollution incident. Examples of sudden pollution release include damage to an aboveground pesticide tank after a roof collapses due to the weight of ice and snow. An example of gradual release (must be reported within 180 days) is fire loss to the building, where a collapsing floor damages the concrete basement and cracks the underground oil tank. Oil is discovered in the private well of the home next door within 180 days. After analysis it is deemed that the damage to the tank was caused by the fire. Removal of the underground tank and the cost of repairs to the tank are not covered by the policy, but the removal of the oil soaked soil is covered for up to $25,000. Damage to the foundation that must be removed to expose the offending tank and soil is covered under the original cause of loss—fire, and is not subject to the $25,000 limitation. $25,000 pollution cleanup is inadequate for all but the most minor of spills and there is no standard endorsement available to increase coverage. Consult the Specialty Markets for EIL—Environmental Impairment Liability Coverage (Markets are found in The Insurance Marketplace a publication of The Rough Notes Company, Inc.).

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Pollutant Cleanup and Removal can be increased by using endorsement COP-269—Increased Limits Endorsement.

5. RECHARGE OF FIRE PROTECTION EQUIPMENT

The expense of recharging automatic fire protection equipment is covered for up to $10,000 after discharge to combat any covered peril. Coverage includes refilling Halon, Ansul tanks, and the cost of filling large internal sprinkler system reservoirs with water or other fire suppressants. This coverage does not pay to recharge manual systems such as hand-held fire extinguishers, or water discharged from manual standpipe and hoses.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Fire Protection Equipment Recharge can be increased by using endorsement COP-269—Increased Limits Endorsement.

SUPPLEMENTAL COVERAGES

All of the supplemental coverages are not subject to coinsurance if a coinsurance clause (Locations Endorsement COP-227) is added to the policy, and if the Scheduled Locations Endorsement COP-226 is added, and then only while property is in or outside of "covered locations," or within 1000 feet thereof. As always, a covered peril must first cause direct physical damage.

1. ARSON REWARD

An arson conviction as a result of information supplied by any one or a number of informants will be rewarded. $5,000 is available per arson loss, not per informant.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Arson Reward can be increased by using endorsement COP-269—Increased Limits Endorsement.

2. BRANDS OR LABELS EXPENSE

Up to $50,000 is available for the expense of removing old labels and relabeling any business personal property that can be salvaged and resold. "You" must be careful not to damage the packaging or the property during the course of relabeling.

If "you" are required to relabel goods by law, "you" must do so, even if the expense exceeds $50,000.

Example: A high fashion men's clothing store has a limited but smoky fire. Salvaged clothing is dry cleaned and for the most part, the smoke damage is removed. However, store management and the insurance carrier agree that the store's customers will not purchase smoke damaged clothing at any price, and the contract that the store has with three specialty clothing vendors prohibits the sale of merchandise that displays their labels on any merchandise so damaged. The insured agrees to sell the damaged goods at its discount store. The insurance company agrees to pay the clothing store to have all the designer labels removed and the salvage brand's labels sewn in their places.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Brands or Labels Expense can be increased by using endorsement COP-269—Increased Limits Endorsement.

3. CONSEQUENTIAL LOSS

Consequential losses to undamaged personal property of up to $10,000 are payable by the policy. Consequential loss is best described by example. Spillage of fuel ignites a fire which damages the paint on one of the lawn tractors your business sells. The repainted tractor cannot be resold as new, and is discounted $1,000 for sale as damaged goods. The $1,000 discount is covered as a consequential loss.

ISO provides similar coverage for manufactured stock through CP 99 02 Manufacturers Consequential Loss Assumption Endorsement attached to a commercial property policy to pay for the reduction in value of the remaining parts of stock in process when the reduction is caused by loss to other stock.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Consequential Loss can be increased by using endorsement COP-269—Increased Limits Endorsement.

4. FOUNDATIONS OF BUILDINGS, PILINGS, AND UNDERGROUND PIPES

10% of the limit of insurance to a maximum of $250,000 is available to pay (at any one "covered location") for foundations of buildings, structures, machinery or boilers if their foundations are below the lowest basement floor (or the ground if there is no basement), pilings, piers, wharves, docks or retaining walls, or underground pipes, flues or drains. Underground tanks are excluded from coverage. Foundations of structures can include specially constructed slabs for external and internal machinery. Docks on foundations and pilings away from shore can also be covered if they are within the continental limit of the USA or Canada.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for foundations, pilings and underground pipes can be increased by using endorsement COP-269—Increased Limits Endorsement.

5. INVENTORY AND APPRAISALS EXPENSES

Up to $50,000 is available to pay for the cost of conducting an inventory or the cost associated with obtaining appraisals on any covered property that is damaged in a covered loss. The insurance company first must request that the inventory or appraisal be conducted before payment is made. Expenses can include: hiring part time individuals to sift through and record inventory, paying the daily fee for and transportation and living expenses of a recognized expert to appraise certain fine arts that were lost in the fire. Public adjuster expenses are never covered and appraisal expenses paid for by this policy in OTHER CONDITIONS—1. Appraisals, are not duplicated here.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Inventory and Appraisals Expenses can be increased by using endorsement COP-269—Increased Limits Endorsement.

6. NEWLY ACQUIRED BUILDINGS

All locations, whether existing at the inception of the policy or acquired or built during the policy period, are covered by the policy except when the Locations Endorsement—COP-227 and Scheduled Locations Endorsement—COP-226 are added to the policy. When these two endorsements are added, coverage exists only for scheduled "covered locations." With these two endorsements, there is an additional provision that is activated in the base policy that adds up to $500,000 coverage for each newly acquired or constructed building for a period of 90 days or until the day you report the acquired location to the company, or the end of the policy period, whichever comes first. "You" must pay for the insurance from the date of acquisition or the day construction begins on the property. Coverage is per occurrence, so if you acquire three buildings in one sale, you have up to $500,000 coverage for each building. No standard COP endorsement exists to increase coverage above $500,000.

7. ORDINANCE OR LAW

Ordinance or law coverage pays for the cost of demolishing the undamaged portion of real property, the cost to repair the property and any increased cost of construction incurred during the reconstruction of the building so ordered by an official that is required by building code, zoning, or land use code at any "covered locations"; the ordinance or law must be in force at the time of the loss. Up to $50,000 coverage is available.

Example: A fire damages 65% of the beams and structure of a frame building used to house a candle manufacturer. City ordinances require that a building that is more than 60% structurally damaged by a fire or other peril must be torn down. City building codes require that any business using any process that heats any flammable liquid to within 80% or more of its flash point must be housed in a masonry building that is sprinklered, and is wired to meet specific explosion proof standards. The limit of insurance for the candle maker is $500,000. The fire caused $100,000 damage (cost to rebuild) to the building and $200,000 damage to business personal property. The cost to demolish the damaged portion of the building is $30,000. The cost to demolish the remaining structure is $50,000. The cost of rebuilding the ordinance demolished portion of the frame building is $90,000. The additional required cost of rebuilding the entire structure to meet the masonry, wiring, and sprinkler codes is $200,000. Thus, the total amount the insured will need to expend to first demolish and then rebuild the building will be $670,000. The insured is paid for $100,000 fire damage for the building, $200,000 for the fire damaged business personal property, 25% of the paid loss is available for debris removal expense plus $5,000, so the full $30,000 of fire caused debris removal is covered; out of the ordinance caused losses, the full $50,000 ordinance or law policy limit is available. Out of a total of $670,000 insured incurred expenses only $380,000 is paid.

Restrictions and conditions that apply to ordinance or law coverage include: the ordinance must be in effect at the time of the loss; costs associated with reconstruction must be for buildings intended for similar occupancy unless otherwise required by law (can't rebuild as an apartment building if originally a manufacturer unless, by law, the manufacturing facility can't be rebuilt); no coverage for monitoring, cleanup, removal or detoxification of "pollutants" (see COP ADDITIONAL COVERAGES 4 for information on available $25,000 pollution removal coverage); the building or structure must be built within a reasonable period of time after the loss not to exceed two years; "you" will be paid no more than you actually spend if you only partially rebuild or decide not to rebuild, and simply demolish and clear the land for resale or otherwise, or rebuild for similar occupancy, the same size, height and floor area with like kind and quality.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Ordinance or Law can be increased by using endorsement COP-269—Increased Limits Endorsement.

8. PERSONAL EFFECTS

Up to $10,000 coverage at each "covered location" is available for personal effects owned by "you" (as an individual), "your" officers, "your" partners or employees. Personal effects can include clothing, knickknacks, briefcases, plaques and awards, fine arts, personally owned software and valuable papers, gifts for others hidden in office desks, and personally owned furniture. The $10,000 coverage is an aggregate per location coverage, not a per person limit.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Personal Effects can be increased by using endorsement COP-269—Increased Limits Endorsement.

9. PERSONAL PROPERTY—ACQUIRED LOCATIONS

All business personal property, whether existing at the inception of the policy or acquired or manufactured during the policy period is covered by the policy except when the Locations Endorsement—COP-227 and Scheduled Locations Endorsement—COP-226 are added to the policy. When these two endorsements are added, coverage exists only for personal property at scheduled "covered locations." With these two endorsements, there is an additional provision that is activated in the base policy that adds up to $250,000 for business personal property coverage at each newly acquired or constructed building for a period of 90 days, or until the day you report the acquired location to the company, or the end of the policy period, whichever comes first. "You" must pay for the insurance from the date of acquisition or the day construction begins on the property. Coverage is per occurrence, so if you acquire three buildings in one sale, you have up to $250,000 business personal property coverage for each building. No standard COP endorsement exists to increase coverage above $250,000.

10. TREES, SHRUBS AND PLANTS

"Your" lawns, trees, shrubs and plants, including their debris removal, are covered up to $50,000 for any one occurrence caused only by the following: fire, lightning, explosion, riot or civil commotion, falling objects. This is "your" property only and does not include property of others. Falling objects can include falling tree limbs if not caused by weather. Noticeably absent from coverage are the perils of wind, hail, rain, vehicles, animal, chemical or pest damage. To find broadened perils coverage for crops and other plants, consult The Insurance Marketplace, a publication of The Rough Notes Company, Inc.—Possible categories include Hail insurance on growing crops, Multiple peril crop insurance, Golf courses, Horticultural risks.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Trees, Shrubs and Plants can be increased by using endorsement COP-269—Increased Limits Endorsement.

SUPPLEMENTAL MARINE COVERAGES

All of the supplemental marine coverages are not subject to coinsurance if a coinsurance clause (Locations Endorsement COP-227) is added to the policy, and if the Scheduled Locations Endorsement COP-226 is added, then only while property is in or outside of "covered locations," or within 1000 feet thereof. As always, a covered peril must first cause direct physical damage.

1. ACCOUNTS RECEIVABLE

Accounts receivable coverage pays "you" for sums owed you that you cannot collect from your customers after a covered loss. Also covered is the interest "you" must pay the bank if "you" should take a loan against your receivables in order to provide the operating capital necessary for "you" to stay in business. Accounts receivable coverage also pays for any excess expense "you" have beyond what is normal to collect money after a covered loss, and accounts receivable coverage will pay for the costs to reconstruct accounts receivable records including those on paper, disk or tape. The policy base coverage is $50,000. Basic COP policy accounts receivable coverage can be replaced with the Accounts Receivable Coverage Endorsement COP-219 and scheduled with the Scheduled Accounts Receivable Endorsement COP-218. These endorsements do not add to the $50,000 base coverage; they replace the coverage in the policy.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Accounts Receivable can be increased by using endorsement COP-269—Increased Limits Endorsement.

2. FINE ARTS

$50,000 is available for "your" fine arts at "covered locations."

3. PROPERTY ON EXHIBITION

Property on exhibition is for property you have on display at locations "you" do not regularly occupy. Property on exhibition is personal property and the form does not require that the property be owned by "you"; so if you are exhibiting other people's property in addition to your own at a trade show, there is coverage. Coverage is limited to $50,000 for all property on exhibit, regardless of the number of locations where property may be exhibited. An exhibition can include trade shows and flea markets, but does not include property that is in the custody of your salespeople. Examples of covered property are the trade booth, including electronics, wiring and associated equipment, but not stock if it is held for sale or in the custody of anyone acting in the capacity as a sales representative.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Property on Exhibition can be increased by using endorsement COP-269—Increased Limits Endorsement.

4. PROPERTY IN TRANSIT

Up to $50,000 coverage is available for property in transit. This is a per occurrence limit and includes business personal property except property in the custody of sales representatives. Occurrence as defined includes all vehicles, trailers, conveyances involved in the same occurrence. If three trailers are involved in the same accident, only $50,000 coverage is available. Coverage is for owned and nonowned personal property. (Note: under property of others #11 in PROPERTY NOT COVERED, if you are a carrier for hire, or are acting as a backhauler, then property of others is not covered.)

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Property in Transit can be increased by using endorsement COP-269—Increased Limits Endorsement.

5. SALES REPRESENTATIVE SAMPLES

Sales representative samples ("yours" and sample property belonging to others while in your custody) are covered up to $50,000 while in the custody of salespeople, in transit between "covered locations" and the sales representative, and in "your" (as an individual, officer, partner or employee) custody while "you" are acting in the capacity of a sales representative. This includes property you have as samples for sale at exhibition. Sales representative samples do not include the property "you" have for sale at "your" retail locations.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Sales Representative Samples can be increased by using endorsement COP-269—Increased Limits Endorsement.

6. VALUABLE PAPERS AND RECORDS—COST OF RESEARCH

Up to $50,000 "Valuable papers and records" cost of research coverage is available. Paper, disk, tape, magnetic, or electronic media valuable papers are covered for the cost of research necessary to reproduce, replace or restore lost or damaged information. Coverage exists whether or not there are duplicate copies of damaged media. Duplicate coverage for accounts receivable records cost of research does not exist here.

Coverage example: The architectural firm had a major fire. Many of the latter drawings were on CAD-CAM and duplicate records did exist. These records were reinstalled on new equipment purchased to replace the damaged work stations. Approximately 100 hours of work @ $25 per hour was required to reinstall the disks and touch up drawings that had not been included in the most recent back-up tapes. However, over 300 hours of legwork and $3,000 of duplication expense was required by the architects who had to search through customer records to retrieve and duplicate plans and drawings for current projects, and for completed products where a need to maintain plans still existed. Total payroll cost @ $25 per hour was $10,000 plus the $3,000 of duplication expense made the total covered pay out—$13,000.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Valuable Papers and Records—Cost of Research can be increased by using endorsement COP-269—Increased Limits Endorsement.

PERILS COVERED

The COP policy covers for external risks of direct physical loss caused by a peril that is not excluded. Therefore, the company must prove after a loss that an excluded peril caused the loss. If the company cannot, coverage exists. The term external risk requires outside forces to act upon the item. Spontaneous combustion would not be covered. Direct physical loss does not include loss of use or the loss in perceived value of goods in the marketplace after an otherwise insured peril—i.e.: a new model of the small plane you manufacture catches fire in midair during a test flight and crashes. Though the aircraft is given certification by the FAA, leery potential customers decide not to purchase your product. The damage to the crashed plane is covered, but the resulting loss of income and perceived loss of value are not paid by the COP policy.

PERILS EXCLUDED

1. The doctrine of "concurrent causation" holds that an "all risk" policy must pay if a loss to property is attributable to two causes, one excluded by the policy and one covered. By application of this concept, coverage has been found for earth movement, flood and other specifically excluded events. The COP policy, in an effort to avoid concurrent causation, says that if one or more excluded peril causes the loss, regardless of any other causes that contribute or aggravate the loss (even if the contributing cause of loss is normally covered), then there is no coverage. An example might be an earthquake that first damages a building's wall but a tree limb falls during the tremor, knocking down a portion of the roof. Falling objects are normally covered, but because the tree limb's fall was as a result of the earthquake, neither event is covered.

1a. ORDINANCE OR LAW

Any increased cost caused by the enforcement of any building code or law is not covered except to the extent it is covered under the Supplemental Coverages ($50,000 basic coverage, can be increased by endorsement).

1b. EARTH MOVEMENT OR VOLCANIC ERUPTION

The perils of earthquake, landslide, mud slide, mine subsidence, sinking-rising-shifting earth, or if earth movement is caused by volcanic eruption-explosion or effusion are excluded for all property except "computers," "mobile equipment" and the Supplemental Marine coverages (accounts receivable, fine arts, property on exhibition, property in transit, sales representative samples, valuable papers and records-cost of research). "Sinkhole collapse" is covered as well as any direct loss from fire or explosion that is a direct result of any otherwise excluded earth movement peril or volcanic eruption. Volcanic eruptions that occur during a 168 hour period will be considered one event.

Example of fire: The building was damaged by earthquake, cracking walls and collapsing shelving. The shifting of the earth caused a gas main to rupture and the resulting fire burned the building to the ground. Damage attributed to the earthquake was estimated at $200,000, while the total loss was estimated at $1,000,000. In adjusting the loss, the company will deduct the $200,000 earthquake damage and pay the remaining $800,000 fire loss.

The Earthquake Endorsement COP-221 can add earthquake coverage.

1c. CIVIL AUTHORITY

Acts of civil authority to prevent the spread of fire (not a fire caused by an excluded peril) is covered. I.E.: "Your" garage is burned to the ground to act as a fire break against an advancing forest fire to prevent the fire from reaching your manufacturing plant. Other acts of civil authority—seizure, confiscation, destruction or quarantine of property—are not covered. Seizure and confiscation generally have to do with illegal activities; destruction normally involves tainted foods; and quarantine involves living organisms (plants, animals, lab viruses and bacteria). No standard COP endorsement exists to provide coverage.

1d. NUCLEAR HAZARD

Virtually all causes of nuclear damage are excluded. However, direct loss by fire as a result of any nuclear mishap will be covered. The example used in the earthquake exclusion will also apply here. Coverage for nuclear risk can only be purchased through nuclear umbrella coverage associations.

1e. UTILITY FAILURE

Brownouts, power surges, power station breakdown or other utility failures or inconsistent power delivery are excluded causes of loss. However, direct loss by fire at any "covered locations" as a result of any power interruption will be covered. The example used in the earthquake exclusion will also apply here. Coverage for various types of utility interruption is available through the Utility Interruption Property Damage Endorsement—COP-244 and Utility Interruption, Property Damage—Separate Limits—COP 267.

(08/98 Changes: COP 267 is a newly available endorsement providing optional increased limits.)

1f. WAR

War, declared, undeclared, warlike action, destruction or seizure or use of the property for military purposes, and any (even accidental) discharge of a nuclear weapon is excluded.

No standard COP endorsement is available to provide coverage.

1g. WATER

Flood, surface water, waves, tidal water, overflow of a body of water whether wind driven or not is excluded. Back-up of sewers and drains, and ground water that exerts pressure through walls, sidewalks, foundations, driveways, swimming pools or other structures is excluded. Examples of excluded ground water losses: frost heaves, excess rain seeping into and flooding a basement, cracking of a swimming pool by the pressure of frost. Resulting damage from fire, explosion or sprinkler leakage is covered. This exclusion applies to all property except "computers," "mobile equipment" and the Supplemental Marine coverages (accounts receivable, fine arts, property on exhibition, property in transit, sales representative samples, valuable papers and records-cost of research).

Additional property can be covered for flood using the Flood Endorsement—COP-223.

2a. ANIMALS

Animal, bird, insect or vermin damage is excluded for all causes of loss except by the "specified perils" or breakage of building glass. Nesting damage, excretions, termite infestation, consumption or contamination of food or grain are all examples of excluded animal damage. A deer crashing through a glass window causing damage to the window is an example where coverage would apply. If the deer that crashed through the window was to create additional damage such as trampling goods and knocking down shelves, the resulting damage would only be covered if caused by a resulting "specified peril" such as falling objects caused by the deer rampage. No standard COP endorsement exists to add coverage.

2b. COLLAPSE

Collapse is later defined under OTHER COVERAGES, 1. Collapse. All other incidents of collapse are excluded for all covered property except "computers," "mobile equipment" and the Supplemental Marine coverages (accounts receivable, fine arts, property on exhibition, property in transit, sales representative samples, valuable papers and records, cost of research). Resulting loss caused by a covered peril is covered; i.e.: the excluded cause of collapse knocks over a Bunsen burner and causes a fire in the laboratory.

2c. CONTAMINATION OR DETERIORATION

Corrosion, decay, fungus, mildew, rot, rust or any fault or weakness or inherent weakness in covered property that cause it to damage or destroy itself is excluded. For example, paint in cans will harden over time, other goods fade when exposed to sun, and iron objects will rust when exposed to moisture.

Coverage is provided for corrosion, decay, fungus, mildew, mold, rot or rust to "computers" as a result of direct physical loss by an otherwise covered peril to the air conditioning system that services "your" computers.

No standard COP endorsement exists to extend this coverage to other property.

2d. CRIMINAL, FRAUDULENT OR DISHONEST ACTS

Criminal, fraudulent or dishonest acts, whether done alone or in collusion with others, by "you" to others who have interest in "your" property, to whom "you" entrust property, "your" partners, officers, directors, trustees, joint adventurers or any of their employees are excluded. Destruction or malicious damage by "your" employees is covered, but not theft; i.e.: coverage is available when disgruntled strikers break windows at your plant, but not to the two employees who break in and rob the safe of money, securities and other property.

This exclusion does not apply to covered property while in the custody of a carrier for hire; i.e.: if your shipment is stolen by freight forwarding employees involved in a hijacking, you are covered.

Coverage for employee dishonesty is available using COP-255. (ISO employee dishonesty forms and endorsements may provide broader, or more appropriate coverages than the COP-255.)

2e. DEFECTS, ERRORS AND OMISSIONS

Defects, errors and omissions include those associated with land use, design, specification, construction, installation, or maintenance of property or planning; zoning, development, siting, surveying, grading, compaction or property maintenance; defect, weakness, inadequacy, fault or unsoundness of materials used in construction; the cost to make good any errors in design, data processing or programming errors; improper instructions. Also excluded are deficiencies in design, specifications, materials or workmanship or latent defect to business personal property.

Examples of excluded situations:

(1) Property built upon wetlands is torn down.

(2) Inadequate roof supports cause the roof to bow.

(3) A weld in the conveyor system is weak and cracks—sending twenty newly manufactured computers crashing to the floor.

Coverage for errors in design of property built for or sold to others can usually be found in professional liability coverages. Coverage for other latent defects and the tendency of goods to self-destruct is not available under any standard COP endorsement.

2f. ELECTRICAL CURRENTS

Electrical arcing and other damage by artificially generated electrical currents is excluded. Damage by any resulting fire as well as natural lightning is covered. Other natural electrical damage, such as static electricity, is not covered. Like the utility interruption exclusion, if power interruption causes another covered cause of loss, the resulting damage is covered. Arcing causes an explosion, the damage resulting from the explosion is covered, but not the damage caused by the arcing itself.

Endorsement COP-265—Additional Computer Coverages, can be added to provide coverage for damage to computers by electrical disturbance and power surges.

(08/98 Changes: The following are newly available endorsements providing optional enhanced coverage.)

Equipment Breakdown Coverage can be added via endorsement COP-103. Computer Coverage Equipment Breakdown can be added using COP-274.

2g. EXPLOSION

Explosions of steam boilers, steam pipes, steam turbines, or steam engines are excluded unless caused by the explosion of gas or fuel in a firebox, combustion chamber or flue. Resulting fire damage is covered.

Examples of coverage:

(1) The boiler explodes because an improper fuel mixture causes gas to accumulate beyond the capability of the boiler to contain the combustion.

(2) The boiler overheats and bursts into flames. Damage to the cracked boiler is excluded, but damage caused by the ensuing fire is covered.

Examples where coverage does not exist: steam pipe bursts, ruining thousands of dollars of inventory; the boiler runs out of water and cracks and explodes, damaging the boiler room walls.

(08/98 Changes: The following are newly available endorsements providing optional enhanced coverage.)

Equipment Breakdown Coverage can be added via endorsement COP-103. Computer Coverage Equipment Breakdown can be added using COP-274.

2h. FREEZING

Loss caused by frozen plumbing, heating, air conditioning and other appliances from water, liquids, powders and molten materials are not covered unless reasonable care has been taken by "you" to maintain heat in a building or structure or "you" drain the equipment and turn off the supply if the heat is not maintained. This exclusion does not apply to fire protective systems that discharge in freezing conditions. There is no standard COP endorsement to add back this coverage. (See also OTHER CONDITIONS 15. Vacancy and Unoccupancy for an expanded water damage exclusion for property vacant or unoccupied for 60 days or more).

Exclusion examples: (1) You don't pay the bills and gas is shut off and pipes freeze. When they thaw, they flood the showroom floor. (2) Your tenant turns off the gas when leaving for vacation. Pipes burst and ruin the rental dwelling's carpet and flooring.

Coverage example: Vandals break basement windows Friday night in your building. A blizzard's wind knocks out the heating system pilot light and, as a result of the vandalism, the pipes freeze and then burst when they thaw.

2i. INCREASED HAZARD

Losses that occur when the hazard has been materially increased within "your" knowledge or control are excluded. This is a difficult exclusion for any adjuster. First, there is no standard definition for material increase, and the concept of hazard is different for every industry. The intent of this exclusion is to prevent the insured from grossly altering its business process without notifying the company. A retail grocery store that decides to open a fireworks factory in the back room would be an exaggerated example of material increase in hazard. Would storing a 5 gallon can of gasoline inside the building to supply the newly purchased lawn mowing equipment be a material increase? Would the addition of a Fryolator to a restaurant that only had baking ovens be a material increase? Some businesses will try anything that helps them earn money. It is these businesses that the agent and underwriter will have to carefully watch during the course of the policy period to make sure that all activities are understood and properly documented.

No standard COP endorsement is available to counteract this exclusion. If an insured should venture into businesses or processes beyond what the insurance company and underwriter originally contemplated, documents recording an agreement by the company to insure should be drawn up and, where possible, added to the policy through a manuscript endorsement.

2j. LOSS OF USE

Business income coverages are excluded, but are available by endorsements—Income Coverage Part—COP-101, and Extra Expense Coverage COP-102.

2k. MECHANICAL BREAKDOWN

The mechanical breakdown or rupturing or bursting by centrifugal force of any object other than "computers” is excluded. No standard COP endorsement exists to provide expanded mechanical breakdown coverage.

(08/98 Changes: The following are newly available endorsements providing optional enhanced coverage.)

Equipment Breakdown Coverage can be added via endorsement COP-103. Computer Coverage Equipment Breakdown can be added using COP-274.

Exclusion examples:

(1) A punch press requiring 440 current loses 1/4 of its electrical phase and releases the cycle prematurely onto a customer's die, damaging it and warping the punch press.

(2) The lack of lubrication causes an engine to seize up.

(3) The governor breaks on a machine, the engine overrevs and the flywheel bursts, damaging both the machine and surrounding walls and windows.

Coverage example: A computer controlled machine's program locks up, damaging both product and machine.

2l. NEGLECT

During and after the loss occurs, "you" must use all reasonable means to protect the property from further damage. Subsequent damage after neglecting to preserve the property from damage is excluded. No standard COP endorsement is available to provide coverage.

Exclusion examples:

(1) Instead of attempting to use an available fire extinguisher to dampen a wastebasket fire, "you" wait until the fire department arrives. The fire damage to the wastebasket would be covered, but not the damage to the rest of the property.

(2) A tree limb falls upon the roof and opens a hole. Rather than repair the damage, "you" wait until the adjuster arrives the next day. Between the limb falling and the adjuster's arrival, a rainstorm sends a torrent of water through the hole in the roof, damaging walls, flooring and ruining hundreds of reams of special paper stock. The damage caused by the tree falling is covered, but any damage from the resulting rain is excluded.

2m. POLLUTANTS

Loss caused by the release or migration of "pollutants" is excluded unless the escape is caused by a "specified peril" and the resulting damage is by that "specified peril. Under ADDITIONAL COVERAGES 4, "pollutant" cleanup and removal, there is $25,000 coverage available for pollution cleanup.

Coverage examples:

(1) Fire causes the burning of transformers containing PCB's and the PCB contamination requires the destruction of the entire building and contents.

(2) Accidental sprinkler leakage fills an open tank of chemicals that eventually spills over, damaging flooring.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Pollutant Cleanup and Removal can be increased by using endorsement COP-269—Increased Limits Endorsement.

2n. SEEPAGE

Seepage of water or steam that occurs over a period of 14 days or more is excluded, i.e.: a slow leak remains undiscovered for months until the sheetrock wall is thoroughly soaked and collapses onto the floor. There is no standard COP endorsement to add back this coverage. The adjuster's challenge is determining whether the seepage is a chronic or acute problem.

2o. SETTLING, CRACKING, SHRINKING, BULGING OR EXPANDING

Settling, cracking, shrinking, bulging or expanding of any pavement, footings, foundation, walls, ceilings or roofs caused by any peril other than the "specified perils" or glass breakage is excluded. Under exclusion 1g. Water, the pressure of water or ice to basements and foundations is also excluded. This exclusion does not apply to "computers" or "mobile equipment." No standard COP endorsement exists to expand coverage.

Examples of coverage:

(1) A sinkhole undermines the foundation causing the exterior walls to bulge.

(2) Ice buildup on the roof sags the roof.

(3) Rioters roll a car down into your building which cracks your foundation.

2p. SMOG, SMOKE, VAPOR OR GAS

Industrial firms’ incinerators release harsh acids and chemicals into the air, bleaching or chipping paint or damaging plastic and rubber products. Agricultural smudging operations used to deter insects or keep crops from freezing can release greasy smoke that can discolor paint and do other damage to nearby buildings. Damage done by smog, smoke, vapor or gas from industrial operations or agricultural smudging is excluded.

No standard COP endorsement exists to provide this coverage.

2q. TEMPERATURE/HUMIDITY

Changes in temperature or humidity that cause damage are excluded and resulting damage is covered only as a result of the "specified perils" or glass breakage. Coverage is provided for changes in temperature or humidity caused by direct physical damage by a covered peril to the air conditioning system that services "your" "computers." Coverage for spoilage can be added through COP-253.

Exclusion examples:

(1) A bird breaks a window in the laboratory, changing the controlled temperature and humidity conditions, rendering useless an expensive batch of pharmaceuticals.

(2) An employee accidentally shuts off the freezer electrical circuit and all the frozen fish thaws and spoils.

Computer coverage example: A loose pipe on a storage rack falls onto the air damper of the computer ventilation system, locking closed the damper. The computer overheats and its circuits melt down.

2r. VOLUNTARY PARTING

Coverage for voluntarily parting with or giving title to any possession to another by fraudulent scheme trick or device is an excluded peril. No standard COP endorsement is available to provide coverage.

Exclusion examples:

(1) You sell a product to someone who bounces a check and skips town with your product.

(2) You allow the individual to test drive the "mobile equipment" and the individual never returns.

(3) You sign over your building as collateral for a get-rich-quick scheme, and creditors of the scheme foreclose upon your building.

2s. WEAR AND TEAR

Wear and tear, marring and scratching are excluded for all causes of loss, but any resulting loss caused by a "specified peril" or glass breakage is covered. No standard COP endorsement is available to add coverage.

Examples: Normal use will cause scratches to tables and is excluded. However, scratches caused by a light fixture that falls upon the table would be covered.

2t. WEATHER

If a weather condition contributes to a cause of loss excluded in paragraph 1 exclusions (ordinance or law, earthquake, civil authority, nuclear hazard, utility failure, war, water) then the damage caused by the resulting weather condition is also not covered. Weather includes wind, rain, hail, snow, heat, cold. However, any resulting loss caused by a covered peril is covered. This exclusion is intended to eliminate concurrent causation coverage. (See PERILS EXCLUDED 1. for a discussion of concurrent causation.

Example: Heavy late winter rains start a flood which begins to undermine the foundation, causing bulging of the wall. The rain turns to ice and the weight of ice collapses the building. Damage attributable to the flood is excluded, but the resulting damage caused by the weight of ice is covered if the company agrees that the roof would have collapsed even if the supporting walls had not been weakened by the flood.

ADDITIONAL PROPERTY NOT COVERED OR SUBJECT TO LIMITATIONS

1. ACCOUNTS RECEIVABLE

Losses as a result of bookkeeping, accounting, or billing error are excluded, whether discovered in the normal course of business, or during inventory or audit. No standard COP endorsement is available to provide coverage.

Exclusion examples:

(1) You undercharge for a particular item by $1,000.

(2) During inventory it is discovered that you are missing $10,000 of stock you thought you had. You can't prove stock was stolen by thieves or employees—it has simply disappeared.

2. ANIMALS

Loss to animals, birds, or fish, except by death or destruction that is caused by "specified perils" or breakage of building glass.

No standard COP endorsement can extend this coverage to other perils. (This coverage is often called animal or livestock mortality coverage.

Examples of coverage:

(1) Lightning kills cattle (stock held for sale) in your feed lot.

(2) A falling radio tower breaks the dam for the pond that holds 3000 fledgling catfish. The loss of water kills all 3000 fish.

3. BOILERS

The boiler exclusion is further clarified here (see EXCLUDED PERILS 2g. Explosion for information on the boiler explosion exclusion). Loss to the boiler itself is excluded except for explosions caused by fuel or gas in a firebox, combustion chamber or flue.

(08/98 Changes: The following are newly available endorsements providing optional enhanced coverage.)

Equipment Breakdown Coverage can be added via endorsement COP-103. Computer Coverage Equipment Breakdown can be added using COP-274.

4. FURS

Coverage for furs is not limited except for the peril of theft. Only $10,000 in furs is available for any one occurrence due to the peril of theft. (Furs can be owned by "you," others, or as personal effects.) No standard COP endorsement is available to increase coverage.

5. GLASSWARE/FRAGILE ARTICLES

Breakage of building glass, bottles or other containers held for sale, and lenses of photographic and scientific instruments are covered for the broad peril—glass breakage. All other glass such as glassware, statuary, porcelains and bric-a-brac are covered only when damaged by the "specified perils" or breakage of building glass. Regular building glass is covered up to policy limits, stained glass is covered only up to $50,000 coverage as included in the SUPPLEMENTAL MARINE COVERAGES, 2. Fine Arts coverage. There is no standard COP endorsement that is available to provide coverage.

Examples:

(1) Coverage at the winery where champagne bottles explode from the accumulation of too much gas.

(2) No coverage when the glass statuary is knocked to the ground by a customer, but there would be coverage if the statuary melted in the heat of a fire.

6. GUTTERS AND DOWNSPOUTS

Gutters and downspouts are not covered for the additional perils of weight of ice, snow, or sleet. No standard COP endorsement is available to provide coverage for these perils.

7. INTERIOR OF BUILDINGS

Rain, snow, ice, sleet, sand or dust entering a building must be as the result of damage done by one of the "specified perils" or loss caused by the thawing of ice, snow or sleet on the building or structure.

Examples:

(1) No coverage if you forget to close the window and rain enters, damaging your desk and valuable papers.

(2) Coverage applies when lightning causes electrical arcing and the resulting transformer explosion damages the window and wall, letting rain in.

(3) Coverage exists when hail breaks the skylight and smashes through laboratory equipment.

8. JEWELRY, WATCHES, JEWELS, PEARLS, PRECIOUS STONES AND METALS

Jewelry and watches worth more than $100 apiece, pearls, precious stones and metal are covered to policy limits for all covered perils except theft. For each theft occurrence, the maximum available coverage for these items is $10,000. No standard COP endorsement exists to increase theft coverage on jewelry and watches.

9. MISSING PROPERTY

Missing property where the only proof of loss is inventory shortage, or mysterious or unexplained disappearance without any definitive physical evidence that points to the cause of the disappearance is not covered. Shoplifting, employee theft, misentry of sales information, etc., are not covered unless there is evidence to point to a covered peril that caused the loss. Mysterious disappearance is covered for property in the custody of carriers for hire. No standard COP endorsement exists that will broaden coverage.

10. PERSONAL PROPERTY IN THE OPEN

Rain, snow, sleet or ice damage to property in the open is excluded, but this exclusion does not apply to "mobile equipment" or property in the custody of a carrier for hire. Property in the open means property that is not covered by a building or other structure. No standard COP endorsement is available to broaden coverage.

11. STAMPS, TICKETS AND/OR LETTERS OF CREDIT

Coverage for stamps, tickets, letters of credit and lottery tickets held for sale is limited to $5,000 per occurrence for the peril of theft. There is no limitation for any other covered peril. Coverage for these items may be purchased by any of a number of crime forms.

12. TRANSFERRED PROPERTY

Under PERILS EXCLUDED, 2r. Voluntary Parting, any scheme, trick or device used to separate you from your goods is an excluded cause of loss. Also not covered under this provision (12), is property that has been transferred to someone or somewhere away from "covered locations" on the basis of unauthorized instructions, i.e.: the shipment is mailed to the incorrect address and cannot be returned.

13. VALUABLE PAPERS AND RECORDS

Damage to "valuable papers and records" caused by errors and omissions in processing or copying is excluded except if caused by the "specified perils" or glass breakage.

Coverage examples:

(1) Part of the false ceiling falls upon the photocopier, causing the copier to rip apart hundreds of paper records.

(2) Lightning alters the computer disk records, producing incorrect data. In both cases, SUPPLEMENTAL MARINE COVERAGES, 6. Valuable papers cost of research coverage is available under the base policy for up to $50,000.

(08/98 Changes: The following is a newly available endorsement providing optional increased limits.)

The coverage limit for Valuable Papers and Records—Cost of Research Coverage can be increased by using endorsement COP-269—Increased Limits Endorsement.

OTHER COVERAGES

1. Collapse

Collapse of a building, structure or personal property may be caused by many different perils. In order to narrow the covered cause of collapse to a reasonable group of perils, the word collapse has been defined in this section. Covered causes of collapse of a building or structure include: "specified perils," hidden decay, hidden insect or vermin damage, weight of people or business personal property, weight of rain that collects on a roof, use of defective construction material if the collapse occurs during the course of construction, remodeling, or renovation.

Examples:

(1) Coverage for carpenter ants that eat through roof supports in sections of the roof where there is no access and there is no visible evidence of damage until the collapse.

(2) No coverage to visible termite damage in the floor joists that cause the floor to collapse.

(3) Coverage for the collapse of a building under construction when faulty temporary supports fail.

(4) No coverage when the building collapses six months after the building is renovated and reoccupied by the insured due to improperly spaced girders installed during the renovation.

Losses to the following property as a result of the covered causes of collapse must be as a direct result of the collapse of a building or structure: outdoor awnings or canopies or their supports, fences, gutters and downspouts (no coverage for the weight of ice, sleet or snow), yard fixtures, outdoor swimming pools, piers, wharves, docks, beach or diving platforms or appurtenances, retaining walls, foundations, walks, roadways and other paved surfaces. Essentially this language states that the only covered collapse to these types of property must be associated with a covered collapse of a building or structure.

While this additional exclusionary language is not immediately clear, a few examples will help clarify the intent of coverage.

(1) The garage is blown over onto the lawn furniture, collapsing the building and crushing the lawn furniture.

(2) The dockside building wall collapses during a fire and in turn collapses the wharf that extends 100 feet into the harbor.

(3) The faulty weld in the central crossbeam during building construction collapses the frame onto the foundation, cracking the footer.

2. Tearing Out and Replacing

Water and process piping often run through walls and other portions of a building. When damage by water, other liquids, powders or molten material is covered, the cost of tearing out and replacing any part of the covered building or structure to repair damage to the fluid system or appliance is covered. Damage to the system itself is not covered, except if damaged by the discharge of any substance from an automatic fire protection system or is caused directly by freezing (see PERILS EXCLUDED—2h Freezing for information of excluded causes of freezing).

Examples:

(1) A water pipe bursts inside the wall. Coverage is provided for damage the water does to the wall, the building and business personal property, and the cost to tear out the wall to remove and repair the piping, but not for the cost to repair the damaged pipe itself.

(2) A sprinkler system discharges, but older sprinkler pipes crack. Coverage is available for both the damage caused by the water and the damage done to the sprinkler system.

WHAT MUST BE DONE IN CASE OF LOSS

1. Notice

"You" or your agent must give the company prompt notice of the claim including a description of the policy, and the company may ask for written notice. If the cause of loss is a crime, the police must be notified, and the credit card company must be notified in a credit card loss. Prompt notification is not defined, but an unreasonable delay could cause the company to deny the claim for noncooperation.

For theft, employee dishonesty (especially when the Employee Dishonesty Endorsement COP-255 is added), arson and other crimes, police notification is imperative. Unfortunately, some employers will decline to notify police if valued employees are involved in minor dishonesty losses. Many dishonesty claims start small and the amount of loss grows as the actions of the employee are further investigated. The company could deny any claim if the employer tries to protect the employee by not notifying the police, and employee dishonesty coverage immediately becomes void for future dishonest acts by an employee once any dishonest act is discovered by the employer.

2. Protect Property

During and after an insured loss, "you" must take steps to protect covered property from further damage. The reasonable repairs and emergency measures you take to protect the property against further damage by covered perils will be paid.

"You" must keep accurate records of the cost of these repairs. The company, however, will not pay for repairs or emergency measures to property which has not yet been damaged by an insured peril. Any emergency repair costs will not increase the "limit" of insurance.

Examples:

(1) Not covered are the cost of and labor to board up windows in the advance of a hurricane.

(2) Covered are repairs to the plywood made during the eye of the hurricane to replace pieces that were shorn off during the initial phase of the storm.

(3) Not covered are the cost of the sandbags purchased to protect the property from flood damage when flood is not an insured peril.

(4) Covered is the plastic purchased to prevent rain from entering the roof after damage done by a hailstorm.

3. Proof of Loss

Signed and sworn proof of loss must be submitted within 60 days of the insurance company's request. The proof of loss must include: time, place, circumstance of the loss, other policies that may cover, the names of all who have interest in the covered property, changes in title of covered property that have occurred during the policy period, detailed repair or replacement estimates of covered property, and an inventory of damaged and undamaged covered property, including detailed quantity, description, cost, actual cash value, and amount of loss. Any available bills, receipts, and other documents that substantiate inventory must be included.

What happened? How did it happen? When and where did it happen? Who owns or has an interest in the property and did "you" purchase any other insurance that may also cover the property? Did title to property pass or was title altered in any way—i.e.: liens, conditional sale, bill of sale, installment, contract of installation, etc.? Take an inventory, estimate the value of, the cost to repair, the actual cash value, and what "you" believe is the amount of "your" loss. Separate the damaged goods from the undamaged goods and be prepared to supply us with any documents that will help prove the amount of your loss. If "you" have no documents, "you" must find a way of inventorying "your" property to prove "your" loss.

4. Examination

If the insurance company desires, "you" must submit to examination under oath as often as reasonably required, and answers to questions must be sworn statements. If the company desires, individuals involved may be questioned separately and not in the presence of any others. (Prevents story collusion.)

5. Records

If "you" have records of property inventory, values and loss, including any tax records, bank records, computer records, paper records, or other documents, "you" must be willing to produce these records as often as the insurance company reasonably requests.

6. Damaged Property

"You" must exhibit damaged property as often as the insurance company reasonably requests and must allow the insurance company to take samples of the damaged or undamaged property. Samples are important to determine the extent of loss to certain property where the amount of loss may not be obvious.

7. Volunteer Payments

"You" can't admit to any obligations (admit to fault), pay any rewards, make any payments or incur any expense (except for emergency repairs to protect property from further insured damage as a result of an insured loss) without the insurance company approval. This does not mean that "you" can't begin to rebuild or repair prior to loss settlement; it means that the insurance company may not be liable for the amount of repairs you spend. For example, "you" may desire to use the highest bidder and to use materials beyond what was of like kind and quality in your original building. The company may not pay for the additional costs, and if the cause of loss was found not to be insured, the entire claim may be denied and all repairs "you" make will be out of "your" pocket.

8. Abandonment

"You" cannot abandon any property to the insurance company, without the insurance company's written authorization. "You" cannot walk away from the property and hand title to the insurance company because the building burned to the ground and "you" have no desire to rebuild on the now worthless land in a declining neighborhood.

9. Cooperation

"You” must cooperate with the insurance company in performing all acts required by the policy. Lack of cooperation for reasonable requests can be grounds for claim denial.

VALUATION

1. Actual Cash Value

Unless replacement cost is listed on the Declarations Page, the value of all covered property (except fine arts, glass, merchandise sold, pairs or sets, loss to parts, tenants improvements, and valuable papers and records which have separate valuation clauses) will be actual cash value, which is defined as replacement cost at the time of the loss with deduction for depreciation.

2. Replacement Cost

If replacement cost is shown on the Declarations Page, replacement cost is only paid if the damaged property is actually repaired or replaced. If "you" are covered for replacement cost, "you" can make a claim first for actual cash value and change "your" mind within 180 days of the loss and ask the company to pay on a replacement cost basis.

Actual cash value as defined involves two parts.

(1) Replacement cost today with like kind and quality.

(2) Subtracted from replacement cost is any depreciation due to use, wear, and obsolescence.

Actual cash value depreciation is not IRS or other tax table depreciation, nor is it GAAP depreciation, nor is it market value (what you could sell the property for on the open market). Stock, unless obsolete, will not normally depreciate. Buildings themselves depreciate at various rates with brick and cement declining at a slower pace than frame buildings. Portions of buildings such as roofs will depreciate at a quicker rate than the building itself. Machinery and equipment may be functionally used up or obsolete in months, or some may be perfectly useful after decades of use. Computers tend to depreciate rapidly. Automobiles depreciate in years and miles, while sturdy construction equipment and fork lifts may depreciate at a much slower rate.

3. Fine Arts

"Fine arts" are covered at actual cash value at the time of loss without a deduction for depreciation. Many fine arts cannot be replaced for the artist may be dead. Instead, actual cash value involves determining the replacement cost today, which inevitably will lead to an appraisal that involves an estimate of the market value of the product in relationship to others of like kind, quality and use.

4. Glass

If, by law, glass must be replaced with safety glazing materials; the cost to repair glass will include these materials. Glass is paid on replacement cost, without deduction for depreciation. (Remember that stained glass is considered "fine arts.")

5. Merchandise Sold

Merchandise that is sold but has not been delivered is valued at the selling price less applicable discounts and unincurred expenses.

Example: The retail value of each television is $500. You sell three at discount—$425 apiece. A fire occurs on your premises before you can ship the TVs. The normal shipping charge would have been $50 per television, but that was not incurred. The paid loss will be $425 per television.

6. Pair or Set

Pairs and sets are worth more as a complete pair and set than the individual pieces are without their partners. Thus, after a loss to only a few pieces of the set, the reduction in value to the set is greater than the loss to the damaged piece(s) itself. The cost to repair or replace the piece(s) is covered. If it is not possible to replace the pieces, then the reasonable reduction of the value to the whole set or the reduction of value for the loss of one or more, but not all pieces, will not be considered a total loss.

Example: The chess set is worth $1,000. Two pieces are lost and cannot be replaced. The estimated reduction in value is $250. $250 is paid.

7. Loss to Parts

Losses to parts of an item that belong to a much larger product will be limited to the value of the part itself. For example, an electric motor might be the key part to a machine that the company manufactures. Without the motor, the machine is virtually worthless; but with the motor, the value is greater than the motor or the other equipment will be without the other. Only the cost to repair or replace the motor is covered.

8. Tenants Improvements

Tenants improvements will be valued at actual cash value if repaired at your expense. Actual cash value will have a deduction for depreciation.

Tenants improvements that are not replaced after a loss are based upon a pro rata portion of original cost as it bears to "your" current lease. The formula involves dividing the number of days between the date of loss and the end of the lease by the number of days from the date of the installation to the expiration date of the loss, multiplied by the original cost of the tenants improvements. (If the lease has a renewal option, use the last date in the option as the new expiration date). If repairs are made at the expense of others, there is no payment under this policy.

Example: Loss occurs on the 200th day of a one year lease. Improvements of $5,000 were made day one of the lease. There is no lease renewal option. 365 - 200 = 165 days remaining in the lease. There are 200 days between date of installation and date of loss. 165 (divided by 365 = .452 percentage of remaining lease)

.452 x $5,000 = $2,260 which is the amount of loss payment before the application of any deductible.

9. Valuable Papers and Records

"Valuable papers and records" including paper, disks, tape or other electronic media will be valued on the cost of blank materials for reproducing the records and the labor to transcribe or copy the records if there is a duplicate. Example: Blank disks cost $100. It takes 3 hours of labor at $10 per hour to load tape back-ups onto the computer. Total payment is $130 before the application of any deductible.

Note that Valuable papers cost of research coverage #6 under SUPPLEMENTAL MARINE COVERAGES pays up to $50,000 to reproduce, replace or restore information on lost records.

HOW MUCH WE PAY

1. Insurable Interest

"You" will not be paid for more than your insurable interest.

Examples:

(1) When "you" relinquish title, you no longer have insurable interest unless you are a lien or mortgageholder.

(2) Property you have sold under an installment arrangement, only the amounts still owed you will be your insurable interest.

2. Deductible

If there is a deductible, only loss amounts in excess of the deductible listed on the "Declarations" will be paid. Deductibles apply before coinsurance and reporting provisions.

Examples:

(1) The loss is $1,000, the deductible is $5,000, no payment is made.

(2) The loss is $5,000, the deductible is $1,000, $4,000 is paid.

(3) The limit of insurance is $100,000. The loss is $110,000 and the deductible is $5,000. The full $100,000 limit is paid because the loss both exceeds the deductible and the amount of loss is in excess of the limit of insurance (assumes no coinsurance clause is in effect).

3. Loss Settlement Terms

If the Locations Endorsement COP- 227 is added, coinsurance will apply. Therefore, the policy will pay the lesser of the amounts determined under VALUATION provisions, the cost to repair or rebuild with materials of like kind and quality to the extent practicable, the "limit" applicable to the covered property.

Like kind and quality for newer property is easily calculated. For buildings containing obsolete or unique construction methods, the phrase, to the extent practicable, becomes operable. If the paneling to the office was originally mahogany, and the tree is now extinct, oak, cherry or similar wood may be substituted. Lath and plaster may be so expensive to recreate that sheetrock will be used to replace damaged walls. Up to $50,000 ordinance or law coverage is available to pay for the increased cost to repairs that are required by current building codes.

A separate coinsurance provision applies to accounts receivable, paying the lesser of the sum of all accounts receivable less reasonable deductions for normal bad debt, the cost to reconstruct accounts receivable records or the applicable "limit" of coverage.

4. Insurance Under More Than One Coverage

If property is covered by more than one coverage under the policy, the policy will pay no more than the actual claim, loss or damage. Essentially no duplicate payments for the same loss are possible.

5. Insurance Under More Than One Policy

If "you" purchased more than one policy on the damaged property, one of two things can occur.

If "you" purchased an identical COP policy, both policies will pay their proportional loss. i.e., Policy 1 has a limit of $100,000, Policy 2 has a limit of $50,000. The loss is $10,000 before any deductible. Policy 1 pays 66% of the loss and Policy 2 pays 33% of the loss.

If "you" purchased a policy other than an identically structured COP policy, then coverage under this policy is excess over the other policy, but not for more than the applicable limit under this policy. Odds are that the other policy will have a similar—we are excess—provision. In the event that occurs, a set of guiding principles used by insurance companies to adjust such situations can be used.

LOSS PAYMENT

1. Our Options

The company will have the following options for the payment of any loss: pay the value, pay the cost to repair or replace, rebuild with like kind and quality to the extent practicable and within a reasonable time, or take any part of the property (for salvage) at the agreed or appraised value. The insurance company must give "you" notice of intent on how "you" will be paid within 30 days of the receipt of a properly prepared and duly executed sworn proof of loss.

Note: If it will take an additional six months to replace the ABC machine tool with another ABC machine tool, and an equivalent XYZ machine tool is immediately available, the company may pay only for the XYZ machine. Further loss or expense as the result of the insured insisting upon the replacement with an ABC machine may not be covered.

2. Your Losses

Losses will be adjusted with "you" and/or any loss payee listed in the policy. An insured loss will be payable within 30 days after a satisfactory proof of loss is received by the insurance company, and the amount of the loss is agreed upon either, in writing, or established by the filing of an appraisal award. (See OTHER CONDITIONS 1 Appraisal, for information on the appraisal alternative dispute resolution mechanism).

3. Property of Others

Losses to property of others may be adjusted or paid directly with the owner, or paid to "you" on behalf of the owner (we give "you" the check made out to the owner, and "you" deliver the check). If the owner is paid, the insurance company doesn't have to pay "you." If "you" are sued by the owners, the insurance company may agree to defend you at the insurance company's expense.

OTHER CONDITIONS

1. Appraisal

The appraisal process is a commonly found policy condition. The process is simple. If "you" and the insurance company disagree upon the amount of loss (not the existence of loss), then either one can demand an appraisal. "You" hire a competent appraiser, and so does the insurance company within 20 days of the written appraisal demand. The two appraisers hire an umpire (within 15 days, or either "you" or the insurance company can ask a judge to appoint one). The appraisers will determine the value of the property and the amount of the loss.

If the two appraisers can't agree within a reasonable period of time, then the umpire is asked to add a second vote to untie the process. Each appraiser is paid by the party who hired the appraiser, and the umpire's expense is paid equally by both "you" and the insurance company. The appraisal will decide the value that is paid if at least two of the three sign off on the amount paid.

2. Benefit to Others

Insurance coverage will not directly or indirectly benefit anyone having custody of "your" property.

Examples:

(1) The amount of value added to "your" product expended by others that is not yet "yours" while "your" product is damaged at another processor is not covered.

(2) Your property is negligently damaged while it is in the possession of another. The insurance carrier is not responsible to pay the negligent party the amount of loss that the party having custody of your property, owes you.

3. Conformity With Statute

This policy is automatically amended if it conflicts with state statute.

4. Control of Property

Coverages are not affected by any act or negligence that is beyond your control.

Examples:

(1) Increase in hazard—a crack house moves next door to your business.

(2) Government officials over-seed rain clouds, producing damaging hail and excessive wind.

5. Death

If "you" die, "your" rights and duties are passed to "your" legal representatives acting in the capacity as "your" legal representatives. If there is no duly appointed legal representative, anyone having proper temporary custody of "your" property is considered to be "you" for that property.

Corporations don't die, but individuals do. Partnerships are immediately dissolved upon the death of one partner and the surviving partner(s) are absolutely responsible for the partnership assets after the death of another partner.

6. Liberalization

If the COP form or endorsement is liberalized or broadened without the need to increase premium any time during the policy period or within 6 months of the inception date of the coverage, the broadened coverage will apply.

Example: The COP policy change is filed, approved and adopted by the company. The policy writing department continues to use the older forms until they run out. If the liberalization occurred within 6 months of the inception date of the policy, regardless of what version of the form was actually sent to "you," the broader coverage does apply.

7. Misrepresentation, Concealment or Fraud

Willful concealment or misrepresentation of any material fact or circumstance relating to the insurance or "your" interest may void the coverages in the policy and this may also void any coverage before or after the loss for any other insured. Fraud or false swearing in any matter affecting the insurance will have the same impact. Defining material facts will depend upon the circumstances revolving around the omission or misstatement. However, false information, no matter how minor in the filing of a sworn proof of loss or in any sworn statement, may immediately void coverage.

8. Policy Period

Losses must occur during the policy period to be covered. The "Declarations" Page will define the policy period.

9. Recoveries

Either "you" or the company may recover property. Recovered property can be property recovered by police from burglars, or property for which salvage has been paid to "you" or the company. If the company pays for the claim, and "you" recover property, the company is entitled to the salvage or recovered value of what they paid "you" after "you" subtract your cost of recovery. If the company receives salvage that is more than the loss paid to you, first the company will reimburse itself for recovery costs, then pay "you" for any deductible, and then the rest will be shared on a prorata basis between "you" and the company.

10. Restoration of Limits

"Limits" are not reduced under the policy for future losses (except for "pollution" cleanup which is a $25,000 annual aggregate).

11. Subrogation

The company has the right to collect from anyone who causes the loss. "You" must not waive that right after a loss, but you can waive this right, in writing, any time before a loss occurs. These company rights are called subrogation rights.

Examples:

(1) The employee burns down your building. The company has a right to pursue the employee to have the employee pay the loss.

(2) You tell your tenant "it wasn't your fault, you don't have to pay for the damage you caused to the building." You have waived the subrogation rights of the company and the company will not have to pay the damage in this claim.

(3) "You" and "your" tenant agree in the lease that neither one will sue the other after a loss. Coverage will apply since the agreement is in writing, and is executed prior to the loss.

12. Suit Against Us

"You" can't sue the insurance company unless "you” have complied with all the terms of the policy, and the suit is within two years of the date "you" first became aware the loss existed. (If a state law changes this two year period, the shortest period permitted by law will apply.)

13. Territorial Limits

Coverage territory is for property while in the USA, its territories and possessions, Canada and Puerto Rico. Within the United States includes transportation of property between states or possessions through international airspace or waterspace, i.e.: Los Angeles to Hawaii, New York to Puerto Rico.

14. Mortgage Provisions

The mortgagee has rights to reimbursement for losses that "you" have voided through misrepresentations, fraud, or criminal activity like arson. If, however, the mortgagee is aware of certain changes in ownership or substantial increase in risk and doesn't notify the insurance company, they too will not be covered under this policy. The mortgagee also has the right to be notified 30 days in advance of any cancellation except nonpayment of premium or nonrenewal, which will carry 10 day mortgagee notifications. The insurance company can request that the mortgagee pay the premium (they don't have to pay). If a mortgagee is paid under a loss that is void for "you" then the insurance company has the right to collect its loss payment from you, but this does not affect the mortgagee's right to the remainder of "your" mortgage debt.

The policy also allows the insurance company to pay off the mortgagee and become the mortgagee itself. This might prove to be worthwhile to a company that feels it can earn more interest income on the mortgage in relationship to its current investments or can sell the mortgage for a premium.

15. Vacancy/Unoccupancy

The vacancy or unoccupancy clause restricts coverage by not covering losses caused by theft, attempted theft, glass breakage, sprinkler leakage (unless protected from freezing), vandalism if the building or structure is vacant or unoccupied for more than 60 consecutive days or in the case of seasonal property, the longer of the normal incidental unoccupancy period. Any other loss will have an additional 15% deductible applied to loss payment.

Vacancy is normally described as no people, no business personal property (not enough stuff to conduct viable business operations). Buildings under construction (not renovation) are not considered vacant or unoccupied. Unoccupied means that the customary activities of the business at "covered locations" are suspended, but the business personal property has not been removed.

AAIS COMMERCIAL OUTPUT POLICY EDITION 2.0 ENDORSEMENTS

Pre-Edition 3.0 Commercial Output Policy Coverage Parts

COP-100—Commercial Output Program—Property Coverage Part

COP-101—Commercial Output Policy Program—Income Coverage Part

Coverage options include:

1. Earnings, “rents” and extra expense.

2. Earnings and extra expense.

3. “Rents” and extra expense.

Coverage follows form with the Commercial Output Policy—COP-100 with the definition of “covered” locations, newly acquired locations, and other provisions.

Earnings are defined as: “Your” actual loss of net income (net profit or loss before income taxes), payroll expense, interest and other continuing operating expenses normally earned or incurred by “your” “business.”

Extra Expense is defined as: the necessary extra expenses that “you” incur to resume or continue “your” “business” as nearly as practicable. Extra expenses to reduce the loss are also covered, and extra expense to research or restore valuable papers that actually reduces the loss is covered.

“Rents” are defined as: rental income of “covered locations” as furnished or equipped less any expenses that do not continue; the rental value of any part of “covered locations” that “you” occupy less any expenses that do not continue; and other charges for which a tenant is legally obligated and for which “you” would otherwise be obligated.

Unless Locations Endorsement—COP-227 and Scheduled Locations Endorsement—COP-226 are added to the policy, there is no coinsurance requirement. If the Locations Endorsement is added, the limit of insurance must be: equal to the coinsurance percentage multiplied by “your” net income (net profit or loss before income taxes), payroll expense, interest and other continuing operating expenses projected for the 12 months following the inception or last previous anniversary date of this policy (whichever is later), normally earned by “your” “business.” Optional coinsurance percentages include: 50, 60, 70, 80, 90, 100 and 125%. When rating business income on a blanket basis, the rates for 100% coinsurance are applied.

Coinsurance does not apply to extra expense coverages. For calculating extra expense needs, use the Extra Expense Worksheet as introduced by ISO in Commercial Property Circular CP-95-34 (1/25/95).

There is, however, no equivalent to the CP 15 15—Business Income Worksheet provided by ISO, nor is there an agreed value clause available. Use of the CP 15 15—Business Income Worksheet will provide adequate calculations for the AAIS COP-101 form with similar options to limit or exclude ordinary payroll. There is also a similar requirement to include in the calculations: utility expenses that don’t continue under contract unless endorsement COP-236—Power, Heat and Refrigeration Exclusion is attached.

“Restoration period” is the time it should reasonably take to resume “your” “business” from the date of covered loss, but does not include building ordinance delays or pollution testing.

Exclusions include loss of earnings to finished stock (other than retail stock), expenses to put out a fire, suspension of leases, licenses, contracts or orders, strikes and unnecessary expenses.

Interruption by civil authority is granted if access to “covered locations” is denied when a covered peril damages property at other than “covered locations” —coverage is limited to two consecutive weeks.

Period of Loss extension—extends coverage for up to 30 days for loss of earnings that continue after the property is repaired.

COP-102—Commercial Output Program—Extra Expense Coverage Part

This provides only extra expense coverage, but other provisions are similar to the COP-101—Commercial Output Program—Income Coverage Part. Not covered under this form are earnings and rents or rental value.

Three recovery period options are available

Options	1^st Month	2^nd Month	3^rd Month
1	100%	100%	100%
2	40%	80%	100%
3	33%	70%	100%

Recovery during the first 30 days for options two and three are limited to the percentage listed. During the second month, loss is limited to the percentage listed, and for the third month in all options, 100% of the limit is available. However, using option 2 as an example, if the insured incurs a loss of 50% of the limit of extra expense in the first month, the extra 10% (50% minus 40%) is not covered and is not carried over into the second month.

COP-103—Equipment Breakdown Coverage Part and COP-273—Equipment Breakdown Coverage Schedule

This provides equipment breakdown or common boiler and machinery coverage, as an optional endorsement to the COP policy. Since it builds upon the terms and provisions contained within the COP, this coverage part cannot be used as a stand-alone policy. Coverages provided by this endorsement include not only the property coverage for the equipment or locations scheduled, but also income protection, expediting expenses, pollution contamination, spoilage, CFC refrigerants, ordinance or law, service interruption and defense costs.

COP-273—Equipment Breakdown Coverage Schedule must be completed and attached to indicate a limit and coinsurance for each of the coverages desired as well as showing the applicable deductible.

Common Policy Conditions

CL-100—Common Policy Conditions

Assignment is not possible without “our” permission.

Cancellation by “you” is possible at any time with written notice. However, any insured can cancel and “we” can cancel any insured, as opposed to the ISO condition that only the First Named Insured may cancel the policy, and this is to whom we must send notice of cancellation. If “we” cancel, “we” give you 10 days notice for non-payment of premium, and 30 days for any other reason. Return premium is calculated under “our” rules.

Changes in the policy must be issued in writing by “us.”

Inspections—we can inspect your property but do not warrant in any report that your property is safe or hazard free.

We may examine or audit your books for 3 years after policy expiration.

AAIS rules permit the use of any other Common Policy Conditions Form. If the company chooses to issue the ISO IL 00 17—Common Policy Conditions Form, the most significant difference is that the first named insured has most rights of change, notification, cancellation and the like.

Optional Endorsements

COP-201—Increased Restoration Period Ordinance or Law.

This endorsement extends the time required to rebuild if the increase is necessary to meet the minimum requirements of ordinances or laws governing construction, use, repair or demolition. The rating load for this endorsement is 1.20.

COP-202—Expanded Restoration Period—Extra Expense

Changes restoration period from 3 months to four with the following optional percentages available:

Options	1^st Month	2^nd Month	3^rd Month	4th Month
1	30%	60%	90%	100%
2	25%	50%	75%	100%
3	20%	40%	80%	100%

Recovery during the first 30 days for all options is limited to the percentage listed. During the second month, and third month, loss is limited to the percentage listed, and for the fourth month in all options, 100% of the limit is available. However, using option 2 as an example, if the insured incurs a loss of 50% of the limit of extra expense in the first month, the extra 25% (50% minus 25%) is not covered and is not carried over into the second month.

COP-204—Income Coverage From Dependent Locations—Separate Limits and COP-205—Schedule of Dependent Locations—Separate Limits

Provides coverage if “your” business is interrupted by damage to contributing locations (your suppliers), recipient locations (those that get your products), leader locations (anchor stores), and manufacturing locations (plants owned by others who make products for delivery to your customers). Each covered location and limit of insurance must be listed in COP-205—Schedule of Dependent Locations—Separate Limits. Unnamed locations are covered on a blanket basis, but the most available for any one loss is .03% times the sum of all limits for “dependent locations.” If after a loss to “dependent locations” you can find alternate suppliers or outlets, benefits will be reduced accordingly.

COP-206—Income Coverage From Dependent Locations and COP-207—Schedule of Dependent Locations

Provides blanket coverage for specifically scheduled “dependent locations.” Coverage, including unnamed location coverage, is the same as COP-204. COP-207—Schedule of Dependent Locations must be added, but note that there is no place for a limit of insurance. The limit of insurance is added to the total limit for income coverage on the Commercial Output Policy Declarations Page. Adequate limits for both “covered locations” and “dependent locations” must then be determined. Coverage with this endorsement can be used if no income coverage is desired for “covered locations.”

COP-217—Valuable Papers and Records Coverage Endorsement and COP-216—Scheduled Valuable Papers and Records Endorsement

This endorsement replaces the Supplemental Marine Coverage Valuable Papers and Records ($50,000), and places coverage on a location scheduled, limit scheduled basis. Valuable papers and records are required to be stored in scheduled storage containers when the scheduled location is not open for business. Coverage includes “your” “valuable papers” and those in “your” care, custody or control while at the scheduled location, in transit or while temporarily at another location, but not while in storage at that other location. Data stored on computer media is covered, but not loss to the media or to the computer. Electrical injury other than by lightning and errors in processing continue to be excluded.

This endorsement will most likely be used by underwriters to restrict coverage, or when the need for insurance is more than $50,000. A computer policy is still suggested for computer data due to the electrical injury restriction.

COP-219—Accounts Receivable Coverage Endorsement and COP-218—Scheduled Accounts Receivable Endorsement

This endorsement replaces the Supplemental Marine Coverages Accounts Receivable coverage ($50,000) and places coverage on a location scheduled, limit scheduled basis. Accounts receivable records are required to be stored in scheduled storage containers when the scheduled location is not open for business. Coverage includes “your” accounts receivable records while at the scheduled location, in transit or while temporarily at another location but not while in storage at that other location. Other coverage provisions are similar to what can be found under Supplemental Marine Coverages Accounts receivable coverage. Electrical injury other than by lightning and bookkeeping errors, and discrepancies continue to be excluded.

This endorsement will most likely be used by underwriters to restrict coverage, or when the need for insurance is more than $50,000. A computer policy is still suggested for loss to accounts receivable computer data due to the electrical injury restriction.

COP-221—Earthquake Endorsement and COP-220—Scheduled Earthquake Endorsement

This adds the perils of Earthquake and Volcanic Eruption to the policy. Earthquakes and volcanic eruptions occurring within a 168 hour period are considered one occurrence. Coverage only applies to scheduled locations, and there are three separate limits:

· “Aggregate limit”—maximum amount of coverage during any 12 month period of this policy for each location.

· “Occurrence limit”—maximum amount of coverage for any one occurrence at any one location.

· “Catastrophe limit”—maximum amount of coverage for all losses at all locations during any 12 month period of this policy.

Masonry veneer is only covered if indicated in the schedule of coverages, or is less than 10% of the exterior wall area. Neither coinsurance nor deductible will be applied to masonry veneer.

Deductibles may be expressed as an amount or a percentage and apply separately to each of the following: each building or structure, all business personal property in each building and structure, and all covered property in the open at each “covered location.”

Property not covered unless specifically named includes “mobile equipment” and any of the Supplemental Marine Coverages. “Computers” can’t be covered; however, remember that coverage for damage to computers from earthquake or flood is covered in the basic COP-100 via exceptions to those exclusions.

The endorsement allows the insured to purchase excess coverage without applying any pro-rata or apportionment clause. Also, with excess coverage, the clause in the Commercial Output Policy—Insurance Under More than One Policy does not apply.

COP-223—Flood Endorsement and COP-222—Scheduled Flood Endorsement

This adds the perils of flood, backup of sewers and drains, and seepage below the ground to the policy. Coverage only applies to scheduled locations, and there are three separate limits:

“Aggregate limit”—maximum amount of coverage during any 12 month period of this policy for each location.

“Occurrence limit”—maximum amount of coverage for any one occurrence at any one location.

“Catastrophe limit”—maximum amount of coverage for all losses at all locations during any 12 month period of this policy.

The deductible is a separate deductible and applies per loss to each item of scheduled covered property.

Property not covered unless specifically named includes “mobile equipment” and any of the Supplemental Marine Coverages. “Computers” can’t be covered; however, remember that coverage for damage to computers from earthquake or flood is covered in the basic COP-100 via exceptions to those exclusions.

The endorsement allows the insured to purchase excess coverage without applying any pro-rata or apportionment clause. Also, with excess coverage, the clause in the Commercial Output Policy—Insurance Under More than One Policy does not apply.

COP-225—Vehicle Coverage Endorsement and COP-224—Schedule of Vehicles

“Vehicles” are defined as virtually any type of motor vehicle except that which is defined as “mobile equipment.” The vehicle clause in the commercial output policy is replaced. The only vehicles now covered are scheduled vehicles. (Vehicles held for sale do not have to be scheduled, but care in selecting an appropriate limit of insurance is necessary. If Locations Endorsement—COP-227 is added, coinsurance applies, and the value of vehicles held for sale would have to be considered.) Vehicles held for sale are not covered, so this coverage is inappropriate for auto dealers. Vehicles will be valued at ACV less depreciation, but a limit of coverage must be listed for each scheduled vehicle. Separate limits apply to each scheduled vehicle (but the deductible applies per loss). All covered perils in the base policy plus additional peril endorsements (that don’t exclude autos) apply to vehicles covered by this endorsement.

COP-227—Locations Endorsement and COP-226—Scheduled Locations Endorsement

Adds coinsurance clauses to property and income coverage parts scheduled under COP-226. Locations and coverages not scheduled are not subject to coinsurance. Coinsurance percentage options are flexible and can be designed by the company.

With this endorsement, the deductible applies per loss. If more than one kind of property or “covered location” is involved in the loss, then the highest applicable deductible is taken.

Property coinsurance applies to each covered property for which a separate limit is shown on the schedule.

With income coinsurance the limit of insurance must be: equal to the coinsurance percentage multiplied by “your” net income (net profit or loss before income taxes), payroll expense, interest and other continuing operating expenses projected for the 12 months following the inception or last previous anniversary date of this policy (whichever is later), normally earned by “your” “business.” Optional coinsurance percentages include: 50, 60, 70, 80, 90, 100 and 125%. When rating business income on a blanket basis, the rates for 100% coinsurance are applied.

COP-228—Property Excluded

This form may be used to exclude coverage for property specifically described on the endorsement.

COP-229—Supplemental Limits Endorsement

This replaces the $50,000 coverage limit for the following properties, if a limit is shown on the endorsement. (The limit entered may be greater or less than $50,000). The limit entered on the endorsement replaces, and is not in addition to, the $50,000 coverage shown in the supplemental coverage grant in the Commercial Output Policy:

Supplemental Coverages:

· Brands and Labels Expense

· Inventory and Appraisals Expense

· Ordinance or Law

· Trees, Shrubs and Plants

Supplemental Marine Coverages:

· Property at Exhibitions

· Property in Transit

· Sales Representative Samples

COP-230—Automatic Increase

Inflation protection options include 4%, 6%, 8%, 10%, 12%. Higher percentages are allowable. Inflation coverage is proportional from the date the endorsement is added.

COP-231—Reporting Conditions and COP-260—Reporting Schedule

Reporting conditions endorsement cannot be written with the Locations Endorsement COP-227. Reporting options include monthly, quarterly and annually with a monthly premium adjustment available in monthly and quarterly reporting.

With monthly and quarterly premium adjustments, the deposit premium is applied until exhausted, then “you” pay the premiums as you go.

If you have a loss and have not submitted the required reports of value, the limit reported on the last report is the maximum amount of coverage available. If no report has ever been submitted, only 90% of the “limit” is available. (“Limit” means the amount of coverage that applies.) If you make a report of less than full value, only that proportion of the loss is paid. If a report is higher than the “limit” of insurance, the maximum payable is only the limit of insurance. If higher than “limit” reports are made, increase the “limit” accordingly.

With both AAIS and ISO, the insured will pay the premium based upon the limits as shown in the reports of values in excess of the limit of insurance, even if the difference is not covered in any loss.

With the ISO CP 13 10—Value Reporting Form Endorsement, if no reports are made, only 75% of the limit of insurance is available. As with the CP 13 10, there is a requirement that reports must be submitted within 30 days of the end of the required reporting period.

COP-232—Loss Payable Options

These are provisions for Lender’s Loss Payable and Contract of Sale.

Ten days notice of cancellation for non- payment of premium and non-renewal, 30 days for any other reason.

COP-233—Premium Payments

Used when the policy is written on a continuous basis to indicate that premiums are paid on an annual basis.

COP-234—Multiple Deductibles Scheduled Perils

Allows for different deductibles by peril type, and all other perils. This endorsement does not apply to flood and earthquake, which have their own deductible clauses. If more than one peril contributes to the loss, then the highest deductible for a contributing peril applies (cannot have both the scheduled perils deductible and scheduled locations deductible).

COP-235—Multiple Deductible Scheduled Locations and Property

Can be written with blanket coverage, or specifically scheduled coverage. This deductible provision singles out certain locations and property for separate deductibles on a scheduled basis, with all other locations receiving a standard deductible. The highest deductible on any one “covered location” applies in any one loss.

COP-236—Power, Heat and Refrigeration Exclusion

Excludes from the definition of earnings: the cost of power, heat and refrigeration normally consumed in production and which does not continue under contract. Non-continuing power can then be eliminated from earnings calculations and from coinsurance calculations. There is a 6% load to add this coverage, but if power consumption is significant, the reduction in necessary limit of insurance may far outweigh the load.

COP-238—Protective Devices Endorsement and COP-237—Protective Devices Schedule

Lists the protective fire and theft devices for which “you” receive premium credit. If you don’t notify us that “you” have knowledge of any suspension or impairment in service, or fail to maintain the device, there is no coverage. There is no time limit for notification.

COP-240—Ordinary Payroll Exclusion and COP-239—Ordinary Payroll Exclusion Schedule

Excludes from earnings “ordinary payroll expense” for non-management and non-contract employees in specific job classifications. “Ordinary payroll expense” includes: payroll, employee benefits payments related to payroll, FICA paid by “you,” union dues paid by “you,” and workers compensation premiums. The limit of insurance may be adjusted for the exclusion of ordinary payroll by using the ordinary payroll exclusion formula in the CP 15 15—Business Income Worksheet.

COP-242—Ordinary Payroll Limitation and COP-241—Ordinary Payroll Limitation Schedule

This endorsement limits ordinary payroll expense payments for a period of 90, 120, 150 or 180 days. The limit of insurance may be adjusted for this ordinary payroll limitation by using the ordinary payroll limitation formula in the CP 15 15—Business Income Worksheet.

COP-244—Utility Interruption—Property Damage and COP-243—Utility Interruption Schedule—Property Damage

Coverage is for loss to scheduled location, and specific property at that location damaged by the interruption of specific utility services (water, communication, electricity, steam, gas and/or overhead transmission lines) caused by a covered peril to that utility service. (Utility service cannot be a “covered location.”) This coverage pays for loss by interruption of a utility service. Brown outs or power surges are not addressed.

COP-246—Utility Interruption—Time Element and COP-245—Utility Interruption Schedule—Time Element

Provides for earnings and extra expense coverage for losses incurred by the interruption of service from a utility listed on the schedule. However, coverage will not apply to utilities on a “covered location.” One of the few business categories not covered by the Commercial Output Policy is utilities.

COP-247—Theft Exclusion

Completely excludes theft except for theft during riot and civil commotion or damage caused by burglars breaking in or exiting. Resulting loss caused by “specified perils” or building glass breakage is covered.

COP-248—Tuition Coverage

Added to earnings is loss of tuition, fees and other income from educational services and related activities. Related activities are not defined, but using the broadest possible interpretation could include athletic event fees, owned TV and radio station advertising income, campus bookstore income, campus restaurant income and the like (any activity or service that generates income for the named insured should be covered). This coverage is designed to be used for private schools and colleges. Coverage is extended if the property is repaired within 30 days of the scheduled opening of the next school term. This is a practical extension, for due to uncertainty about the school’s reopening, some students may transfer to other private or public schools, thus decreasing expected tuition income.

COP-250—Seasonal Leases and COP-249—Seasonal Leases Schedule

The definition of earnings is replaced to accommodated leases for property “you” occupy and/or property rented to others. Coverage is granted only for specifically identified property and only for specifically listed months, and for a maximum limit per month.

COP-251-Manufacturers Stock Valuation

Changes the value of stock to include “your” manufactured stock on the sales price less discounts and unincurred expenses.

COP-253—Spoilage Coverage and COP-252—Spoilage Schedule

Covers “perishable stock” specifically scheduled by scheduled location. Perils covered can include one or more of the following: breakdown, malfunction or failure of the refrigeration system, contamination of the refrigeration system, and power disruption due to conditions beyond your control. Exclusions include earthquake (but can be covered by Earthquake Endorsement—COP 221), civil authority, nuclear hazard, war, flood (cannot be covered by flood endorsement), disconnection or deactivation—pulling the plug, glass breakage of glass that is a permanent part of the refrigeration system, and brown outs. A selling price clause can be indicated on the declarations page, and a separate deductible applies to any loss caused by spoilage. If you carry a refrigeration maintenance agreement and that fact is indicated on the schedule, “you” must notify “us” as soon as reasonably possible of any suspension in that coverage, or any loss will not be covered if the loss is due to anything but power outage from the utility.

COP-254—Agreed Amount Endorsement

Sets an agreed value to specifically scheduled property at specifically scheduled locations.

COP-255—Employee Dishonesty Coverage

Provides employee dishonesty coverage for money, securities and other property. This form has some similar provisions to the Surety Association of America (SAA) Form A—CR 00 01 10 90—Employee Dishonesty coverage, but is different enough to require scrutiny if issued in place of the SAA form. Coverage is for risks of direct physical loss, unless excluded, resulting from “dishonest acts”; while the SAA form specifically defines employee dishonesty as the covered peril of loss (similar wording for the ISO defined “employee dishonesty” as the AAIS “dishonest acts”). Unlike the SAA form there is no similar Crime General Provisions Form and employee is not defined, so the broadest possible interpretation is possible, including—contract, leased, agents, officer, spouses, non-officer board members and the like. Unlike the SAA form, an employee is not considered to be an employee for 30 days after termination. Like the SAA form, employees are covered while temporarily outside the USA or Canada for up to 90 days.

If prior employee dishonesty is indicated on the Crime Schedule—COP-258, and this policy became effective as of the date the previous policy expired, the discovery period for losses is extended back into the time period covered by the previous policy (but only for losses that would be covered by this policy, and subject to this policy’s limit). Following expiration there is a one year discovery period for loss. Like the SAA form, employees are excluded for future losses immediately upon discovering that they have committed dishonest acts, even if before this insurance took place.

The COP program does not include any ERISA fidelity endorsement, so a separate policy will have to be issued for ERISA required pension, or other employee welfare plans. Fiduciary coverage also is not available under the COP program.

Pricing for this endorsement is left completely up to the individual company.

COP-256—Money and Securities

The basic commercial output policy covers theft of property other than money and securities (unless excluded by endorsement COP-247). The Money and Securities Endorsement adds coverage for money and securities for the peril of theft, disappearance or destruction with theft being defined as an act of stealing, including burglary or robbery. Coverage is subject to a specific limit of insurance and money and securities are covered inside any building “you” occupy, a bank, and outside any building “you” occupy while the money is in “your,” “your” partners’, officers’, directors’, or employees’ care, custody or control or in the care of armored vehicle companies, but only in excess of your contract with the company. Exclusions are: civil authority, earth movement, volcanic eruption, nuclear hazard, war, errors or omissions, employee dishonesty, money operated devices (unless a continuous recording device is installed), unattended vehicles unless forced entry into a securely locked compartment with visible signs of forcible entry (not the car, the compartment), voluntary parting. Again, employee is not defined, so using the broadest possible interpretation, a messenger can include the non-employed spouse of an officer, a contract or leased employee, or any other agent.

COP-257—Off Premises Computer Coverage

Provides blanket coverage for a specified limit of insurance for the defined word “computers” while in transit and away from “covered locations.” Coverage territory of the USA and Canada still applies.

COP-258—Crime Schedule

Sets a schedule for employee dishonesty, and prior employee dishonesty coverage. Also sets the limit for loss inside the premises, loss outside the premises, in armored vehicles and the deductible for money and securities losses if any.

COP-259—Sewer Backup and Water Below the Surface

Adds sewer backup, and water below the surface of the ground that exerts pressure on buildings, sidewalks, driveways, foundations, swimming pools or other structures. This is not frost or ice coverage.

COP-260—Reporting Schedule

Schedules reports and premium adjustments with options for monthly, quarterly and annually.

Reports of value are due within 30 days after the end of each reporting period for any one or more of the following types of property: business personal property, all covered property, sales or gross receipts, or other.

The rates per $100 of reported value, the deposit premium and minimum premium are shown.

COP-261—Loss Payable Schedule

Schedule of loss payable, lender’s loss payable and contract of sale for specifically described locations and property.

COP-264—Transit—Backhaul Endorsement

Coverage may be added via this endorsement for physical loss to property of others form a covered peril that the insured becomes legally liable for, when the insured is acting as a common or contract carrier. The liability must be written as in a bill of lading, contract of carriage, or shipping receipt issued by the insured. The loss must occur during transit while the property is in the care, custody or control of the insured and in a vehicle that is owned or leased and operated by the insured.

COP-265—Additional Computer Coverages

Three important additional computer related coverages can be added with this endorsement:

Off Premises Computers—loss to computers while in transit and while away from covered locations.

Software Storage—loss to duplicate and back-up software stored at a software storage location. To be a software storage location, it must be a separate building at least 100 feet away from a covered location.

Disturbance Coverage—loss caused by electrical disturbance (including electrical or magnetic damage), disturbance of electronic recordings, or erasure of electronic recordings; or loss from power supply disturbance such as interruption of power supply, power surge, blackout or brownout.

A limit must be indicated for Off-Premises Computers Coverage and Software Storage Coverage.

COP-266—Sewer Back Up and Water Below the Surface—Separate Limits

Adds sewer backup and/or water that is below the surface of the ground that exerts pressure on buildings, sidewalks, driveways, foundations, swimming pools or other structures, subject to a sublimit.

A specific sublimit must be selected and shown for this coverage.

COP-267—Utility Interruption—Property Damage—Separate Limits

Coverage for loss to scheduled location, and specific property at that location damaged by the interruption of specific utility services (water, communication, electricity, steam, gas and/or overhead transmission lines) caused by a covered peril to that utility service. (Utility service cannot be a “covered location.”) This coverage pays for loss by interruption of a utility service. Brown outs or power surges are not addressed. Coverage is subject to a sublimit.

A specific sublimit must be selected and shown in the endorsement.

COP-268—Debris Removal Endorsement

The limit for the Debris Removal Coverage provided in the base policy may be increased via this endorsement. The increased amount of coverage should be shown.

COP-269—Increased Limits Endorsement

The limits for a number of coverages provided in the base policy may be increased via this endorsement. The new total limit applicable must be scheduled for each item, otherwise the base policy limit applies. The coverages which may be increased include: Emergency Removal; Fire Dept Service Charge; Pollutant Cleanup and Removal; Recharge of Fire Protection Equipment; Arson Reward; Brands or Labels Expense; Consequential Loss; Foundations of Buildings, Pilings, and Underground Pipes; Inventory and Appraisals Expenses; Ordinance or Law; Personal Effects; Trees, Shrubs, and Plants; Accounts Receivable; Property on Exhibition; Property in Transit; Sales Representative Samples; and Valuable Papers and Records—Cost of Research.

COP-270—Resident Agent Countersignature

If a resident agent countersignature is required in a particular state, this endorsement is available to comply with the applicable regulations.

COP-271—Monthly Limitation—Income Coverage

A thirty day limitation on the amount to be paid for loss of income coverage may be added via this endorsement. Once the restoration period has begun, the insurer will pay no more for any consecutive 30 day period than the limit of insurance shown in the declarations multiplied by the percentage or fraction indicated in the declarations as the monthly limitation.

COP-272—How Much We Pay—Income Coverage

The 12-month limitation on earnings and extra expense contained in the condition for How Much We Pay in the base policy may be deleted via this endorsement.

COP-273—Equipment Breakdown Coverage Schedule

This schedule must be completed and attached any time the Equipment Breakdown Coverage—COP-103 is selected, to indicate a limit and coinsurance for each of the coverages desired as well as showing the applicable deductible.

COP-274—Computer Coverage Endorsement Equipment Breakdown

Coverage may be extended for loss to computers damaged by an accident to its equipment from mechanical breakdown or utility failure as long as Equipment Breakdown Coverage (COP-103) has been purchased and the above perils are indicated on the equipment breakdown schedule (COP-273). Excluded are losses caused by defect, virus and loss of data or other situation within software; and any delay in resuming operations due to the need to reconstruct or reinput data or programs.

COP-275—Fraud and Deceit

Coverage may be purchased by the insured for its agents, customers or consignees who voluntarily part with covered property to persons who falsely represent themselves as the proper persons to receive the property, or by the acceptance of fraudulent bills of lading or shipping receipts.

A limit must be shown in the endorsement for any one occurrence of this loss.

COP 395—Year 200 Exclusion Endorsement

Coverage may be excluded for losses that occur as a result of a software problem caused by two-digit coding of four-digit calendar year dates in any hardware, software or program causing equipment or software to recognize, distinguish or misinterpret any date or time on or after January 1, 2000.

COP 396—Year 2000 Coverage Part and COP-397—Year 2000 Coverage Schedule

Coverage in this endorsement provides limited extra expense coverage for Year 2000 disturbances which may interrupt or disrupt an insured’s data processing operation. Limits are available between $10,000 and $250,000. COP-397 must be used to schedule the limits for earnings, extra expense or combined earnings and extra expense, as well as a deductible amount. The insurer also has the option to add additional conditions in the schedule, relating to the Year 2000 coverage.

COP-397—Year 2000 Coverage Schedule

The schedule which must be used to show the limits for earnings, extra expense or combined earnings and extra expense, as well as a deductible amount when the Year 2000 Coverage Endorsement (COP-396) is purchased. The insurer also has the option to add additional conditions in the schedule, relating to the Year 2000 coverage.

AAIS COP 2.0 EDITION VS. ISO SPECIAL COMMERCIAL PROPERTY 06 95 EDITION

This article discusses the features of two older coverage forms (AAIS 2.0 ed. COP and ISO 06 95 Commercial Property forms).

The AAIS Commercial Output Policy Consists of: · Declarations Page · Common Policy Conditions—CL-100 (or can use any appropriate Common Policy Conditions) · Coverage part (common property conditions and perils are built in) · Endorsements (various)		The Comparable ISO Coverage Consists of: · Common Policy Declarations—IL 00 19 · Common Policy Conditions—IL 00 17 · Property Declarations—CP 12 05 · Commercial Property Conditions—CP 00 90 · Coverage Form—CP 00 10 · Cause of Loss Special Form—CP 10 30 · Endorsements (various)
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
DEFINITIONS
"You" and "Your"	Same as AAIS		The person or organizations named in the “declarations.”
"First Named insured"	Pays premiums, to whom cancellation notice is sent, can make changes.		Not defined, all insureds have equal status
"We" and "us"	Same as AAIS		The insurance company.
“Computers"	Not defined		"Hardware" and "software" “owned by “you" or in "your" care, custody or control.
“Hardware"	Not defined		Network of electronic machine components capable of accepting instructions and information, processing the information according to the instructions and producing desired results.
Software	Not defined		a. Processing, recording or storage media used by electronic data processing. Includes films, tapes, cards, discs drums or cells. b. Data, including instructions or information stored on processing, recording or storage media.
Pollutants	Similar to ISO - also refers to sound emission and/or electromagnetism		Virtually all causes
Stock	Merchandise in storage or for sale, raw materials, and in-process or finished goods, including supplies used in their packing or shipping		Not defined
Covered Locations	Not defined		Any location where “you" have structures or business personal property covered by the COP. Unless Forms COP-227 and COP-226 apply, covered locations are defined by policy language and include virtually any place within the covered territory where the insured has property or works.
Declarations	Not defined		All pages labeled declarations, supplemental declarations or schedules that pertain to this coverage.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Fine Arts	Not defined		Paintings, etchings, pictures, tapestries, art glass windows, and other bona fide works of art, rarity, historical value or artistic merit.
“Mobile Equipment"	Not defined, but vehicles that are licensed or operate principally away from the premises are excluded. Thus unlicensed vehicles for use on premises are the only covered vehicles.		a. Contractors’ equipment, or similar equipment of a mobile nature or floating nature; b. Self-propelled vehicles designed and used primarily to carry mounted equipment; or c. Vehicles designed for highway use that are unlicensed and not operated on public roads.
"Sinkhole Collapse"	Not defined as a quoted word, but defined under F. Definitions		Definition is the same—includes collapse of land under limestone rock formations carved away by the actions of water.
"Specified Perils"	Specified cause of loss (Causes same as AAIS)		Identical perils— note that AAIS has not abandoned the word "peril" as has ISO—includes aircraft, civil commotion, explosion, falling objects, fire, hail, sprinkler leakage, lightning, riot, sinkhole collapse, smoke, sonic boom, vandalism, vehicles, volcanic action, water damage, weight of ice, sleet, snow or sleet, and windstorm.
Terms	Not defined		All provisions, limitations, exclusions, conditions and definitions that apply
Valuable Papers and Records	Not defined as such, but cost to research is both excluded and added back under extensions for $2,500 in coverage.		Inscribed, printed or written documents; manuscripts; or records. This includes abstracts, books, deeds, drawings, films, maps or mortgages. (Cost of research is added for $50,000.)
Volcanic action	Same, but multiple eruptions occurring within 168 hours are considered one eruption.		Volcanic action is covered as an exception to the earth movement exclusion. If Earthquake Endorsement—COP-221 is used, it contains the 168-hour multiple tremor condition.
Stock	Merchandise in storage or for sale, all materials and goods, including supplies used in their packaging or shipping.		Not defined
PROPERTY COVERED
Buildings - Completed additions	Yes, covered		Same
Permanent fixtures, Machinery/equipment	Yes, covered		Same
Outdoor fixtures	Yes, covered		Same
Personal property for servicing building	Yes, covered		Similar to ISO, but adds coverage for air-conditioning equipment.
Buildings and additions under construction	Yes, covered		Same
Radio and TV towers, Antennas, satellite dishes, lead-in wiring, foundations and attached equipment.	Excludes outside buildings but added back under coverage extensions for fire, lightning, explosion, riot, aircraft, and a limit of $1,000. Additional coverage available via endorsement CP 14 15.		Covered if located within 1000 feet of a covered building or structure. (Note: coverage is not 1000 feet from a covered location or premises.) No perils restriction.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Building Glass	Under Special cause of loss form for $100 per pane $500 per occurrence		Building glass has no limitation and safety glazing is covered where required
Awnings and canopies	Not addressed, but covered if they meet policy requirements as building or outdoor fixtures.		Covered
Fences	Specifically excluded, but added back under outdoor property coverage extensions for the perils of fire, lightning, explosion, riot & aircraft—limit of $1,000. Addition coverage available by scheduling using CP 14 10—Add’l Covered Prop.		Covered (within 1000 feet of a covered building or structure)
Signs, attached	Covered to $1,000 per sign		Covered to policy limits.
Signs, detached	Specifically excluded, but added back under outdoor property within coverage extensions for the perils of fire, lightning, explosion, riot and aircraft, and a limit of $1,000. Additional coverage is available by scheduling under CP 14 40—Outside Signs		Covered anywhere within the territory to policy limits.
BUSINESS PERSONAL PROPERTY
“Your” business personal property in buildings, in the open or in vehicles within “Your” use interest as a tenant to building fixtures, alterations, additions or installations you paid for and replaced after a loss, but can’t be legally removed	Covered, but only property in the open within 100 feet of the premises covered		Covered. Property in the open covered within 1000 feet of the “Covered Locations” covered
Leased personal property which “you” have a contractual responsibility to insure.	Covered		Covered
“Your” interest in personal property of others for “your” labor, material and services.	Covered		Covered
Computers	Hardware covered but software—cost of research is limited to $2,500 at each location. Also, important perils such as mechanical breakdown, and artificially generated electrical currents excluded. Suggest adding a separate inland marine computer policy.		“Computers” include “Hardware” and “Software”— research cost is limited to $50,000. Excludes electrical currents other than lightning or if a fire results, but mechanical breakdown, humidity and temperature change after a loss, and mold after a covered loss to computer ventilation system are covered.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Personal property which will become a part of “your” installation, fabrication, or erection project while on site or in temporary storage.	If within 100 ft. of premises, there is coverage. If at another location, an inland marine installation policy would be required. Limited coverage for $10,000 while property is temporarily away from premises, but not at an exhibition or in custody of a sales rep. This additional coverage is not restricted to property intended for installation, and can include your property at other processors, but no coverage while in transit.		Covered on site or in temporary storage at another site, but limited to $50,000 while in transit other than in the care of a sales representative. For higher limits use the COP-229, Supplemental Limits endorsement. The restriction to property coverage within 1000 feet of “covered locations” does not apply. Property at exhibitions is limited to $50,000 and property in care of sales persons is limited to $50,000. Coverage is also available for personal property at any other location within the covered territory. This includes other processors or property on consignment at other locations.
“Mobile Equipment” not restricted to within 1000 feet of “covered locations”	See “Mobile Equipment” under definitions for covered vehicles. Coverage will apply only to covered vehicles within 100 ft. of premises.		See “Mobile Equipment” under definitions for Covered mobile equipment.
Personal property of others	Same, within 100 feet of premises.		Same, within 1000 feet of the “covered locations”
Property sold to others under an installation agreement where responsibility continues until property is accepted by the buyer.	Coverage only for “stock” that is sold but not delivered at the selling price.		Covered , but our payment will be made only for the benefit of the owners of the personal property
PROPERTY NOT COVERED
Airborne or waterborne personal property	Excluded		Covered only while being transported by a regularly scheduled airline or ferry service. (No charters).
Automobiles	Autos held for sale, licensed for road use, operated principally away from the premises. Vehicles you manufacture, process or warehouse are covered. Items can be protected under a Special Form basis by using CP 14 10—Additional Covered Property.		Include only autos and boats that you manufacture, process, warehouse (not hold for sale). Add automobile physical damage coverage for scheduled autos, and for blanket coverage for Autos held for sales by using endorsement COP-225
Animals	Excluded, unless owned by others and boarded by you, or if owned by you, only as “stock” while inside of Buildings. Coverage for other animals may be added by Endorsement CP 14 10— Additional Covered Property.		Same, but no requirement that owned animals be inside of buildings. No standard endorsement is available to add coverage for other animals
Aircraft and Watercraft	Same as autos, plus canoes and rowboats out of water on premises. Coverage for Other aircraft and watercraft may be added by using Endorsement CP 14 10—Additional Covered Property.		Same but includes held for sale, plus canoes and rowboats out of water on “described locations”. Other watercraft and aircraft may not be added to the policy by any standard endorsement.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Contraband	Excluded		Excluded
Growing crops	Excluded		Excluded
Imports and exports	No corresponding exclusion, but there is limited coverage for property in transit		“We” do not cover exported or imported property that is covered under any ocean marine cargo insurance policy or any similar policy that anyone has obtained covering exports and imports. This limits coverage granted for property in transit. Limits under export-import policies should be reviewed.
Land, water, cost of excavation, growing crops or lawns	Excluded. Can add back the cost of excavation, backfilling or filling by the Additional Covered Property Form—CP 14 10		Excluded, but lawns are added back for up to $50,000 in additional coverages but only for the perils of: fire, lightning, explosion, riot, falling objects. No standard endorsement is available to increase coverage.
Money and Securities	Excluded. Can be added by many of the crime forms.		Excluded - Can be added by Money and Securities Endorsement—COP-256
Property more specifically insured	Excluded		Same, but this policy will provide excess coverage.
Property of others	No corresponding exclusion, but coverage for property of others is limited in other parts of the policy.		Exclusion only applies to property of others for which “you” are responsible as: a carrier for hire; or an arranger of transportation. This includes car loaders, consolidators, freight forwarders, or shipping associations, or backhaulers.
Property you have sold after it has been delivered	Excluded, but coverage is available under an installation inland marine policy.		Property sold under an installation agreement is still covered. There is no standard endorsement available to cover other property—get coverage under a separate inland marine policy. No coverage for floor planned or consigned property.
Foundations of buildings, structures, machinery or boilers if their foundations are below the lowest existing floor level.	Excluded, but coverage may be added by using endorsement CP 14 10.		Covered for lesser of $250,000 or 10% of limit on dec. page for covered property at any one “covered location,” whichever is less. No standard endorsement is available to increase coverage.
Pilings, piers, wharves	Excluded, but can be added using endorsement CP 14 10 and Cause of Loss—Special Form covers for floating ice or collision with a vessel.		Covered for lesser of $250,000 or 10% of limit on dec. page for covered property at any one “covered location” whichever is less. No standard endorsement is available to increase the limit of insurance.
Retaining walls that are not part of the building	Excluded, but can be added by endorsement CP 14 10.		Covered for lesser of $250,000 or 10% of covered property limit at any one “covered location,” whichever is less. No standard endorsement is available to increase this limit.
Underground pipes, flues or drains.	Excluded, but can be added by endorsement CP 14 10.		Covered for lesser of $250,000 or 10% of limit on dec. page for covered property at any one “covered location,” whichever is less. No standard endorsement is available to increase coverage. (No coverage for underground tanks).
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Cost to research – valuable papers, including electronic media	Research cost is limited to $2,500 at each location. Mechanical breakdown and artificially generated electrical currents are excluded.		Cost to research is limited to $50,000. Excludes electrical currents other than lightning or if a fire results.
Bridges, roadways, walks, not patios, or other paved surfaces.	Excluded, but can be added by endorsement CP 14 10.		Not excluded
Grain, hay, straw or other crops outside of buildings	Excluded, but companies specializing in grain dealers may provide limited coverage.		Excluded, but companies that specialize in grain dealers may provide limited coverage.
Fences, radio or TV antennas, including lead-in wiring, masts, or towers	Excluded, but can be added by endorsement CP 14 50.		Included if within 1000 ft. of any covered structure. No standard endorsement exists to increase coverage; turn to IM policy for coverage.
Signs, detached	Specifically excluded, but added back via outdoor property coverage extensions for fire, riot, lightning, explosion, and aircraft (max. $1,000). Add'l coverage is available by adding under CP 14 40—Outside Signs.		Covered
Signs, attached	$1,000 per sign. Endorsement CP 14 40 can be used to increase limit of insurance.		Covered
Trees, shrubs or plants other than “stock” of trees, shrubs or plants	Excluded, but added back under coverage extensions for $250 per tree, shrub or plant; maximum per loss is $1,000 for the perils of fire, lightning, explosion, riot or aircraft. Add form CP 14 30 to increase coverage for non-”stock” trees, shrubs, plants.		Covered for up to $50,000, for fire, lightning, explosion, riot or falling objects. Higher limits are available using endorsement COP-229
ADDITIONAL COVERAGES
Debris Removal	Same, but increased limits are available from endorsement CP 04 15 and additional is $10,000 instead of $5,000.		Included within the limit for the damaged property but limited to 25% of that coverage. An additional $5,000 coverage is available if limit of insurance is exhausted or 25% limit is reached. Must be reported within 180 days of the loss. Increase in limit is available by endorsement COP-268.
Emergency Removal (This add'l coverage is not subject to policy limits)	Called preservation of property—and gives 30 days coverage while in temporary storage. No standard endt. is available to increase coverage.		Same
Fire dept. charges (Add'l Ins. not subject to policy limits)	$1,000 coverage, no deductible. By both contract or local ordinance. No standard form is available to increase coverage.		$5,000 coverage. No deductible. Only if assumed by contract or agreement. Form COP-269 is available to increase coverage.
Pollutant cleanup and removal (Add'l ins. - not subject to policy limits)	$10,000 annual aggregate, more available through endorsement CP 04 07		$25,000 annual aggregate. Endorsement COP-269 is available to increase this coverage.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Recharge of Fire protection Equipment (Add'l ins. - not subject to policy limits)	No coverage. No standard endorsement available to provide coverage		$10,000 coverage for expenses incurred to recharge automatic fire protection equipment discharged to fight a fire or other covered peril. Endorsement COP-269 is available to increase the limit of insurance.
SUPPLEMENTAL COVERAGES - All AAIS supplemental coverages apply only when a loss is caused by a covered peril and property is within 1000 feet of a “covered location”; they are not subject to coinsurance. Called Coverage Extensions by ISO, they apply only when property is within 100 feet of the described premises, and these extensions only apply when there is an 80% coinsurance percentage or a value reporting period symbol shown in the declarations page.
Arson Reward (Add'l ins. - not subject to policy limits)	Not Covered. No standard endorsement is available.		Up to $5,000 reward for information leading to a conviction for a covered fire loss. Endorsement COP-269 is available to increase coverage.
Brands or Labels Expense (This is additional coverage and is not subject to policy limits)	Not Covered. Endorsement CP 04 01 will add coverage.		Up to $50,000 coverage for stamping or removing brands or labels after a covered loss for property that can be salvaged. Additional limits are available by endorsement COP-269.
Consequential Loss (Add'l coverage. Not subject to policy limits)	Not Covered. No standard endorsement is available		Up to $10,000 for loss of value of undamaged product part (s) that become unmarketable because of direct physical covered loss to another part(s). Increase coverage using COP-269.
Foundations of structures, machinery or boilers if their foundations are below the lowest basement floor or ground if there isn’t a basement; pilings, piers, wharves, docks or retaining walls, or underground pipes, flues or drains.	Not Covered with the exception of retaining walls attached to the building. Coverage for any or all excluded property is available by adding endorsement CP 14 10.		Covered for lesser of $250,000 or 10% of limit on dec. page for covered property at any one “covered location,” whichever is less. Form COP-269 is available to increase the limit of insurance.
Inventory and Appraisals Expense (add'l ins. - not subject to policy limits)	Not Covered. No standard endorsement is available.		Pays up to $50,000 to take inventory and appraisals incurred by “you” to assist “us” in determining the amount of a covered loss. But excludes expenses incurred under the Other Conditions, Appraisal section of the policy, or any public adjuster fees. Higher limits are available by adding endorsement COP-229.
Newly Acquired Buildings (This is additional coverage, but you must pay premium from the date of construction inception or property acquisition)	30 days coverage up to a limit of $250,000 Endorsement CP 00 25 is available to increase this coverage.		90 days coverage for up to $500,000 per loss, only if the Locations form COP-227 and the Scheduled Locations form COP-226 are attached. Blanket situations do not need this option since all locations are covered. (COP-227 adds coinsurance in addition to converting coverage to schedule coverage. COP 226 is the schedule of locations). New construction does not have to be built on “covered locations.” No standard form is available to increase coverage.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Ordinance or law coverage for buildings. (This is additional, coverage and is not subject to policy limit).	No Coverage, but it may be added via CP 04 05. With that form, repairs must be made within 2 years, but the time may be extended by the company. For full benefit, the building must be rebuilt on the same site.		Essentially the same coverage as CP 04 05. Automatically included for a limit of up to $50,000. Repairs must be made within 2 years. For full benefit, the structure must only be replaced - does not have to be at the same site. Limits above $50,000 are available by adding COP-229.
“Personal Effects” and property of others. (This is additional coverage and is not subject to policy limit).	Owned by you, your “partners,” employees, and property of others in your care, custody and control for up to $2,500. You, your partners, and employee property are not covered for theft. (Add Personal Articles coverage under homeowners). No standard form is available to increase limits.		Coverage only for “you,” “your” officers, partners or employees for up to $10,000. (No theft exclusion). Property of others is automatically included under the basic coverage. Form COP-269 is available to increase coverages.
Personal Property Acquired locations (Add'l Ins. - prem. payable from the date of acquisition)	$100,000 for 30 days following acquisition. No standard endorsement is available to increase coverage.		Up to $250,000 coverage for 90 days following acquisition, but only when Locations form—COP-227 and Scheduled Locations Endorsement—COP-226 are added to the policy.
Trees, shrubs, and plants (Add'l ins. - not subject to policy limits)	$1,000 max. per loss, max. $250 per tree shrub or plant for perils of fire, lightning, explosion, riot and aircraft. Limit and perils restriction does not apply to “stock.” CP 14 30 is available to increase coverage.		$50,000 max. per occurrence for trees, shrubs, plants or lawns for perils of fire, lightning, explosion, riot, falling objects. Limit and perils restriction does not apply to items held for sale. COP-229 is available to increase ins. limits.
Outdoor fences, radio & television antennas detached signs. (This is additional coverage and is not subject to policy limits)	$1,000 max. per occurrence for perils of fire, lightning, explosion, riot, and aircraft. Applies if within 100 feet of the premises. Include fences by adding Add'l Covered Property Form CP 14 10. For antennas, add CP 14 50. For signs (detached) add IM Sign Form CM 00 28.		No restriction on coverage if property is within 1000 feet of covered buildings/structures. For limits beyond 1000 feet, look to an inland marine form.
Valuable papers cost of research (This is additional coverage and is not subject to policy limits)	Cost of research is limited to $2,500 per location. Excludes perils such as mechanical breakdown and artificially generated electrical currents are excluded. Suggest adding separate IM computer policy. Increase valuable papers coverage with form CM 00 67.		Cost of research is limited to $50,000. Excludes: electrical currents other than lightning or if a fire results; but coverage for computer mechanical breakdown. Data and media covered even if duplicates do exist. Endorsement COP-269 is available to increase coverage.
Property off-premises	Your covered property other than “stock” temporarily at a location you don’t own, lease or operate, but not while in a vehicle, in custody of a sales person, or at an exhibition. The maximum available is $10,000.		$50,000 coverage in transit. $50,000 coverage in custody of a sales person. $50,000 while at an exhibition. Property at worksite is automatically covered up to policy limit. Property at any other location within territory limits is covered (owned or not owned locations). COP-269 is available to increase the exhibition and transit limits.
SUPPLEMENTAL MARINE COVERAGES (AAIS COMMERCIAL OUTPUT POLICY ONLY) All losses for each of the Supplemental Marine Coverages must be caused by a covered peril, and no coinsurance provision applies to any coverage.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Accounts Receivable (This is additional coverage and is not subject to policy limits)	No Coverage - Must purchase an Accounts Receivable Inland Marine Policy CM 00 66. Coverage grants are similar, but receivables stored away from the “premises” shown on the dec. page are not covered. (Subject to the 100 foot rule in distance from the premises.) Determination of receivables requires establishment of last 12 months average adjusted for normal fluctuation.		Pays up to $50,000 for sums due from post-loss uncollectibles, interest on any loans against receivables, excess collection and other expenses incurred to reconstruct A/R records. Higher limits or scheduled coverage available by adding form COP-219. Under COP-100, loss determined by deducting the cost of reconstruction or limit (whichever is less) to Receivables Due. Under COP-219, use the 12 month average valuation. Under both forms, the 1000 feet from the “covered location” rule applies.
Fine Arts (This is additional coverage and is not subject to policy limits)	No coverage restrictions, however, valuation is limited to the actual cash value at the time of loss. The coinsurance clause also applies. For more specific Coverage add the IM Fine Arts Coverage Form—CM 00 42. No coinsurance applies and form CM 00 42 allows the selection of specific limits for selected items which establishes the value of the item, but the policy is subject to a 100% coinsurance clause.		$50,000 maximum for the defined word “Fine Arts.” Value is based upon actual cash value at the time of the loss without deduction for depreciation. No standard endorsement is available to increase limit above $50,000. Fine arts coverage can be purchased in a commercial articles floater or similar inland marine policy.
Property at Exhibitions (This is additional coverage and is not subject to policy limits)	Not Covered. No property endorsement is available. Find coverage in an inland marine form.		Up to $50,000 per occurrence coverage for business personal property while on exhibit at locations “you” don’t regularly occupy. No in-transit coverage here. Increase coverage limits by adding endorsement COP-229.
Property In Transit (This is additional coverage and is not subject to policy limits)	Up to $1,000 coverage provided under Cause of Loss Special Form—CP 10 30 for the following perils only: fire, lightning, explosion, windstorm, hail, riot, vandalism, collision or upset, theft of an entire package and there must be visible signs of forcible entry (sales samples are excluded).		Up to $50,000 per occurrence coverage for business personal property, but not for property in the care, custody or control, of “your” sales representative. Increase limits by adding endorsement COP-229.
Sales Representative Samples (This is additional coverage and is not subject to policy limits)	Not covered if away from the premises. No standard endorsement is available. Look for an inland marine Sales Representative Samples Floater.		Up to $50,000 for samples, and for property of others in sales representatives’ care. The limit of insurance can be increased with endorsement COP-229.
Cost to research valuable papers, including electronic media. (Add'l Ins. - not subject to policy limits)	Cost to research is limited to $2,500 ea. location. Excludes mechanical breakdown and artificially generated electrical currents. Suggest adding separate inland marine computer policy		Cost to research is limited to $50,000. Excludes: electrical currents other than lightning or if a fire results, but mechanical breakdown of computers is covered. Endorsement COP-269 may be used to increase limits.
Perils Covered	Cause of Loss Special Form—CP 10 30 for risks of direct physical loss.		Risks of direct physical loss.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
EXCLUSIONS (ISO) OR EXCLUDED PERILS (AAIS)
Ordinance or law coverage for buildings	Excluded, but coverage may be added by endorsement CP 04 05. With CP 04 05, repairs must be made within 2 yrs, but the time may be extended by the company. For full benefit, the building must be rebuilt on the same site.		Excluded - added back under Supplemental coverages for a limit of up to $50,000. Repairs must be made within 2 years. For full benefit, structure must be replaced— even if at another site. Increased limits? - Add form COP-229.
Earth movement	Excluded, except if fire ensues, or for volcanic action. Coverage is available from Cause of Loss—Earthquake Form CP 10 40.		Same, but coverage is available with Earthquake Endorsement—COP-221.
Civil authority	Called Government Action. No standard form is available. If bus. income form is added, there is interruption coverage for two weeks for action by the civil authority as a result of a covered peril that damages other than your premises.		Called Civil Authority and exclusion is the same. No standard endorsement is available. If Bus. Income—COP-101 is added there is interruption coverage for 2 weeks for action by the civil authority as a result of a covered peril that damages other than your “covered locations.”
Nuclear Hazard	Excluded. No standard endorsement is available.		Excluded. No standard endorsement is available.
War	Excluded		Excluded
Water	Exclusions: flood, surface water, waves, sewer/drain back-up, ground water pressure, but covers subsequent fire, explosion or sprinkler leakage damage. Flood coverage is available through NFIP. Backup of Sewers is available with endorsement. Federal Flood coverage restricted to companies in flood plains in qualified municipalities - insurance amounts may be inadequate to repair or replace flooded property.		Exclusions are similar. Coverage is extended to subsequent damage by explosion, sprinkler and fire and to the Supplemental Marine Coverages including: accounts receivable, fine arts, property at exhibitions, sales representative samples, valuable papers—cost of research. Flood coverage is available through form COP-223. Full and necessary coverage may be written on any location where an underwriter will approve coverage. For locations rejected for coverage, consult the Federal Flood Program.
Animals	Exclude damage by nesting or infestation, or discharge secretion of insects, birds, and other animals; but if loss is caused by the “specified perils” or breakage of glass results, there is coverage. Animal mortality coverage is available from specialty coverages.		Same exclusion
Collapse	Excluded, but added back under the supplemental coverage of collapse.		Excluded, but added back under Other Coverages—Collapse.
Contamination or deterioration	Essentially the same exclusion, but no add back for computer air conditioning system damage except if caused by the “specified causes of loss” or glass breakage. Available only by manuscript endorsement.		Contamination, deterioration, corrosion, decay, fungus, mildew, mold, rot, rust or any latent fault that causes the property to destroy itself. Coverage is added back for corrosion, decay, fungus and mildew caused by direct damage by a covered peril to the air conditioning system that services “your” “computers.”
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Defects, errors and omissions	Exclusion (3.c.) is Faulty, inadequate or defective: (1) Planning, zoning, siting, development, surveying, (2) Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction. (3) Materials used in repair, construction, renovation or remodeling; or (4) Maintenance, whether on or off the premises.		Excludes loss resulting from one or more of the following: 1) an act, error or omission relating to: a) land use; b) the design, specification, construction, workmanship, installation, or maintenance of property; c) planning, zoning, development, siting, surveying, grading, or compaction; or d) maintenance of property including land, structures, or improvements); whether on or off the “covered locations.” 2) a defect, weakness, inadequacy, fault or unsoundness in materials used in construction or repair, whether on or off the “covered locations.” 3) the cost to make good an error in design; or 4) a data processing error or omission in programming or giving improper instructions. In addition, “we” do not pay for loss to business personal property caused by deficiencies or defects in design, specifications, materials, or workmanship or caused by latent or inherent defects.
Criminal, fraudulent, or dishonest acts	Employee dishonesty part excludes you, your partners, trustees, employees, directors, representatives, or those entrusted with your property. Add Employee Dishonesty Form—CR 00 01.		Employee dishonesty exclusion, but the exclusion does not apply to covered property in the custody of a carrier for hire. Employee Dishonesty Form—COP-255 will provide coverage.
Electrical currents	Excluded unless fire results, and then only for the resulting loss. Lightning is covered. No endorsement is available to add coverage. CP 04 10—Electrical Apparatus coverage gives limited additional coverage to electrical apparatus, but only for electrical damage after a self-sustained fire and this coverage is proportional—requiring a similar endorsement on all policies, and is subject to a $1,000 deductible. Broader coverage is available from Boiler and Machinery Policy.		Same. Equipment breakdown can be added by endorsement COP-103 Equipment breakdown coverage can be added by endorsement COP-103.
Explosion	Excluded: steam boilers, steam pipes, steam engines or turbines, but resulting loss of fire or combustion explosion is covered. Also covered is the damage caused by or resulting from the explosion of gasses or fuel within the furnace or flues of any fired vessel. A boiler and machinery or equipment policy can provide coverage.		Equipment breakdown can be added by endorsement COP-103
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Freezing of pipes unless steps are taken to maintain heat, or drain the equipment (except fire protection systems)	Excluded. No standard endorsement is available to grant coverage		Excluded. No standard endorsement is available to grant coverage
Increased Hazard	No comparable exclusion		Doesn’t pay for loss occurring while the hazard has been materially increased by any means within “your” knowledge or control. Exclusion hinges upon interpretation of the phrase “materially increased.” While there is no form available to grant coverage, the underwriter should be made fully aware of increase in exposure—i.e.: new product line that involves potentially hazardous materials. No standard endorsement is available to provide coverage.
Loss of use	Delay, loss of use, loss of market is excluded. Business income is available with form CP 00 30 or CP 00 32 (without extra expense).		Loss of use, business interruption, delay or loss of market. Business income coverage is available with endorsement COP-101.
Mechanical breakdown	Excluded. Boiler and Machinery Policy—BM 00 25 plus object definition 6 which includes production machinery will provide the broadest protection.		Equipment breakdown can be added by endorsement COP-103
Neglect to preserve property from further damage after a loss	No comparable exclusion, but in Duties in the Event of Loss or Damage, under the Building and Contents Form, the phrase is: “take all reasonable steps…”		Excluded, but the phrase is "use all reasonable means.” Also addressed in What Must be Done in Case of Loss.
Pollutants	Excluded. Purchase a pollution policy from specialty markets		Excluded unless caused by one of the 18 specified covered perils. Purchase a pollution policy from specialty markets (limited coverage for pollution cleanup).
Seepage	Excluded. Seepage that takes place over time may be covered by some companies for certain property through their own endorsement.		Excluded. Seepage over time will have to be done by company manuscript endorsement.
Settling, cracking, shrinking, bulging or expanding	Excluded for all property, unless resulting loss is caused by a “Specified causes of loss.” Boiler and Machinery Policy—BM 00 25 will cover cracking, bulging or expanding that occurs during an accident.		Excluded only to pavements, footings, walls, foundations, ceilings, or roofs, unless resulting loss is caused by a “specified peril” and only for the resulting loss. The exclusion does not apply to “computers” or mobile equipment. Look to boiler and machinery coverage for broader coverage.
Smog, smoke, vapor or gas	Excluded - No standard endorsement is available		Excluded, but exclusion does not apply to “computers” or “mobile equipment.” No standard endorsement is available for other property.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Temperature/ humidity	Excluded are: damp or dry atmosphere, temperature extremes. Resulting loss by “specified causes of loss” or building glass breakage is covered. No standard endorsement is available. Coverage for certain accidents caused by humidity temperature changes are covered for certain objects under Boiler and Machinery Coverage—BM 00 25.		Excluded are: humidity or changes in, or extremes of, temperature. Resulting loss by “specified perils” or breakage of building glass is covered for resulting loss. Exclusion n/a to losses caused by or resulting from a covered peril to the air conditioning system of “your” “computer.” No standard form is available for other property. Find broader coverage for certain objects under a boiler and machinery or equipment policy.
Voluntary parting	Excluded Voluntary parting by trick or device may be available from certain companies as a manuscript form. Also excluded under crime forms		Excluded. No standard form. Voluntary parting by trick or device may be available from certain companies as a manuscript endorsement.
Wear and tear	Excluded - No std. endt. is available		Excluded - No standard endt. is available
Weather	If weather contributes with an excluded peril to cause loss, there is no coverage		Same exclusion. The intent is to eliminate the doctrine of concurrent causation, a court technique used to grant coverage for the consequential loss by a covered peril after the property is first damaged by an excluded peril.
Acts or decisions, including the failure to act or decide by any person, group, organization or governmental body.	Excluded - No standard endt. is available		No comparable exclusion.
Rain, snow, ice or Excluded, but under: Additional Property sleet to personal property in the open	Excluded - No standard endt. is available		Not Covered or Subject to Limitations. No standard endorsement is available.
ADDITIONAL PROPERTY NOT COVERED OR SUBJECT TO LIMITATIONS
Accounts Receivable	Not covered, but a similar exclusion is found in the Accounts Receivable Policy— CM 00 66.		Covered, but no coverage for accounting or billing errors; or “your” discovery of a discrepancy in “your” books or records if an audit or inventory computation is necessary to prove the factual existence of the discrepancy. See Supplemental Marine coverages for explanation of Accounts Receivable coverage available in this policy.
Animals	Same wording in Property Not Covered in Building and Personal Property Coverage Form.		Only animals covered are animals held for sale and then only for loss caused by the “specified perils” for their death or destruction .
Boilers, steam or hot water	Same exclusion under: Limitations. Boiler and Machinery Policy can provide coverage to most vessels.		Losses caused by a condition or occurrence or within the equipment other than explosion of gas and fuel in a firebox, chamber, or flue are excluded. Equipment Breakdown Coverage can be added by endorsement COP-103.
Furs	Coverage limited to $2,500 per loss for the theft. No standard form is available. A bailees policy with a fur garment endorsement or a furriers block inland marine policy will provide coverage.		Coverage limited to $10,000 per occurrence for the peril of theft. No standard form is available. A bailees policy with a fur garment endorsement or a furriers block inland marine policy will provide coverage.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Glassware/Fragile Articles	Same, but found under: Limitations. No standard endorsement is available under this policy, the Commercial Fine Arts or Jewelers Block IM policies.		Breakage is excluded for other than the “specified perils.” Limitation n/a to building glass, containers held for sale, or scientific or photographic lenses. No standard endorsement is available.
Gutters and downspouts	Same, but found under Limitations. No standard endorsement is available.		No coverage for perils of weight of ice, sleet or snow. No standard endorsement is available.
Interior of buildings	Similar, but found under Limitations. Difference: unless first sustains damage by a covered cause of loss as opposed to the “specified causes of loss.” No standard endorsement is available.		No coverage to loss to the interior of buildings or to personal property in buildings by rain, snow, sleet or ice, unless entering through openings first caused by “specified perils”; or the loss is caused by the thawing of snow, sleet, or ice on the building. No standard endorsement is available.
Jewelry, watches, jewels, pearls, precious stones and metals. Items under $100 not subject to the limitation.	Maximum $2,500 coverage per loss for the cause, of loss theft. For higher coverages, see Jewelers Block inland marine form—CM 00 59.		Maximum $10,000 coverage per occurrence for the cause of loss—theft. For higher coverages, look to a Jewelers Block policy.
Missing property due to unexplained or mysterious disappearance, or inventory shortage	Not covered. No standard form is available. Under crime policies, burglary requires visible signs of forcible entry, and theft is any act of stealing; but in all crime forms, inventory coverage is excluded.		Not covered. No standard form is available. Under Money and Securities Endorsement—COP-256, coverage follows the base COP-100—Commercial Output Policy and the exclusion remains the same.
Damage to personal property in the open caused by rain, snow, ice or sleet.	Found under Limitations. All personal property in the open excluded for these causes of loss. No standard Endorsement is available.		Same limitation, but does not apply to “mobile equipment” or property in the custody of carriers for hire. No standard endorsement is available to Include other covered property.
Stamps, tickets and/or letters of credit.	$250 maximum coverage per loss. Crime form CR 00 04—Theft, Disappearance and Destruction and other forms insuring “securities” will provide various degrees of coverage.		Up to $5,000 coverage per loss to stamps, tickets (including lottery tickets held for sale), or letters of credit. Look to Money and Securities form —COP-256 for coverage.
Transferred property to a person(s) or place outside of the “covered location” due to unauthorized instructions.	Same, but shown under Limitations. No standard form is available and coverage is excluded under ISO crime policies.		Same.
Building materials not attached- theft peril	Not covered. Form is available through a Builders Risk Coverage Form.		Covered for theft
Valuable papers errors and omissions from copying or processing.	Not specifically excluded, but only causes of loss for damage to valuable papers that are covered are the “specified causes of loss.” No standard form is available in this form or in the CM 00 67—Valuable Papers inland marine form.		Covered losses for errors and omissions only as a result of “specified perils” and then only for the resulting damage. No standard endorsement is available to increase coverage.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Building materials not attached for the peril of theft	Not covered for theft. Endorsement is available through a Builders Risk Coverage Form.		Covered for theft
Building Glass limited to $100 per pane, $500 per occurrence.	Limitation applies except to the “specified causes of loss” and glass breakage.		No limitation applies
Builders’ machinery, tools, and equipment that you own or are entrusted to you while away from premises	Not Covered. Can be covered under contractors equipment inland marine form.		Up to $50,000 while tools are in transit, and coverage for owned tools under personal property coverage at any location including job site. Property of others is included at the job site and in transit. Machinery defined as “mobile equipment” is covered anywhere in the covered territory.
Patterns, dies and molds and forms	Limited to $2,500 per occurrence. No endorsement is available to add back coverage. Consult an inland marine pattern & die floater.		No limitation for owned property on premises; or up to $50,000 in transit, or if at an installation site; or for property of others on the job site or in transit. Patterns, dies and molds are covered at any other location including while they are at another processor.
OTHER COVERAGES
Collapse	Collapse is defined as including loss caused by one or more of the following “specified causes of loss,” hidden decay, hidden insect or vermin damage, weight of rain that collects on a roof. Use of defective/methods may be covered after construction if both a covered peril and the collapse occur at the same time. Unless a building collapses first, the following aren’t covered for collapse: outdoor antennas, awnings, gutters, downspouts, yard fixtures, outdoor swimming pools, fences, piers, wharves, docks, diving platforms, retaining walls, walks, roadways or other paved surfaces. Collapse does not include settling, shrinkage, bulging, cracking, or expansion.		Covered perils are the same. Similar excluded property, but the following property is not excluded: radio or television antennas. The following is additionally excluded foundations. There is no settling, shrinking, bulging, cracking or expansion exclusion. “Computers” and “mobile equipment” are not subject to the restrictions in this definition of collapse.
Tearing out and replacing	Also pay to tear out and replace any part of the building to repair damage to the system or appliance from which the liquid substance escaped.		Same coverage.
Water Damage	Same limitation. Coverage is available under the standard Boiler and Machinery Policy—BM 00 25 for up to $5,000 coverage. Additional water damage coverage under Boiler and Machinery is available from endorsement BM 99 38—Increases in Coverage Limitations.		Damage to an appliance from which the water or other substance escapes is not covered, unless the damaged appliance is part of fire extinguishing equipment; or is directly caused by freezing. No standard form is available; seek coverage from Boiler and Machinery or Equipment coverage.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
WHAT MUST BE DONE IN CASE OF LOSS
Notice	Similar language. Notify police if a law may have been broken. No comparable clause		Notify “us” promptly and give us a description of the property involved. Notify police when the act is a crime. Give notice to the credit card company if the loss involves a credit card. (Credit card coverage only available when Money and Securities Endorsement—COP-256 is added).
Protect property from further damage after a covered loss.	Similar Language		Similar Language
Proof of Loss	Similar, but does not address interest of others or explicit reference to copies of bills, receipts, etc.		Signed, sworn proof of loss within 60 days that includes: time, place and circumstances; other policies that may cover; “your” interest and the interest of all others in the property, including mortgages and liens; changes in title during policy period; detailed estimates of repair; inventory of damaged and undamaged goods; and copies of bills, receipts, etc., that substantiate inventory.
Examination	We may examine any insured under oath. Similar language thereafter.		“You” must submit to examination under oath. “We” have the right to receive statements separately and not in the presence of others.
Records	As often as reasonably required, permit us to inspect.		You” must produce records, including tax returns and bank microfilms of all canceled checks relating to value, loss, and expenses and permit copies and extracts to be made of them as often as “we” reasonably request.
Damaged Property we must be allowed to inspect and test.	Similar language		Similar language
Volunteer payments	No comparable language		“You” must not, except at your own expense, volunteer to make any payments.
Abandonment of property to insurer without permission.	Similar language		Similar language
Cooperation with the insurance company	Similar language		Similar language
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
VALUATION
Actual Cash Value (ACV) and Replacement Cost (RC)	ACV at the time of loss except for the following which are at replacement cost: no coinsurance penalty and the loss to the building is less than $2,500 (except awnings, floor coverings, appliances for refrigerating, cooking, ventilating, dishwashing or laundering), and glass including safety glazing where required by law. “Stock” that is sold but not delivered at selling price less discounts; tenants improvements at ACV if repaired, or proportional to original cost as calculated to the remainder of the lease plus any renewal option (nothing if others pay). Valuable papers (other than retail software) at cost of blank materials and labor to transcribe when there is a duplicate. Replacement cost as an Option when indicated on the dec. page does not apply to property of others, contents of a residence, manuscripts, works of art, “stock” unless also indicated on the dec. page. For replacement cost, replacement is with comparable material and quality, used for the same purpose, or the amount actually spent and must be on the same premises.		ACV applies to all property. If RC is shown, it applies to all property that is replaced. Fine arts are valued at ACV. Glass/safety glazing material is at RC. Merchandise sold but not delivered at the selling price; pair or set if only one is lost at a reasonable proportion of the entire set value; loss to part of an item that consists of several parts, only to the value of the damaged item; tenants improvements at ACV if repaired at your expense and in proportion to the remainder of your lease plus any renewal option; valuable papers at cost of blank materials and labor to transcribe when there is a duplicate (applies to all software). Replacement cost is limited to the cost of repair or replacement with similar material on the same site, used for the same purpose.
HOW MUCH WE PAY
Insurable Interest	Similar language in Loss Payment clause.		“We” don’t cover more than “your” insurable interest In any property.”
Deductible	Similar language, Standard deductible is $500.		Deductible is taken first and if there is a coinsurance penalty or reporting provision, the deductible is applied after deduction for the penalty, or after applying the reporting provision. Minimum deductible is $250.
Loss settlement Provisions	Similar language, but no comparable wording on Accounts Receivables.		Pay the lesser of: the amount determined under the valuation section of the policy, the cost to repair or replace with like kind and quality to the extent practicable, or the “limit” of insurance that applies. For accounts receivable, pay the lesser of the sum of all receivables due (with reasonable deductions) or the reasonable cost to reconstruct the records, or the “limit” for accounts receivable.
Insurance under more than one coverage	Similar language in Commercial Property Conditions—CP 00 90		If more than one coverage in the policy insures the same loss, “we” pay no more than the actual claim.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Insurance under more than one policy	Found in Commercial Property Conditions— CP 00 90. Language is similar.		If both policies are concurrent, i.e.: two COP-100 policies with similar provisions, etc., this plan pays a proportional share of the loss. If the plans are not concurrent, then this policy is excess, but never more than the applicable “limit” of the policy. To avoid having to argue over which is excess, multiple for the same insured should be written under the same plan wherever possible.
LOSS PAYMENT
Our options and Your Losses	Similar language.		Pay the value of the loss, the cost to repair or replace, rebuild with like kind and quality where practicable and timely, or take the property at the agreed or appraised value. “We” will let you know “our” intent to rebuild, repair or replace within 30 days of receipt of a duly executed proof of loss. We” will adjust with and pay “you” unless another loss payee is named in the policy, and “we” must pay you within 30 days of receiving a satisfactory proof of loss, and the loss amount is established either by written agreement with “you” or the filing of an appraisal award with “us”.
Property of others	We will pay only the owners of the property. Other language is similar.		“We” will adjust with and pay to either “you” on behalf of the owners, or to the owner. “We” only have to pay one of you, not both, and we can choose to defend any suit from the owners of other property at “our” expense.
OTHER CONDITIONS
Appraisal	Either party may demand. Similar language, but without the time limitations.		Either party may demand. Each party chooses an appraiser and must notify each other of the identity of the appraiser within 20 days of the written demand. Two appraisers must choose an umpire within 15 days, or either “you” or “we” can ask a judge to choose. Other language is similar.
Benefit to others	No benefit to bailee, found under Commercial Policy Conditions—CP 00 90.		No benefit to anyone having custody of “your” property.
Conformity with statute	Similar language		Similar language
Control of property	Under Commercial Property Conditions —CP 00 90, with the additional paragraph: The breach of any condition of this coverage part at any one or more locations will not affect coverage at any location where, at the time of the loss or damage, the breach of condition does not exist.		No coverages are affected by an act or neglect beyond "your" control
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Death	Found under Common Policy Conditions—IL 00 17 under Transfer of Your Rights and Duties Under this Policy. Language is similar.		Rights and duties pass to the legal representative but, until appointed, anyone having proper custody of your property.
Liberalization	Found under Commercial Property Conditions—CP 00 90. Revisions that don’t increase premium are automatically adopted if made within 45 days prior to or during the policy period.		Same, but the change can be made up to six months before the policy period.
Misrepresentation, Concealment or Fraud	Found in Commercial Property Conditions—CP 00 90. Similar language.		Similar language
Policy Period	Similar language found in Commercial Property Conditions—CP 00 90.		Similar language
Recoveries— Recovered property; both “you” and “we” must notify the other of any recovery and if you want the property back, “you” pay “us” back, and we’ll pay you the cost to fix the property.	Recovered Property in Building and Personal Property Form—CP 00 10. Similar language.		Similar language, but if the claim paid is less than the deductible or other limiting terms, the recovery will be pro-rated between “you” and “us” based upon our respective interest in the loss.
Restoration of Limits	Limits are per occurrence and there is no similar language.		“Limits” are fully restored for later losses. (Note that pollution coverage is an annual aggregate.
Subrogation You may waive “your” rights to recovery in writing before a loss, but not after.	Called Transfer of Rights of Recovery against Others to Us, in Commercial Property Conditions—CP 00 90.		Similar language, but will not allow post-loss waiver of rights to your tenant.
Suit against us	Legal action against us found in Commercial Property Conditions—CP 00 90. Not until there is compliance with, all provisions, and no later than 2 years after the loss.		Similar language but the time limit is 2 years, unless an applicable law makes this time limit invalid, then the shortest time allowed by law.
Territorial limits USA, territories, possessions, Puerto Rico and Canada.	Found in Commercial Property Conditions—CP 00 90. Similar wording.		Similar wording.
Policy Provision	ISO Building and Personal Property Form CP 00 10 Plus Cause of Loss Special Form - CP 10 30		AAIS Commercial Output Policy—COP-100
Mortgagee provisions	We’ll pay the mortgagee according to their interest, in order of mortgage precedence even after they foreclose on you. We’ll still pay the mortgagee if we deny payment to you because of your act, if they pay the premium when you haven’t and if they submit a statement of loss within 60 days notice that you have failed to submit a proof of loss. If the loss is covered but for your fraud, etc., then we will pay the mortgagee for the full amount. We can also opt to pay the mortgagee the principal and interest they are due and transfer the debt to us. 10 days notice to mortgagee for non-payment cancellation, 30 days for any other reason, and 10 days notice for non-renewal.		Only similar language has to do with mortgage precedence. “We” may request the payment of the premium from the mortgagee if you don’t pay. Insurance does not remain in effect if the mortgagee is aware of changes in ownership and doesn’t notify us.
Vacancy and unoccupancy	Building and Personal Property Form—CP 00 10. Similar wording, but no use of the word unoccupancy, and no reference to usual and incidental. Vacancy is a strict 60 days. Form CP 04 50—Vacancy Permit adds back Coverage for vandalism and sprinkler leakage for a defined period of time. A building is vacant when it does not contain enough business personal property to conduct customary business operations.		No coverage for theft, breakage of building glass, sprinkler leakage (unless protected from freezing), vandalism, or water damage if building is vacant or unoccupied for more than 60 consecutive days or the usual or incidental unoccupancy period for the “covered locations,” whichever is longer. (Usual and incidental has to do with seasonal property.) No expanded Vacancy permit is available. Other covered peril losses that occur will be reduced by 15%. Unoccupied means: that the customary activities or operations at the “covered location” are suspended, but business personal property has not been removed. The building or structure will be considered vacant and not unoccupied when the occupants have moved, leaving the building or structure empty or containing only limited business personal property. Buildings or structures under construction are not considered vacant or unoccupied.
Coinsurance	Standard coinsurance clause.		No similar clause unless attached by endorsement.
OPTIONAL COVERAGES (BUILDING AND PERSONAL PROPERTY FORM CP 00 10 FORM ONLY)
Agreed Value (If shown in the declarations)	Suspends coinsurance while the form is in effect. If the ins. limit is reduced below the agreed value, then only the proportion of the agreed value that bears to the limit will be paid.		There is no similar endorsement. COP-254—Agreed Amount converts certain property limits from replacement cost or ACV to agreed value.
Inflation guard (If shown in the declarations)	The increase % is shown on the declarations page and increases are similarly proportional.		Add form COP-230 and add the % of increase on the “dec.” The increase applies proportionately from the date the endorsement is made part of the policy.
Replacement cost (if shown in the declarations)	All property covered for replacement cost except: property of others, contents of a residence, manuscripts, works of art, or “stock” unless “stock” is shown on the declarations page.		Can choose replacement cost or ACV except: property of others, contents of valuation for details.

AAIS COMMERCIAL OUTPUT POLICY EDITION 2.0 VS. THE MANUFACTURERS OUTPUT POLICY

This article offers a brief, general review of the differences between these two, important predecessors to the current AAIS edition of the Commercial Output Policy (COP). For details on the current form, please refer to PF&M Section 191.4-2, AAIS COP Coverage Form Analysis.

STYLE CHANGES

The format, wording and structure of the COP are significantly different from the Manufacturer's Output Policy (MOP). These changes and a greater emphasis on key phrases and terms make the COP much easier to read and understand.

COP v. MOP COVERAGE CHANGES

· The insuring agreement in the COP reflects that coverage is subject to the declarations page.

· Words that are defined appear in boldface.

· Deleted defined words: business, described premises, finished stock, raw stock, stock in process. Business and finished stock are described in the business income endorsements.

· “Covered locations” is a defined phrase. However, covered locations has no meaning within the policy (since policy is blanket) unless the Locations—COP-227 and the COP-226—Scheduled Locations endorsements are added to the policy.

· Defined words: computers, declarations, fine arts, hardware, limit, mobile equipment, sinkhole collapse, software, specified perils, valuable papers and records, volcanic action.

· “Fine Arts” is a Supplemental Property Coverage and is limited to $50,000.

· “Sinkhole Collapse” has been added to the specified perils.

· Buildings include: outdoor fixtures, property used to maintain the building or buildings in the course of construction, building glass, signs, radio and TV towers, antennas and satellite dishes.

· Volcanic action is covered as an exception to the earth movement exclusion. Note that “volcanic action” is a defined term.

· Business personal property also includes: computers, software, leased personal property, personal property being installed, personal property of others, aircraft and boats that are manufactured by the insured, animals held for sale or boarded, mobile equipment, standing timber and lawns (lawn limit is $50,000 and covered for select perils only), mining property, well drilling property, jewelry and furs ($10,000 theft limitation).

· Excluded/limited business personal property: lottery tickets and food stamps (limit to $5,000), property more specifically insured (covered on an excess basis though), contraband, property of others if the insured is an arranger of transportation (contract carrier, common carrier).

· Debris removal is limited to 25% of the loss plus $5,000. Emergency removal is also covered.

· Add fire department service charge—$5,000.

· Add pollution cleanup and removal—$25,000.

· Add recharge of fire protective equipment—$10,000.

· Add arson reward—$5,000.

· Add brands or label removal expense (salvage re-labeling)—$50,000.

· Add consequential loss (undamaged but unmarketable parts of a whole object)—$10,000.

· Add foundations—$250,000 or 10% of limit of insurance, whichever is less.

· Add inventory and appraisals (cost of determining amount of loss)—$50,000.

· Increase newly acquired buildings to 90 days and $500,000 coverage, business personal property to 90 days and $250,000 coverage.

· Add ordinance or law coverage—$50,000.

· Add trees, shrubs and plants.

· Add accounts receivable coverage—$50,000.

· Add sales representative samples—$50,000.

· Add property on exhibition—$50,000.

· Add valuable papers cost of research—$50,000.

· Computers, mobile equipment and supplemental inland marine coverages are covered for normally excluded perils: earthquake; volcanic action; flood; utility failure; collapse; mechanical breakdown (computers only); smog-smoke, etc. (computers and mobile equipment only); temperature/humidity after covered loss (computers only).

· Additional excluded perils: animal damage; deterioration; fraudulent acts of partners, officers, directors, trustees, or joint ventures, accounts receivable bookkeeping errors.

· Settling, shrinking, expanding losses are covered to most property when caused by a specified peril. Also covered are collapse, and tearing out and replacing property damaged by water, liquids, powders and molten material (but not damage to the system that released the fluid).

· Transfer of property to a person or a place away from the covered location is not covered.

· Insurance company must be notified of credit card loss. Any proof of loss must be signed and sworn to.

· An optional replacement cost provision (activated on declarations page) and a pair or set clause has been added. Options are available to pay costs of repairing or rebuilding, and the insurance company entitled to any salvage or value of salvage. Tenant repairs to improvements and betterments at someone else’s expense aren’t covered. There is a two -year time limit on suits against the company.

· The COP is excess over any other policy that does not contain similar provisions.

· Appraisal clause liberalized.

· Territory expanded to include transit (air or water) between Hawaii, Alaska, Puerto Rico and Canada.

· The COP does not provide financial loan payments on losses that the company believes can be recovered from others.

ENDORSEMENT REVISIONS

· Equipment breakdown coverage similar to the traditional boiler and machinery coverage is available by endorsement.

· Computer coverage equipment breakdown may be purchased to extend equipment breakdown coverage to computers. Other additional computer coverages such as computers away from the covered location or while in transit, or software at an unscheduled storage location may be added.

· Business income coverage enhancements add 3 options: earnings, rents and extra expense; extra expense to resume operations or reduce amount of loss or restore valuable papers, loss due to damage to property at acquired locations (90 days, 10% of limit or a max. of $250,000).

· Business income exclusions: fire extinguisher recharge ($10,000 coverage under base policy); finished stock (add Manufacturers Stock Valuation Endorsement—COP-252); lease cancellation exclusion, but coverage if cancellation results from interruption, strikers, unnecessary expenses.

· Reporting form—if no report is ever submitted the most that is paid is 90% of the limit (previously 75%).