BP 0816-POLICY AMENDATORY ENDORSEMENT
(May
2025)
The BP 0816-Policy Amendatory Endorsement is a nine-page mandatory endorsement. The numerous
changes throughout this policy are substantial. It was introduced and filed in
2015, but adoption occurred throughout the latter part of 2015 and 2016.
Because the changes are significant and are
policy wide, we have taken an unusual approach and actually inserted all of the
changes into our analysis of the BP 0200–Businessowners
Special Policy and BP 0100–Businessowners
Standard Policy Analysis and updated them as though the BP 0816 was a policy
edition change rather than an endorsement so that the changes could be viewed
in context.
Related Article: BP 0200–Businessowners Special Policy and BP 0100–Businessowners Standard Policy Analysis
This article will look at only the changes within
the endorsement and provide additional explanations of the changes.
NOTE: The Editors added titles to
each section of this article to enhance clarity.
Three definitions are changed, and one
definition is added.
The
term supplier is eliminated from the definition of a contributory location and replaced
by the more precise explanation that these locations deliver material and
services. In addition, wastewater removal
services is added and not considered a contributing location.
The definition of earth movement was
moved from the earth movement exclusion to the definition section in the 06 12 edition
of the BP100 and BP200 forms. This was a significant change, but there is even
more so in the BP 08 16 because it is even more specific and, in some ways,
expansive in attempting to eliminate earth movement coverage.
a.
The initial change is that the earth, as defined here,
encompasses not just the physical planet but also includes substrates, strata,
soil, ground, and sediment.
b. Earth movement is defined as the movement of earth. The newly introduced definition of earth
is much more expansive. It excludes the movement of substrates, strata, soil,
ground, and sentiment.
The following six items are examples of types
of excluded earth movement; however, it is important to note that earth
movement itself remains excluded. The previous edition specified that earth
movement was limited to five listed items, whereas this edition simply states
that earth movement is excluded and provides six examples of that movement.
This change could represent a significant difference.
An earthquake is the first
example of earth movement and is defined as an earthquake, earth tremor, or
earth temblor. Previously, earth temblors were not mentioned; only tremors that
occurred before, during, or after a volcanic eruption were excluded.
Both definitions include
aftershocks following earthquakes. However, the current definition encompasses
aftershocks from earth tremors and temblors, which the previous definition did
not. The earlier definition referred only to land aftershocks, while the
current one refers to aftershocks in a broader sense.
The new definition clarifies that
these phenomena are forms of earth movement, regardless of how they manifest.
Possible manifestations include shaking and ground displacement, but the
definition applies regardless of the specific manifestation.
This example refers back to earthquake, earth tremblors or earth tremor. If soil liquefies due to these events or
for any other reason, it is still classified as earth movement.
The prior definition did not
mention liquefaction of soil.
All movement associated with a volcano is
classified as earth movement. This includes eruptions, explosions, and
effusions, which were part of the earlier definition. Furthermore, the updated
definition now includes the shaking and ground rupture that occur before,
during, and after a volcanic eruption, recognizing all these activities as
forms of earth movement.
The term "landslide"
was included in the previous definition, but it lacked further explanation.
This revised definition clarifies that the material moving with or being
carried by the landslide is considered part of earth movement.
This term did not materially
change.
This term has not changed
significantly from its previous definition, aside from a minor formatting
update. The earlier version may have limited the phrase "that causes
cracking, setting, or shifting of covered property" to refer specifically
to the movement of water beneath the surface of the ground. The new formatting
clarifies that the term now encompasses all types of movement described in item
6.
Ø The
next part of Definitions is new. It would appear to have been added as a
response to the significant increase of earthquakes in parts of the country
using hydraulic fracturing (fracking).
a. Acts, errors, or omissions that
result in earth movement regardless of where they take place are also earth
movement. Examples include the following:
1) Excavating or construction
2) A blast or vibration without
regard as to where it came from
3) Any type of process that
extracts natural resources underneath the earth’s surface. Examples of
processes are hydraulic fracturing, drilling, mining, and the extraction of
geothermal energy, but not limited to these. Examples of natural resources are
gas, heat, minerals, water, and oil, but not
limited to these.
4) Any injection under the earth’s
surface. Examples are water and wastewater, but it could be any material,
natural resource, or substance.
5) The storage of a natural
resource, material, or substance beneath the earth’s surface. Carbon dioxide is
one example.
6) Any of the above in combination
with each other.
(BP 200 Only)
The
BP 0816 change is a reformatting that lists each of the perils separately,
while previously, they were all listed in a single paragraph. In doing this,
they moved the explanations of falling objects and water damage from being
separate paragraphs to being described within the peril itself.
The
falling object definition is unchanged.
The
water damage peril has been changed significantly so that it lines up with the Water
Exclusion that was added to the 06 12 edition.
1)
Water damage from a sudden or accidental leak or discharge resulting from the
breaking or cracking of a system or appliance containing the water or steam.
2) Water damage is the sudden
or accidental discharge or leakage of water or material that is waterborne but
only if all of the following occur:
·
Direct result of water
or sewer pipe breaking or cracking
·
The breaking or cracking is
due to wear and tear
·
The water or sewer pipe is part of a municipal sanitary
sewer system
·
The sewer system is not on the named insured’s premises
Another
addition to this water damage definition applying to paragraphs 1) or 2) above
is that surface water and water damage below the surface of the ground (located
in the Perils Excluded section of the BP 200 under 9. Water) does not apply if
coverage is provided within this definition of water damage.
The
definition of secondary dependent locations has been added to expand coverage. This
is a significant addition because of the way businesses operate. Often, the
business the named insured relies on is dependent on another business for a
portion of the product it will provide to the named insured.
Is
defined as a location within the basic territory that is neither owned nor
operated by an insured’s dependent location, but does one or both of the
following:
This
definition excludes transit-type structures such as airfields, bridges,
pipelines, roads, tunnels, and waterways. It also excludes water, communication
and power suppliers, as well as wastewater removal services.
The
following replaces the wording of the first paragraph of Coverage B – Business
Personal Property:
When
the named insured occupies the entire building, there is coverage for the
insured's business personal property when the following conditions apply:
·
The property is located in or on a building or structure
listed on the declarations with a BPP limit.
·
The property is in the open within 100 feet of the
scheduled premises with a BPP limit.
·
The property is in or on a vehicle within 100 feet of
the scheduled premises with a BPP limit.
If
the named insured only occupies part of a building or structure, the business
personal property must be within 100 feet of that building or structure and
either in the open or in or on a vehicle
to be covered.
This
change is beneficial for the named insured because it introduces an exception.
Pre-packaged software held for sale by the insured, as well as electronic data
records, software programs, applications, and proprietary software that are
part of the building's HVAC, lighting, elevators, or security systems, will be
covered, provided they are integrated into those systems.
This
change is beneficial for the named insured because lawns that are part of a
vegetated roof are covered.
This
is beneficial for the named insured because trees,
shrubs, or plants that are part of a vegetated roof are covered.
(BP 200 Only)
This change broadens the exclusion to include
business personal property.
The
only change is that the $2,500 theft limit can be increased on the Declarations.
Vegetated
roof lawns, trees, shrubs, and plants are now covered in the same way as other
types of property due to changes in the Property Not Covered section mentioned
above.
However,
there are specific exposures unique to these items that are not covered. The
four new exclusions that apply specifically to these items are:
Coverage
has been expanded to include the cleanup of debris from properties other than
those that are covered. However, as a result of this change, some restrictions
have been added. While these restrictions may seem to limit coverage, they
actually only apply to the newly added aspect of the coverage.
The
following added restrictions are not covered. The insurance company will not
pay to remove the following:
None
of these items were previously covered. However, with the other property
expansion the wording needed to be added.
The
Coverage Limit has changed in the following two ways:
·
The additional amount of debris removal is increased
from $10,000 to $25,000 for covered debris removal or can be increased to a
higher limit.
·
A limit of $5,000 applies to debris of other property when
there has not been a direct loss to covered property.
An
important new restriction has been added. The limit now applies per occurrence,
regardless of how many fire departments respond or how many services are
performed. In the previous version of this coverage, the wording was ambiguous
and could have been interpreted as applying per occurrence for each department.
The good news is that the limit can be increased on the declarations page,
which may be a wise decision if the named insured has entered into multiple contracts.
The
only change in this additional coverage is the inclusion of item b., which
specifically states that vegetated roofs, lawns, trees, shrubs, and plants are
not covered. This does not represent a reduction in coverage, as the previous
forms did not specifically exclude these items.
Under
the Coverage Limits, debris removal cost for trees, shrubs, or plants is
eliminated from this section, but it is added to this extension for direct
physical loss or damage. An additional change in this endorsement is that the cost
to remove debris of others, consisting of
trees, shrubs, and plants that land on the
insured's premises, is also part of this
extension. This expansion of coverage works with the Debris Removal Additional
Coverage.
Because
of the expansion of coverage for vegetated roofs and debris coverage for other
property, two restrictions are added:
·
Coverage does not extend to trees, shrubs, or plants
included in vegetated roofs.
·
Debris removal of other property belonging to the named
insured’s landlord is not covered.
The
following items are not part of this extension because they are exceptions to
the Data Records and Programs described in the Property Not Covered Section.
This is not a restriction but more of a consistency that prevents duplicate
coverage and ambiguity.
The
following are not covered:
This
extension covers business personal property while it is temporarily stored in a
portable storage unit or detached trailer. This coverage applies when the unit
or trailer is located on the insured premises, within 100 feet of the premises,
or within 100 feet of the building or structure where the premises is situated.
There
are significant restrictions.
The
coverage is subject to a $10,000 per occurrence limit that applies to covered property in such trailers or units. This is
NOT a per trailer, per unit, or even per premises limit. It is a strictly per
occurrence limit, meaning the maximum that will be paid for damage to all business personal property stored in
temporary portable storage units or detached trailers is limited to $10,000 in a single occurrence. This limit can be
increased on the declarations.
This
verbiage appears to clarify coverage details. When the insured occupies only part
of a building, the wording is changed from "building" or
"site" to "described premises." This adjustment highlights
that being within 100 feet of a premises in a multi-occupancy building may not
provide adequate coverage.
The
only change is the number of days during which coverage applies is increased
from 30 to 60 days.
The
only change, which is significant, is that this coverage now applies to loss of
earnings due to direct damage to a secondary dependent location.
The
Perils Covered is changed from “risks of direct physical loss or damage” to
“direct physical loss or damage.” The phrase “risks of” is removed.
NOTE: This change of
language is due to a PA Supreme Court Case, 401 Fourth St., Inc. v. Investors
Insurance Group.
(BP 0100)
A restriction is added: the insurance company will not pay when hail damages lawns, trees, shrubs, or plants on a vegetated roof.
As with all of
the changes in the earth movement definition, the changes in this exclusion are
put in place to further clarify that earth movement is not covered. The first
paragraph adds the wording that earth movement is not covered under any of the
following:
No other changes
were made to this exclusion. However, when combined with the modifications in
the earth movement definition, significant changes have been made overall.
The only
change in this exclusion is in item 9.b.1). This item clarifies and emphasizes
that the exclusion applies if the water or any material in the water, as
described earlier, is the result of either an act of nature or an act of man.
The
only change in this exclusion is the exception for acts of destruction by the
named insured’s employees also applies to acts of the named insured’s
authorized representatives. Theft by
either remains excluded.
The
only modification is the addition of the following exclusion:
The
theft or other dishonest acts committed by an employee who was already known to
have engaged in such behavior prior to the effective date of this policy are
not covered. For this exclusion to apply, the named insured, including any
partners, directors, trustees, joint ventures, members, or managers, must have
had knowledge of the employee's prior actions.
However,
there is an exception: if one of these individuals who had knowledge colluded
with the dishonest employee, then this exclusion will not apply.
Under 2. Exclusions
Three
significant changes were made to the liquor liability exclusion.
The
new exclusions are as follows:
4) There is no coverage because of allegations of a wrongdoer supervising in the
hiring, employing, monitoring, or training of others who committed negligence
under 1), 2), or 3) of the excluded actions resulting in bodily injury or
property damage.
5) There is no coverage for incidents arising from providing
or failure to provide transportation to an intoxicated person, or for failing
to ensure their wellbeing, which results in bodily injury or property damage.
This applies to the outlined excluded actions in sections 1), 2), or 3).
The third change clarifies that a named insured who
does not serve alcoholic beverages but allows others to bring them onto their
premises is not subject to the liquor exclusion, even if a license is required
for this arrangement. This holds true even if a fee is charged for the
privilege of consuming those beverages on the premises.
This section has
been changed to add the exclusion for any loss, expense, or damages due to
bodily injury.