MARKET SEGMENTS DIVISION—JANITORIAL SERVICES

(February 2023)

 

Collapsible Index

Eligibility

MS JS DS–Janitorial Services Supplemental Schedule

MS JS 01–Janitorial Services Analysis

I. Modifications To CP 00 10–Building And Personal Property Coverage Form

II. Modifications To CP 10 30–Causes Of Loss–Special Form

III. Changes To The Commercial General Liability Coverage Part

IV. Definitions

Endorsements

Underwriting Considerations

Rating Considerations

The Janitorial Services Program is an enhancement of the Commercial Package Policy. Any package written under the market segment division must be assembled according to the rules for all Market Segment policies.

Related Article: ISO Market Segment Overview This article will discuss items specific to the Janitorial Services Program, including the eligibility, supplemental schedule MS JS 01–Janitorial Services underwriting and rating.

This article is based on the 07 13 edition of this program. Changes from the prior edition are in bold print.

ELIGIBILITY

This program is designed for janitorial services that clean building interiors. The only eligible General Liability classification is 96816. If a janitorial operation includes exposure to other general liability classifications, it continues to be eligible under this program unless any of the following classifications:

MS JS DS–JANITORIAL SERVICES SUPPLEMENTAL SCHEDULE

What follows is a discussion of the specific information that needs to be shown on a Supplemental Schedule for the Janitorial Services Program.

Changes in Limits

This section's only purpose is to increase insurance limits. If no limit is entered, the limits shown in the MS JS 01 apply. Any limit changes are effective on a per location basis. This allows protection for one or two locations to be increased without affecting the remaining locations.

Ten specific coverages are listed in this section. An eleventh space is available for entering a coverage and limit of insurance.

Note: Any limits entered are replacement limits to those described in the coverage form. This means they are not an addition to the existing limit.

Forms Applicable

The final section of the Supplemental Schedule allows for the listing of specific endorsements by premises.

MS JS 01–JANITORIAL SERVICES ANALYSIS

The opening paragraph of the Janitorial Services endorsement clarifies which of the coverage forms and the property causes of loss form are being modified by this endorsement. They are:

The Janitorial Services endorsement is NOT a complete coverage part, so it must be attached to a package containing all three of the above named forms. If all three forms are not a part of the policy, the Janitorial Services Program endorsement cannot apply.

When the Janitorial Services endorsement is attached, all of the underlying terms, conditions, and provisions of the above three forms apply, with the important exception of the items modified by the Janitorial Services endorsement. Each of the modifications will be reviewed in the following analysis.

I. Modifications to CP 00 10–The Building and Personal Property Coverage Form

A. Property Not Covered Changes

The reference in the Property Not Covered section to vehicles or self-propelled machines is replaced. It is modified to include a list of vehicles or self-propelled machines that are covered. Self-propelled machines that a janitorial service typically operates at a client's premises are therefore considered covered property.

 

                                                                       

Example: Trimpe’s Janitorial owns a forklift primarily used at client premises. Trimpe’s owner let a friend borrow the forklift to help move some items in the friend’s warehouse. Trimpe’s friend catches the corner of a warehouse wall and damages one of the forklift tines. Because the forklift is primarily used in Trimpe’s operation, the forklift damages should be covered.

 

B. Additional Coverages Changes

The Limit for Fire Department Service Charge is increased to $5,000.

C. Additional Coverages Additions

1. Money and Securities

Coverage is added for direct loss by theft, disappearance, or destruction of money and securities. This additional protection is effective if a loss occurs at a covered premises, a bank or savings institution, living quarters of the named insured, partner or employee and while the property is in transit between any of these locations. Coverage at employee living quarters applies only if that employee was given the covered property to use or hold on behalf of the named insured.

The automatic amount of $5,000 applies when the covered property is either in the described premises or at a bank, while the $2,500 applies when the covered property is anywhere else. Either or both limits can be increased by an entry on the Supplemental Schedule.

The following three types of loss are excluded:

·         Losses that result from errors or omissions in accounting or arithmetic.

·         Losses that occur because the property was voluntarily given out in an exchange or purchase

·         Any loss of covered property that is contained within any money-operated device (such as a vending machine). This exclusion does not apply if the device has a continuous reading instrument that records all amounts that are deposited or stored in the device that is covered.

Occurrence is defined under this segment as any loss that involves a single act or a series of related acts by one or more individuals. The named insured is required to keep records of all money and securities to verify any loss.

In order to avoid conflict, the policy states that if there is coverage provided in this section, the Property Not Covered does not apply to this particular coverage.

2. Fire Extinguisher Systems Expense (07/13 change)

Up to $2,500 is available in any one occurrence to pay the cost of recharging or replacing fire extinguishing equipment and systems. Coverage applies only if the discharge is within 100 feet of a described building or within 100 feet of the premises. The greater of the two distances is used to determine if coverage applies.

In addition, if the covered property is damaged due to an accidental discharge, it is covered but subject to the same $2,500 limit. No deductible applies to this coverage.

There is no coverage if the system is discharged during testing or installation.

3. Reward Payment

As an additional coverage, reward payments are available to assist in solving crimes that result in covered losses. The coverage consists of two categories of rewards. In the first category, up to $5,000 is available for information that leads to the arrest and conviction of any party that commits a crime resulting in a covered loss to the property portion of the policy. The coverage limit is also subject to the actual cash value of the damaged property at the time of the loss or the amount it takes to repair or replace the property, or however the value of the property has been determined by policy conditions. In other words, the policy would not pay $4,000 for information related to a crime that caused a $1,500 loss.

The second category of reward payment applies to the return of stolen property and is also for a maximum of $5,000. The reward amounts shown are the most that are available for any one occurrence. Should more than one source provide information or return stolen property, payment is made to the one that acts first.

 

Example: Sanitaree Services advertises an award for help with the theft of some expensive cleaning equipment. The police department receives the following information that leads to the capture of the thieves.

  • Party One – August 12 - Voluntary source.
  • Party Two – September 1 - Voluntary source.
  • Party Three – September 15 - Voluntary source.

All three provide information that leads to the capture of the thieves. The $1,500 reward goes to Party One, the first to respond.

 

Who is eligible to collect the award? Only one person can receive the reward. The first person, as determined by law enforcement, who voluntarily provides information that leads to a conviction or leads to the stolen property will receive the reward. However, that person cannot be any of the following:

·         The named insured

·         Family members of the named insured

·         Employees

·         Family members of employees

·         Employees of law enforcement agencies

·         Employees of a business engaged in property protection

·         Any person having custody of the covered property at the time the theft was committed

·         Any person involved in the crime

The reward is not paid until there is a conviction or the property is returned.

4. Money Orders and Counterfeit Money

If the named insured, in good faith, provides services or hands over money or merchandise to another party who pays with unrecoverable money orders or counterfeit money, coverage is provided for the loss to the named insured. The maximum payout is $5,000, but it can be increased on the Supplemental Schedule. There is a limitation that money orders are covered only if they were issued by a post office, express company, or bank. Counterfeit money is also restricted to only money accepted during the course of business.

5. Forgery or Alteration

Loss that occurs because of the forgery or alteration of checks, drafts, promissory notes, bills of exchange or any similar instruments is covered. Such instruments must be issued by the named insured, the named insured’s agent, or someone impersonating either of these parties. There is no coverage if the loss is for instruments received by the named insured from other sources.

If the named insured realizes that an instrument has been forged or altered and refuses to honor it, this coverage also pays related and reasonable legal expenses that may ensue. The named insured is given written permission to go ahead with their own defense, and the named insured will be reimbursed for those expenses.

The $2,500 limit is the most that will be paid under this coverage for a single loss. The amount may be exhausted by the loss itself, the defense of a suit or a combination. The limit can be increased on the Supplemental Schedule.

6. Outdoor Signs

Direct damage to outdoor signs owned or under the control of the named insured is covered. This coverage supersedes any other coverage provided for signs elsewhere in the policy.

The any one-occurrence limit is $2,500. This limit can be increased in the declarations.

7. Employee Dishonesty (07 13 change)

Coverage of up to $5,000 is provided for employee dishonesty that results in the loss of money, securities, or business personal property. The limit of $5,000 can be increased by entering a higher limit in the declarations.

The coverage extends to theft of client’s property by an identified employee. The client’s property must have been on the client’s premises and must be property that the client owns, leases or that the client is holding for others or is otherwise legally liable for. This coverage is for the benefit of the named insured, not the client, and all loss payments are settled with the named insured.

 

Example: Pablo’s Office Services provides janitorial services to Kleinfeldt Packaging. One morning Pablo received notification from Jake at Kleinfeldt that three computers Kleinfeldt was packaging for a client were missing. Jake was the last to leave the night before and could attest that the computers were there when he left. There is no sign of breaking and entering, so Jake is 100% sure it is Pablo’s responsibility and either wants the computers returned or compensation for his customers. Pablo questions his crew, who all deny any involvement. Since he can’t identify the employee(s), there is no coverage for any compensation he may have to provide Kleinfeldt.

 

 

The employee may be working alone in committing the dishonest act(s), or the employee may collude with other persons. However, if any of those other persons include the named insured or a partner, member or manager of the named insured, there is no coverage.

An inventory computation and/or profit and loss statement cannot be the sole proof that a loss has occurred or be the sole method of establishing the value of the loss. In other words, there must be tangible evidence that a dishonest act occurred, and there must be a way to calculate the amount of that loss accurately.

If the named insured, a partner, officer, trustee, manager member, or director of the named insured discovers that an employee was previously involved in a dishonest act, there is no coverage for any acts of that party. It doesn’t matter whether the incident occurred before or after the insured hired the employee—coverage ceases. The termination takes effect the moment the party's prior act is discovered. There are no exceptions to this exclusion unless the insurer is willing to write a manuscript endorsement to document an exception.

The $5,000 limit or the higher limit on the supplemental schedule is the total amount available to respond to a single occurrence. The maximum is not affected by the loss involving more than one party or by it involving a series of related acts.

The dishonest act or event must happen during the policy period to be covered.

The limit of insurance is not cumulative from year to year, so the limit shown is the maximum that will be paid for any one occurrence of a dishonest act or event, regardless of how many years the policy has been in force or how much premium has been paid.

The act or event that causes a loss must have not only occurred during the policy period but must also be discovered no later than one year from the end of the policy period. There is an important exception. If the insured suffers a loss that would have been eligible under a previous policy but was not discovered until after the one-year limitation expired, there may be coverage. However, the old loss would have to meet two criteria. First, this policy must be the replacement for the one in force when the loss actually occurred. Second, the loss would have to involve a loss that is eligible under this policy provision. In addition, any payment made is subject to the current policy term's insurance limit (unless the prior term's limit was lower).

Possible Exclusion Ambiguity

There is an exclusion that may be confusing. It states that loss or damage due to a dishonest act performed by the named insured and any partner, member, officer, manager, director, or trustee is ineligible for coverage. However, the exclusion also bars loss for dishonest or criminal acts by authorized representatives and by anyone to whom the named insured has entrusted property. This part of the exclusion may be problematic. Doesn’t the named insured entrust items to employees as part of their duties? Aren’t employees authorized representatives? This wording is NOT used in the Commercial Crime policy and could cause confusion after a loss.

Related Article: Employee Dishonesty Exclusion Superseded Liability for Negligent Supervision – Illustrates how this issue was treated under another line of coverage.

8. Artificially Generated Electrical Current

This coverage is applicable only to computers. When artificially generated electrical current damages or destroys the named insured's computers, the carrier will pay, but only if either of the following applies:

·         An occurrence that causes the loss or damage takes place within 1000 feet of a described premises

·         Power surge, interruption of power, blackout, or brownout is due to an occurrence that took place within 1000 feet of the premises

Any loss payment is subject to the deductibles in the policy and the limit on the Declarations that apply to this computer equipment.

9. Key and Lock Replacement (07 13 changes)

If a client’s keys that have been entrusted to the named insured or the named insured’s employee are stolen or lost, the insurance company will replace the locks and the keys at that client’s premises.

The loss must not be attributable to a criminal act by the named insured or its managers, directors, trustees, employees (this includes temporary or leased employees), partners, or authorized representatives of the named insured. If any other person is given keys by the named insured, there is no coverage for any theft loss attributable to that person.

The exclusions apply to actions at any time during the day. The exclusions do not apply to employee acts of destruction that are not considered theft.

The limit is $5,000 per occurrence with a $100 deductible.

 

Example: Grandy’s Cleaning Services is entrusted with keys for all its residential clients. A tornado rips through Grandy’s office complex. The clients' keys are scattered because of the storm, but the clients' homes are not damaged. A total of $5,000 is available to replace the clients’ keys and locks after Grandy notifies them of the loss.

D. Coverage Extensions Changes

1. Newly Acquired or Constructed Property

The only change is for computers. Coverage at newly acquired or constructed property in the CP 00 01 ends at the earliest of when the policy expires, thirty days after the property is acquired or when the values are reported to the insurance company.

This coverage extension adds one additional time of coverage ending, but it applies only to computers. When ‘specific insurance’ is purchased at the newly acquired premises, coverage ends. The other times also continue to apply to computer.

Note: This extra item is confusing because it doesn’t say that coverage specific to computers is purchased but instead says only ‘specific insurance.’ This confusion could be an ambiguity to the benefit of the insured.  

 2. Personal Effects and Property of Others

The limit is increased from $2,500 to $5,000 and can be further increased on the Supplemental Schedule. In addition, the coverage is extended to apply while in transit and while on a client’s premises.

A maximum amount of $500 is available for an individual client, but there is no deductible to apply for client losses.

 

Example: Kris was listening to his radio as he cleaned Sheila’s office and became very engaged with the music. He knocked over some office shelving when he struck it with his broom. The damage to Sheila’s personal figurines is covered by up to $500.

 

3. Valuable Papers and Records (Other than Electronic Data)

The valuable papers and records coverage extension is increased from $2,500 to $10,000 for on-premises loss or damage. It also adds coverage when the valuable papers and records are off premises but only for $5,000. These limits can be increased for an additional premium.

Coverage is expanded to include not only the cost to replace or restore the lost information but also any physical loss or damage to the valuable papers and records owned by or in the named insured’s care, custody or control. The coverage extends to the cost of blank material and the labor necessary to transcribe any available records.

The covered cause of loss is more restricted and must be due to a specified cause of loss as defined in the CP 10 30–Causes of Loss - Special Form or due to collapse. Property that is held as samples or that have been sold and is waiting to be delivered is not covered. Any property that is being stored off premises is also not covered.

Note: If higher limits are needed, consider using one of the following forms because of causes of loss and coverage designed just for this exposure.

Related Articles:

AAIS Valuable Papers and Records Coverage Form

ISO Valuable Papers and Records Coverage Form

4. Property Off-Premises

The Janitorial Services Program enhances the property off-premises extension by adding computers while in transit. The coverage is also extended to include janitorial equipment and any supplies that may be stored at a client’s premises.

5. Outdoor Property

The Janitorial Services Program provides coverage for outdoor property for the following causes of loss:

Limits are based on the type of outdoor property.

The expense to remove property of others consisting of trees, shrubs, and plants debris is covered under this item. The property of others cannot belong to the owner of the building when the named insured is a tenant.

Note: No limit is mentioned with the expense to remove property of others item, although there is a reference to the terms and conditions of the rest of extension. There could be an ambiguity as to what limit, if any, applies.

6. Accounts Receivable

The limit of insurance for the business personal property may be extended to include direct loss or damage to accounts receivable from a covered cause of loss. Coverage applies to:

The amount available is $5,000 for on-premises loss or damage and up to $2,500 for off-premises loss. The limit can be increased for an additional premium, and the higher limit will be shown in the declarations.

The reference to accounts receivables in the Property Not Covered section is deleted in regard to this supplemental coverage.

Note: If higher limits are needed, consider using one of the following forms because the coverage is designed just for this exposure.

Related Articles:

AAIS Accounts Receivable Coverage

Accounts Receivable Coverage

II. Modification to CP 10 30–Causes of Loss-Special Form

Several exclusions and limitations found in the CP 10 30–Causes of Loss-Special Form are modified for some of the additional coverages and coverage extensions. The modifications are as follows:

A. Mechanical breakdown

Mechanical breakdown references in the Exclusions section do not apply to computers.

B. Dampness, Dryness, Changes in Temperature, Marring or Scratching

The only change in the dampness, dryness, and changes in temperature, marring or scratching exclusion subparts is the dampness or dryness of the atmosphere portion.

An exception is added so that when an air conditioning system used with the computer is damaged by a covered cause of loss, the resulting damage to a computer because of any dampness or dryness is covered.

C. Additional Exclusions for Computer Coverage Only

1. Loss or damage caused directly or indirectly by any of the following are excluded. The exclusion applies even if other causes of loss contribute either concurrently or in sequence.

Note: The reason these extra exclusions are needed is that MS JS 01 includes coverage for mechanical breakdown of computers that is not provided by the CP 10 30.

a. Errors or Omission

There is no coverage for damage or loss caused by or resulting from errors or omissions in processing, recording, or storing information on computers. There is an exception. Any resulting fire or explosion is covered if caused by a covered cause of loss.

b. Electrical Disturbance

There is no coverage for damage caused by electronic or magnetic injury, disturbance, or erasure of electronic recordings unless it is a result of direct loss or damage caused by lightning.

c. Computer-related Losses

There is no coverage for any loss or damage that is caused by or results from the failure, malfunction, or inadequacy of any of the following (regardless of who owns the property) because they cannot correctly recognize, process, distinguish, interpret, or accept dates or times:

d. Computer Advice or Consultation

Any of the following provided by the named insured or for the named insured is not covered when used to determine, test, or rectify potential or actual problems described in exclusion c. above.

2. When Electrical Disturbance, Computer-related Losses, and Computer Advice or Consultation excluded above result in a specified cause of loss or elevator collision, that resultant loss is covered. However, there is no payment to repair, replace, or modify any item listed in exclusion c. above.

The damage from an elevator collision must involve the elevator experiencing a mechanical breakdown.

D. Employee Dishonesty

The only exclusions in CP 10 30–Cause of Loss-Special Form that applies to the Employee Dishonesty Coverage are Governmental Action, Nuclear Hazard, and War and Military Action. All other exclusions are a part of the Employee Dishonesty Additional Coverage.

E. Outdoor Signs

F. Valuable Papers and Records and Accounts Receivable

The only exclusions that apply to Valuable Papers and Records and Accounts Receivable are:

Note: This item is ambiguous because of the difference between the two coverages. Valuable Papers and Records coverage applies only for specified causes of loss and collapses, while accounts receivable coverage is subject to the CP 10 30 causes of loss. Remember that under the Valuable Papers Coverage Extension only specified causes of loss and collapse are considered covered causes of loss. Combining the two coverages under this same modification would suggest that the two are covered for the same causes of loss when they are not.

G. Accounts Receivable

As noted in F. above, most of the exclusions in CP 10 30 do not apply to Accounts Receivable, but the following ones that are unique to Accounts Receivable are added:

·         Loss involving alteration, falsification, concealment, or destruction of accounts receivable records if these actions were meant to conceal another action, such as giving, taking, or withholding money, securities, or other property.

·         Loss due to errors or omission in a covered operation's bookkeeping, accounting or billing functions.

·         Loss that is only found due to an audit or inventory. There must be some other outside evidence.

H. Property in Transit

The Special Cause of Loss Form Additional Coverage Extension of Property in Transit is increased to $10,000 and can be increased on the Supplemental Schedule.

III. Changes to the Commercial General Liability Coverage Part

A. A New Coverage for Janitorial Services is Added

YOUR WORK COVERAGE

This is a separate Coverage Part with its own Insuring Agreement, Exclusions, and Conditions.

1. Insuring Agreement

The coverage is for damage to a client’s property caused by the work performed by the named insured. The work must have been completed by the named insured or its employees during the policy period. The named insured must agree that payment is necessary and must have received a request for payment from the client within 90 days of the completion of the work. This coverage does not include defense costs or other services.

2. Exclusions

There are three exclusions:

The important part of this coverage is that legal liability is not required to be proven. This is a no-fault coverage over which the named insured exercises control. If the named insured agrees that there is damage and the damage is not otherwise excluded under the policy, the named insured can satisfy the complaint and then provide all of the detail to the insurance company for repayment.

A limit of $5,000 per occurrence and a $10,000 annual aggregate limit are applicable.

There is a $250 per occurrence deductible applicable before the insurance company begins to pay anything.

 

Example: Kwick Clean received a call from its largest client. A large vase on its atrium had split open. It was undamaged the day before, so the client is sure the damage was caused by Kwick Clean. The value is $1,000. Kwick Clean cannot verify its employees caused the damage, but it does not want to lose this client. It pays the client and requests reimbursement from the carrier under this coverage.

 

3. Conditions

Duties in the Event of a Claim replaces the condition called Duties in the Event of Occurrence, Offense, Claim or Suit and requires that the named do all of the following:

IV. Definitions

Twelve definitions are added:

Client is anyone who has a written agreement with the named insured to perform services for a particular location and who has been billed for the services performed by the named insured.

Client’s Premises is used only with Employee Dishonesty and Property Off Premises Coverage. It is the interior of the portion of the building that a client occupies for their business operations. This means that if a client is in a large office complex and occupies only one office, the client’s premises is that office and any allotted storage space. No other area of the complex would qualify as a client's premises.

Computer is programmable electronic devices used to work with data. While the definition does apply to peripheral equipment and to related air conditioning and fire suppression systems, it doesn’t apply to data or media.

Counterfeit money is an imitation of money meant to deceive the parties to whom it is given.

Employee is a defined term only for Money and Securities and Employee Dishonesty coverages. (07 13 changes)

Employee is expanded beyond the full-time employee of a business. There are seven different categories that qualify as employees:

a.     An actual person (not a corporation) who is paid by the named insured and is under the control of the named insured with respect to performing his or her duties. The person remains an employee for 30 days after termination but only if termination is not related to dishonest actions.

b.    A person who is a substitute for an employee or is hired for short temporary work is considered an employee while under the control of the named insured except when caring for property off-premises.

c.     A person leased to the named insured that is not a person described in a. or b. above. There must be a contract and a labor-leasing firm involved.

d.    A consultant for the named insured but only if that consultant was formerly an employee, director, partner, member, trustee, or manager.

e.     A guest student or intern but only while acting as a student or providing services for the named insured. There is no coverage for loss of property off premises.

f.      Any employee of an entity that merged with the named insured or was acquired by it prior to the policy effective date.

g.    Managers, directors or trustees when acting as employees or while on a task-oriented board.

An employee does not include independent contractors or similar type individuals unless specifically described in the list above.

Forgery is when one person signs another person’s name with the intent to deceive. It does not include an unauthorized signing by a person of his or her own name.

Manager applies to any director in a limited liability company.

Member is one of the owners of a limited liability company. (07 13 addition)

Money includes all currency, coins, and banknotes with a face value and in current circulation, plus money orders, travelers’ checks and similar items held for sale to the public.

Other property is property that has an intrinsic value other than money and securities, BUT it doesn’t include property that is described under the property not covered part of the policy. This definition is used only in the Employee Dishonesty Coverage under the Client’s property.

Securities are evidence of debt such as stock certificates, bonds, contracts, tokens, stamps, credit card evidence that can be used to collect from the credit card company, and other items that represent money but are not money. Food stamps and lottery tickets are also considered securities.

Theft is used only in Employee Dishonesty Coverage and is the taking of money, securities or other property in an unlawful manner but only if it deprives the client.

ENDORSEMENTS

There are no specific endorsements that apply to the Janitorial Services program. However, it is important to remember that all of the endorsements available under the Property and General Liability Coverage Parts are available under this division.

Related Articles:

Commercial Property Program Available Endorsements and Their Uses

Commercial General Liability Available Endorsements and Their Uses

UNDERWRITING CONSIDERATIONS

Any program offered by an individual insurer will have its own set of eligibility guidelines. If the program is a generic or standard program, as in the case of ISO’s Market Segments Program, it normally has a set of qualifying criteria. Because there may be differences between the two sources of eligibility criteria, the insurance professional needs to be thoroughly familiar with the applicable new business and renewal qualifications. The following review of the underlying and eligibility requirements for the Janitors Program are for the ISO generic program.

Janitorial Service Operations

Underwriting the janitorial classification requires a careful analysis based on the types of jobs handled. The damage that can be done by a janitorial service depends on the susceptibility of the property being handled and the services offered. Any work in or around “sterile” areas is extremely sensitive and requires a high degree of expertise. Working in non-sterile parts of an operation with sterile parts can lead to problems if the work is above the sterile environment or requires access to the sterile environment. Also, any work in and around sophisticated and elaborate machinery requires a high degree of care. This means that the first part of underwriting any janitorial service starts with a list of services provided and the current client list.

The next part involves a review of contracts to see what assumptions of liability have been made and guarantees offered. A listing of equipment and where it is stored is important to understand the susceptibility of equipment to loss and to see if the type of equipment matches the type of services being offered.

A final but major part of the underwriting is the screening and supervision of employees. Employees will be off premises with a high potential for interaction with clients. Employees should never work alone for their own protection but also protection of the client. There should be procedures for check-in and check-out, key handling and other security measures to protect the client.

COVERAGE ISSUES

Commercial Property Coverages

Many of the issues related to the underwriting of commercial property insurance, such as construction, occupancy, physical characteristics, types of rates and so forth, are discussed in detail under the commercial property section.

Related Article: Commercial Property Program Underwriting Considerations

Commercial General Liability Coverages

Many of the issues related to the underwriting of commercial general liability insurance, such as claims-made versus occurrence coverage, limits, deductibles, endorsements, and so forth, are discussed in detail under the commercial general liability section.

Related Article: Commercial General Liability Policy Underwriting Considerations

Property Enhancements

Several property enhancements are added to the commercial property coverages via the Janitorial Services endorsement. Any increase in exposure presented by the individual risk hazards and covered by the endorsement enhancements should be identified. Once identified, these hazards and exposures should be evaluated to determine if they are those contemplated by the program's coverages and rates. The property enhancements with the most significant underwriting concerns are as follows:

Accounts receivables are covered up to the stated limits and conditions. The insured should have adequate copies of records stored off-premises in a safe location. The same is true of valuable papers and records.

Property in Transit is increased to $10,000 and can be increased to higher limits. These types of limits should focus underwriting on the method of transport, types of items being transported, and safety controls in place.

Key and Lock Replacement coverage is limited to $5,000 per occurrence. This coverage should not be used as a substitute for procedure and controls for clients’ keys.

Crime and Dishonesty Enhancements

The Janitorial Services Program endorsements add coverage for money and securities, money orders and counterfeit money, forgery and alteration and employee dishonesty.

The insured should be evaluated for crime protection devices, including the type of devices used and how they are maintained. The evaluation should include alarms, locks, lighting, fencing, guards, or other security measures.

Sound hiring procedures, background checks, and internal controls are necessary to avoid and prevent employee dishonesty losses. Procedures should be implemented and reviewed regularly to minimize the potential for crime and dishonesty losses.

The insured's client’s property is protected under the Employee Dishonesty provision, and employees on the clients’ premises should be monitored. Particular care should be paid to establish controls on who has keys to client premises.

Related Article: Crime Underwriting Considerations, for more information

Liability Enhancements

Your work coverage provides $5,000/$10,000 coverage for damage caused by the work of the named insured. The named insured should have a method in place that prevents careless mistakes in handling client’s property in order to avoid minor accidents.

RATING CONSIDERATIONS

The rating for this product is the same as any other package product. All coverages must be rated in accordance with the Commercial Lines Manual for the specific coverage part.

The basic MS JS 01 is rated based on the number of employees and whether Flood and/or Earthquake are provided in the underlying policies. In addition, there are charges made for any increases in limits.