MARKET SEGMENTS DIVISION—LANDSCAPERS PROGRAM

(February 2023)

 

Collapsible Index

Eligibility

MS LS DS–Landscapers Supplemental Schedule

MS LS 01–Landscapers 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 Landscapers 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 Landscapers Program, including the eligibility, MS LS 01–Landscapers – Supplemental Schedule, 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 landscapers. This includes landscaping and lawn care, lawn maintenance services along with landscapers who install gardens, lawns, plants, and trees.

The only eligible General Liability classifications are:

Landscape Gardening – 97047, Lawn Care Services – 97050, and Tree Pruning, Dusting, Spraying, Repairing, Trimming or Fumigating – 99777.

When any of the above operations combine with others, the risk remains eligible unless those other operations qualify as any of the following general liability classifications:

MS LS DS –LANDSCAPERS SUPPLEMENTAL SCHEDULE

What follows is a discussion of the specific information that needs to be shown on a Supplemental Schedule for the Landscapers 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 LS 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.

Eight specific coverages are listed in this section. A ninth space is available for entering a coverage and limit of insurance.

·         Fire Department Service Charge

·         Money and Securities

·         Money Orders and Counterfeit Money

·         Forgery or Alteration

·         Outdoor Signs

·         Employee Dishonesty

·         Valuable Papers & Records

·         Accounts Receivable

·         Other (Specify)

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

Forms Applicable

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

MS LS 01–LANDSCAPERS ANALYSIS

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

·         CP 00 10–Building and Personal Property Coverage Form

The Landscapers endorsement is not a complete coverage part. 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 Landscapers Program endorsement cannot apply.

This means that if a CPP is issued with a CGL but without commercial property coverage, the Landscapers endorsement cannot be added.

When the Landscapers 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 Landscapers endorsement. Each of the modifications will be reviewed in the following analysis.

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

A. Personal Property of Others

The description of Personal Property of Others in the CP 00 10 is expanded to include property sold to a customer on the condition that the property be installed and accepted by that customer. The named insured’s interest is protected until the installation is complete and the purchaser accepts the property.

Note: This is not an expansion of Your Business Personal Property; it is an expansion of Personal Property of Others. This means that in order for the coverage described in this change to apply, a limit of insurance must be shown on the Commercial Property Declarations for Personal Property of Others.

 

Example: Greater Good Landscapers has been contracted to create a rooftop garden. The plants, shrubs, and piping cost $20,000. Payment is to be made as follows: 50% down, 25% additional when the work is 50% complete, and the remainder when all work is accepted. The work is 90% complete when a windstorm destroys most of the plants and all of the structures. If the insured has Personal Property of Others Coverage, this loss is covered. However, the loss payment is limited to Great Good’s financial interest, which is $5,000, because the customer had paid $15,000 prior to the loss.

 

 

B. Property Not Covered Revision

The reference in the Property Not Covered section to vehicles or self-propelled machines is replaced. It is modified, so that self-propelled machines that a landscaper operates away from the premises are an exception to property not covered. This means the landscaper’s lawn mowing and other types of landscaping equipment are considered covered property.

C. Additional Coverages Change–Fire Department Service Charge

The limit of insurance for Fire Department Service Charge is increased to $5,000.

D. 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 $2,500 can be increased by an entry on the Supplemental Schedule.

The following three types of loss are excluded:

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

Note: No deductible applies to this supplemental coverage.

3. Reward Payment

As an additional coverage, reward payments are available to assist with covered losses that involve crimes. 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.

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 reward is not paid until there is either 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 $1,500, 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

Coverage of up to $2,500 is provided for employee dishonesty that results in the loss of money, securities, or business personal property. The limit of $2,500 can be increased by entering (and paying for) a higher limit in the declarations.

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.

There is no coverage for any type of indirect loss attributable to the employee dishonesty, such as a business income loss, any costs to establish the existence or the amount of a loss or any legal liabilities.

Legal expenses incurred are not covered. 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.

The $2,500 limit (or higher if purchased) is the total amount available to respond to a single occurrence.

The dishonest act or event must happen during the policy period to be covered. However, the loss can be discovered up to one year after the expiration of the policy period.

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.

If the named insured, partner, officer, director, trustee, manager, or member is aware of an employee’s prior dishonest acts, any loss caused by that employee is not covered unless the employee is acting in collusion with the individual who is aware of the past indiscretions.

If a loss that occurred in a prior policy period is discovered during the current policy period, this policy will pay for the loss provided there was no gap in coverage, and the loss would have been covered under this policy if it had been in effect at that time. The maximum payment is the lesser of the current limit of insurance or the prior insurance limit of insurance.

Possible Exclusion Ambiguity

There is one more exclusion, and it may not be very clear. 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. Up to this point, the exclusion is very similar to exclusions in the Commercial Crime Form. 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 Court Case: "Employee Dishonesty Exclusion Superseded Liability for Negligent Supervision"

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 the:

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

E. 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 coverage is changed to prevent duplicate coverage. There is no coverage in this extension for loss or damage to employees’ tools. All such coverage is found in the Employees Tools Extension.

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

The valuable papers and records coverage extension is increased from $2,500 to $5,000 for on-premises loss or damage. It also adds coverage when the valuable papers and records are off premises but only for $2,500. 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 to 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 has 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:

ISO Valuable Papers and Records Coverage Form

AAIS Valuable Papers and Records Coverage

4. Property Off-Premises

The Landscapers Program enhances the property off-premises extension by adding protection for computers while in transit.

This extension is then modified to eliminate coverage for any property covered under the Installation Coverage Extension described later in this form. This modification prevents duplicate coverage.

5. Outdoor Property

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

The program limits for outdoor property are based on the type of 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.

 

Example: Vandals attacked Great Good Landscapers operation. They ran their vehicles over the lawn, destroyed young plantings, and generally destroyed trees, shrubs, and the lawn between the parking lot and the road. The destroyed stock of $15,000 is covered as business personal property of the insured.

Greater Good’s own landscaping sustained damage of $5,000. This is not covered as business personal property because it is outdoor property. It is also not covered under the extension because the damage is due to vandalism which is not a covered cause of loss.

 

 

6. Contractors’ Installation Coverage

This coverage is normally provided under a Commercial Inland Marine Installation Floater.

Related Article: AAIS Installation Floater Coverage Form

The coverage provided by this extension is much more limited than the installation floater, but it may be sufficient for many operations. A comparison should be made between the two coverage forms if a client is contemplating replacing separate installation floater coverage. There is a significant potential for coverage gaps simply because of the differences between an Inland Marine coverage approach and a Commercial Property coverage approach.

The named insured can choose to extend its business personal property limit to include:

This above described property is covered when it is:

The described property is covered while it is waiting to be installed, while it is being installed and while it is waiting to be accepted by the person purchasing the property.

The limit is $10,000 per occurrence and is not increased by the number of job sites or storage locations.

Coverage ends at the earliest of:

There is no coverage for the following property items:

Any damage or loss that is the result of any of the following is not covered:

 

Example: Exotic Landscaping is hired to provide jungle plantings around an outdoor pool. The job is scheduled for four weeks because of the structures that must be built and the plantings that are required. Two weeks into the project, a tornado rips through, destroying not only the items installed but also all items waiting to be installed. Coverage is provided up to the $10,000 limit for the items in which Exotic has a financial interest.

 

7. Employees’ Tools

This extension protects against damage or loss to tools that belong to the named insured’s employees. This extension gives up to $2,500 in a single occurrence at each described premise or job site. There is a cap of $250 for the tools of any one employee. The $2,500 limit may be increased for an additional premium and by entering the higher limit on the declarations.

A locked car warranty is part of this extension. There is no coverage for loss by theft from an unattended vehicle unless the windows, doors, and other compartments are closed and locked and there are visible signs of unauthorized entry. This warranty does not apply to property in the custody of carriers for hire.

8. Accounts Receivable

The limit of insurance for business personal property may be extended to include direct loss or damage created by a covered cause of loss to accounts receivable for:

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.

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

A. Mechanical Breakdown

The mechanical breakdown exclusion does not apply to computers.

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

The only change in the dampness, dryness, 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. The following exclusions apply to computer coverage. Loss or damage due to any of the following is excluded regardless of other concurrently or sequentially occurring causes of loss.

Note: The reason these extra exclusions are needed is that MS LS 01 includes coverage for mechanical breakdown of computers that are 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 the processing, recording or storing of information on computers. There is an exception. Any resulting fire or explosion damage is covered when it is due to 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 a direct lightning loss or damage.

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

Most of the exclusions in the Cause of Loss–Special Form do not apply to the Employee Dishonesty Coverage provided in this endorsement. The only applicable exclusions are Governmental Action, Nuclear Hazard, War and Military Action and the specific exclusions discussed in the Employee Dishonesty Additional Coverage.

Related Article: Basic, Broad and Special Causes Of Loss Forms Analysis

E. Outdoor Signs

Most of the exclusions in the Cause of Loss–Special Form do not apply to the Outdoor Sign Coverage provided in this endorsement. The only applicable exclusions are Governmental Action, Nuclear Hazard, War, Military Action, Wear and Tear, Rust and Mechanical Breakdown.

Related Article: Basic, Broad and Special Causes Of Loss Forms Analysis

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 Receivables

The following exclusions apply in addition to the exclusions described in F. above:

·         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.

III. Changes to the Commercial General Liability Coverage Part

A. One New Coverage Is Added For Landscapers

Landscape Design Errors and Omissions Coverage

This separate Coverage has its own Insuring Agreement, Exclusions, and Supplementary Payments.

1. Insuring Agreement

The coverage is for damages that result from a landscape design error or omission. The only payment is for sums that the named insured becomes legally obligated to pay due to such damages. As with other liability insuring agreements, the insurance company has the right and duty to defend and investigate incidents. This obligation does not exist if the incident is ineligible for coverage. All duty to defend ends when the limit is exhausted by payments.

A limit of $10,000 annually per premises is applicable.

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

The services resulting in the error or omission must have happened or should have happened in the coverage territory during the policy period.

2. Exclusions

The following are exclusions under this coverage part:

3. Supplementary Payments

The supplementary payments section that is applicable to bodily injury, property damage and personal advertising injury also applies to this coverage part.

4. Conditions

Duties in the Event of a Landscape Design Error or Omission Condition replaces the Condition called Duties in the Event of Occurrence, Offense, Claim or Suit as follows:

The named insured must notify the insurance company as soon as practicable that a potential claim situation has occurred and provide the details to identify it, such as name and address, how, when and where the situation occurred.

If a claim or suit is actually presented, the named insured must document all of the relevant information and notify the insurance company in writing as soon as practicable.

All insureds who may be involved in an occurrence must send the insurance company all legal papers, authorize the insurance company to obtain information, cooperate with the insurance company, and assist in enforcing the insurer's rights.

No one, including the named insured, can agree to make any payment unless they make it voluntarily. They cannot act on behalf of the insurance company.

IV. Definitions

Ten definitions are added:

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 a money imitation meant to deceive.

Employee is a defined term only for Money and Securities and Employee Dishonesty coverages.

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 is any director in a limited liability company.

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.

Occurrence, as defined here, applies to only the Crime portions of this form, and the meaning varies by the type of coverage. Under Money and Securities coverage, it means all loss that involves one or more related acts by one or more persons. Under Money Order and Counterfeit Money coverage, it means either one or more related acts or events by one or more persons or one or more related acts or events not involving any person. Under Forgery or Alteration coverage it means all losses involving one or more instruments caused by any person or in which that person was involved. Under Employee Dishonesty it means all losses resulting from a single act or series of acts caused by one or more employees.

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.

Temporary Storage Location is a location where property that is meant to be installed is stored. This applies only if the job site where the property is to be installed is not owned or controlled by the named insured and where work will begin within 30 days or is already progress.

ENDORSEMENTS

There are no specific endorsements that apply to the Landscaping program.

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 Landscapers Program is for the ISO generic program.

Specific Landscaping Operations

This program is designed for landscapers. The eligibility criterion permits a wide variety of operations to be written in this program. A one-person operation is eligible, but so is a multi-employee operation with extensive mobile equipment that performs massive tree trimming and chemical fumigations. A survey questionnaire is needed to determine the services performed by a given landscaper.

 A list of equipment and customers (current and past) should be obtained for any landscaper. That information is critical in determining the scope of a firm's operations.

Key questions revolve around types of fumigation and other chemical treatments a landscaper may perform. It is also important to determine whether the firm has the paperwork (certificates and licenses) that demonstrates they have the expertise and authority to do such work.

Other key information involves the maximum height they will work and the amount of commercial vs. residential work (by percentage). It would also be crucial to review the operation's contracts, including gathering information about any deviations that may be part of their contracts with larger customers.

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: ISO 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: ISO Commercial General Liability Coverage Forms Underwriting Considerations.

Property Enhancements

Several property enhancements are added to the commercial property coverages via the Market Segment 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 contemplated by the program's coverages and rating structure. The exposures should be addressed if any additional coverages, endorsements, premiums, or other tailoring is necessary. The property enhancements with the most significant underwriting concerns are as follows:

Several types of outdoor property, including fences, outdoor antennas, trees, shrubs and plants (other than stock) and outdoor signs are covered.

Electronic data processing equipment and electronic media and records have been added via the enhancement endorsement. Theft is a major concern, along with hostile fire. All media should be backed-up and copies stored off-premises in a safe location.

Equipment breakdown may be included, so the electrical system, including wiring, circuit breakers, and amperage, connecting to the electronic data equipment should be checked to reduce the potential for loss. Surge protection should be installed.

Accounts receivables are covered up to the stated limits. The insured should have adequate back-ups and copies stored off-premises in a safe location. The same is true of valuable papers and records, personal effects, property of others and employees’ tools. The underwriting effort must include a determination of what kind of property is covered by these enhancements, the average and maximum values of such property, and how frequently the insured is exposed to these property hazards.

Installation Floater Coverage is provided for up to $10,000. This provides coverage at a number of locations that are out of the direct control of the insured. There should be a method used to accurately track where all property is located and the status of all installation projects because coverage can continue up to 90 days after a job is complete. If the named insured frequently performs installations, a separate Installation Floater may be more appropriate.

Related Articles:

AAIS Installation Floater Coverage Forms

ISO Installation Coverage Form

Crime and Dishonesty Enhancements

The Landscapers Program endorsement adds coverage for money and securities, money orders and counterfeit paper currency, 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 minimize employee dishonesty losses. Procedures should be implemented and reviewed regularly to monitor and prevent the potential for crime and dishonesty losses.

Related Article: Commercial Crime Coverages Underwriting Considerations

Liability Enhancements

Landscape Design Errors and Omissions provides a limited amount of coverage for mistakes that are made by the design team of a landscaper. It is important to be aware of the training provided to employees who provide the consultation, especially when it involves the purchase of expensive trees and could impact the grading of property.

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 MS LS 01 has a number of enhancements, and those must be priced. It is rated based on the number of employees and whether Earthquake and/or Flood are covered in the other parts of the policy.