MARKET SEGMENTS DIVISION—PET SERVICES

(February 2023)

Collapsible Index

Eligibility

MS PT DS–Pet Services Supplemental Schedule

MS PT 01–Pet 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 Pet 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.

This article will discuss items specific to the Pet Services Program, including the eligibility, supplemental schedule, MS PT 01–Pet Services, and the special endorsements developed just for this program. In addition, there are sections on 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

One or more of the following classifications must apply to any applicant who wishes to use the forms associated with the Pet Services Market Segment:

Pet Stores – 16403
Pet Training – 16404
Pet Grooming – 16402
Kennels – 45450
Veterinarian or Veterinary Hospital – 99851

Other classifications may be used along with any of the above. There is no classification that, when used along with any of the above, would make the risk ineligible for this market segment.

MS PT DS– PET SERVICES SUPPLEMENTAL SCHEDULE

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

Nine specific coverages are listed in this section. Space is also available for entering a coverage to be defined and a limit of insurance for it. The coverages that are subject to change are:

Money and Securities
Computer Fraud
Money Orders and Counterfeit Money
Forgery or Alteration
Outdoor Signs
Employee Dishonesty
Spoilage
Valuable Papers & Records
Employees’ Tools
Other (specify)

Note: According to the coverage form, whatever limit is entered is a replacement (not an additional) limit. If an insured wants $5,000 in coverage and the existing limit is $2,500, a limit of $5,000 must simply be entered on the schedule to get the desired level of coverage.

Loss or Damage to Animals Being Boarded (Legal Liability Coverage)

If this coverage is desired, the premises number where the coverage applies must be entered along with an each animal limit, each occurrence limit, and an aggregate limit. However, in order for the coverage to be in effect, MS PT 05– Pet Services-Loss or Damage to Animals Being Boarded (Legal Liability) must also be attached.

Professional Liability

Professional coverage is available for Veterinarians, Pet Groomers and/Pet Trainers. A premium must be entered and the appropriate MS PT professional coverage form attached in order for coverage to apply.

Forms Applicable

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

MS PT 01–PET SERVICES ANALYSIS

The opening paragraph of the Pet Services 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
CP 10 30–Causes of Loss-Special Form
CG 00 01 or CG 00 02–Commercial General Liability Coverage Parts

The Pet Services endorsement is not a complete coverage part of and by itself, and thus, it does not stand alone. 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 Pet Services Program endorsement cannot apply.

This means that if a CPP is issued with commercial property coverage, commercial crime, commercial inland marine and equipment breakdown coverage but no CGL, the Pet Services endorsement cannot be added.

When the Pet Services endorsement is attached, all of the underlying terms, conditions, and provisions of the above three forms apply, with the exception of those that are modified by the Pet Services 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. Change to the CP 00 10 Coverage Form

Animals are considered Property Not Covered in the CP 00 10 except when they are held as stock and kept inside or when the animals are owned by others and being boarded by the named insured. There are two changes under the MS PT 01. The first is that animals of others are covered without requiring the animals to be boarders. The other change is that animals being held for stock are covered without the restriction of having to be inside the building.

Note: Even with the exception, animals are covered only for loss or damage involving specified causes of loss or building glass breakage and then only if they are killed or must be euthanized.

Example: Marty’s Fish Emporium suffers a strange loss. A driver blacks out and his pickup truck crashes through Marty’s showroom window, smashing dozens of fish tanks. Coverage applies to the death of Marty’s owned fish, the fish he is selling on consignment, and the breeding fish he had borrowed.

B. 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 losses 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.

2. Fire Extinguisher Systems Expense (07 13 change)

Up to $5,000 is available in a single 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 $5,000 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 if that crime results in a covered loss to the property portion of the policy. However, the reward payment will be for no more than the least of the actual cash value of the damaged property at the time of the loss, the amount it takes to repair or replace the property, or the settlement value developed based on the policy’s 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 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.

Example: Krimson Gold is stolen from Happy Grooming. Happy Grooming offers a reward for her safe return. Krimson Gold is reunited with her owner, and Happy Grooming submits a claim for $1,500 to the insurance carrier. The claim is denied because theft is not a covered cause of loss for animals.

4. Computer Fraud

If a fraudulent transfer of the insured’s property or money and securities occurs by using a computer, there is coverage for up to $25,000. The transfer must move property or money and securities from inside an insured premises or bank to a person or place outside the insured premises or bank. This limit can be increased on the Supplemental Schedule.

5. 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 $2,500, 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.

6. 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 such instruments that are 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.

7. 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 $5,000. This limit can be increased in the declarations.

8. Employee Dishonesty

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 (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 is a 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 $10,000 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. This limitation is not affected by 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 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. 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.

9. Ordinance or Law – Equipment Coverage

This coverage was inspired by the dynamism surrounding environmental laws. Federal, state and community standards may require changes in equipment when it is replaced for any reason. If so, this coverage pays for the upgrade but only if the equipment’s valuation is on replacement cost and the item is being replaced due to a covered cause of loss.

If refrigeration equipment is damaged this coverage pays three additional costs:

Mandatory refrigeration reclamation
Retrofitting of CFC-type equipment so that it uses non-CPC refrigerant to meet Clean Air Act requirements
Recharge of the system with non-CFC refrigerant

The ordinance coverage is paid only if the equipment is actually repaired or replaced. The total payment cannot exceed the limit of insurance on the declarations.

This coverage does not pay for costs related to pollutant enforcement. Also, if the named insured had an order to comply with an ordinance or law prior to the loss and failed to comply, there will be no payment for that previously neglected upgrade under this Additional Coverage.

Coinsurance does not apply to this Additional Coverage.

When the equipment is actually repaired or replaced, the payment is the lesser of:

Actual amount spent to repair or replace (repair cost cannot exceed the cost to actually replace) – this includes the cost to upgrade to the ordinance or law.
Limit on the Declarations for covered buildings or business personal property.

10. Lock Replacement

If keys for the locks on the premises are stolen or lost, the insurance company will pay up to $5,000 to replace or repair the locks, subject to a $100 per occurrence deductible. The keys can be lost by anyone at any place.

11. Artificially Generated Electrical Current

This coverage is applicable only to computers. When an artificially generated electrical current damages or destroys the named insured's computers the carrier will pay, but only if one 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 applies to this computer equipment.

12. Spoilage Coverage

Coverage applies if perishable stock is damaged by any of the following:

Change in temperature or humidity due to either the failure of on-premises refrigeration, cooling or humidity controlling devices or to an on-premises mechanical breakdown.
Refrigerant contamination
Power outage when it is out of the named insured’s control. This includes any type of interruption of electrical power, on or off the premises, that causes a temperature or humidity change.

The limit of $5,000 can be increased on the Supplemental Schedule.

Any settlement is based on the selling price of the damaged stock minus any discounts or expenses the named insured would have incurred in selling the product but did not incur because the items were damaged.

This coverage has its own set of exclusions as follows:

Earth Movement
Governmental Action
Nuclear Hazard
War and Military Action
Water
Unplugging of the particular refrigeration, cooling or humidity controlling device
Flipping the switch and thereby turning off the electrical power to the device
The electrical utility’s inability to supply power because of either a lack of fuel or because of a governmental order
When there is an on premises power source such as a generator, solar panels or wind turbine and it is unable to supply sufficient power because there is too much demand for power
The breaking of glass that is a permanent part of the refrigeration, cooling or humidity controlling unit

Example: A winter storm knocks out the electricity at Gracie’s Pet Emporium. The owner cannot get to the store for 24 hours because of road conditions. When he arrives, the fish have perished. The refrigerated and frozen pet food is spoiled. The loss of the fish is not covered, but the loss of the pet food is covered for up to $5,000.

Deductible

Editorial Comment: There is a statement that the deductible on the Declarations applies, but there is no spoilage deductible on the supplemental schedule. This paragraph specifically states that no other deductible on the policy applies to this coverage. If left as is, it would appear that no deductible does apply to this coverage even though it is clear that the writers intend for a specific spoilage deductible to apply.

Warranty

The warranty provision states that the named insured must adhere to a refrigeration maintenance or service agreement. If the named insured ends the agreement and fails to notify the insurance company, coverage is suspended at the affected location.

Note: NO suspension is triggered if the agreement's supplier ends the arrangement. Does this mean that if a supplier ends the agreement because of nonpayment, the coverage remains in effect?

13. Relocation of Animals

When a covered on- or off-premises power failure occurs, this item covers the expense of moving animals to another facility and also pays their boarding expenses while there. The named insured must actually incur the expenses. The maximum payment per occurrence at a single premises is $5,000.

Note: This should not be viewed as an extension of the Preservation of Property Additional Coverage. This coverage is not protecting the animals from a potentially covered loss. It provides expense-only coverage for transit and boarding. It does NOT provide coverage for the animals while in transit or at the boarding facility.

C. 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 10 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 computers.

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.

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 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.

AAIS Valuable Papers and Records Coverage Form

ISO Valuable Papers and Records Coverage Form

4. Property Off-Premises

The Pet Services Program enhances the property off-premises extension by adding computers while in transit.

5. Outdoor Property

The Pet Services Program provides coverage for outdoor property (other than outdoor property that is for sale) for the following causes of loss:

Fire
Lightning
Explosion
Riot or civil commotion
Aircraft

The enhanced Pet Services Program applies limits based on the type of outdoor property.

Fences and retaining walls are covered for up to $15,000 in a single occurrence provided they are not part of the building.
Outdoor radio and television, satellite or other antennas are covered for up to $3,000 in a single occurrence. The coverage extends to masts, towers and lead-in and support wiring that are part of the covered items.
Trees, shrubs, and plants are covered for up to $5,000 for any one occurrence, but there is a maximum of $500 for any one tree, shrub, or plant. (Trees, shrubs, and plants that are considered stock or that are part of a vegetated roof are not part of this extension because they are covered as personal property.) The $5,000 limit must also cover any debris removal associated with the loss.

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 reference to the terms and conditions of the rest of extension. There could be an ambiguity as to what limit, if any, applies.

6. Employees’ Tools

The named insured’s business personal property coverage is extended to include loss or damage to employees’ tools. The coverage applies only while the tools are on premises and coverage is limited to $500 for one employee and $2,500 per premises total in a single occurrence. Payment is only for the actual owner of the tools.

Example: Kelli, who works at Furry Fashions Dog Grooming, has purchased her own grooming equipment because she is very picky about how she cares for animals. She has a number of different combs, brushes and other grooming tools because of the varying coats and sizes of dogs. When she returns from lunch one day, the building is on fire. All of the animals are rescued, but her equipment is destroyed. Because of this coverage, Furry Fashions is able to compensate Kelli for the loss of her equipment.

7. Accounts Receivable

The limit of insurance for 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 amounts the named insured is owed from customers but is unable to collect
Interest charges on loans the named insured obtains to offset collections while the insurer is handling the loss settlement
Any additional collection expenses that were created by the loss or damage
Other reasonable expenses incurred to re-establish accounts receivable records

The amount available is $10,000 for on-premises loss or damage and up to $1,500 for off-premises loss.

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. Ordinance or Law

In order to prevent confusion, this explanation is provided. The Ordinance or Law exclusion in the Special Cause of Loss form applies to the entire policy except for the Ordinance or Law – Equipment Coverage Additional Coverage that was added earlier in this endorsement.

B. Mechanical Breakdown

The mechanical breakdown exclusion does not apply to computers.

C. 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.

D. 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 because MS PT 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 due to human errors or omissions in processing, recording, or storing information on computers. (Resulting fire or explosion is covered if caused by a covered peril.)

b. Electrical Disturbance

There is no coverage for damage due to electronic or magnetic injury, disturbance, or erasure of electronic recordings unless it results from a 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:

Micro-processors and any other computer hardware
Software
Operating system software
Networks used by computers
Equipment that is computer related or electronic and associated components
Any other products that depend on the items listed immediately above in any manner.

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.

Advice
Consultation
Design
Evaluation
Inspection
Maintenance
Repair
Replacement
Supervision

2. If a condition that is excluded by Electrical Disturbance, Computer-related Losses and Computer Advice or Consultation exclusions above results in a specified cause of loss or elevator collision, that resultant loss is covered. This does not include the cost to correct the excluded deficiencies or to change any features of the property involved.

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

E. 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 exclusions are Governmental Action, Nuclear Hazard, War and Military Action and the specific exclusions discussed in the Employee Dishonesty Additional Coverage.

G. 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.

H. Valuable Papers and Records and Accounts Receivable

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

· Governmental action

· Nuclear hazard

· War and military action

· Computer-related losses

· Computer advice or consultation

· Continuous or repeated seepage or leakage of water—14 days or more

· Water, other liquids, powder or molten material that leak or flow from plumbing, heating, air conditioning or other equipment caused by or resulting from freezing

· The concurrent causation exclusions that are part of B.3.

Note: This item is very ambiguous because of the difference between the two coverages. Valuable Papers and Records coverage applies only for specified causes of loss and collapse, 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.

I. Accounts Receivable

· The following exclusions apply in addition to the exclusions described in H. 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. Added Coverage for Pet Services

VETERINARY EXPENSES

This is similar to medical expense coverage except that it applies to animals. If an animal requires veterinary treatment because of an accident on or next to the named insured’s premises or due to the named insured’s pet grooming, boarding or training operations, up to $1,000 is available to cover the expenses of that treatment. The accident must occur during the policy period and within the coverage territory, and all expenses must be reported within six months of the accident.

This is no fault coverage and is not an admission of guilt. The expenses covered include medical, surgical, x-ray and dental veterinary services but only when deemed necessary. If an animal dies or must be euthanized, the cost of cremation covered.

Coverage does not apply to an owned animal. It also doesn’t apply to animals for sale or already sold by the named insured. Coverage does not apply for pre-existing conditions, damage that might be covered by the commercial property coverage part, or injury to any animal being treated by the named insured as a veterinarian. An aggregate $5,000 annual limit applies to this coverage.

Example: Yari brought his Golden Retriever, Cooper, to Furry Fashions to be groomed. Kelli washed him, but when the dryer started, he bolted. Kelli watched helplessly as Melody, the store cat, jumped on Cooper’s back, and they careened into a shelf filled with doggie grooming products. Cooper had cuts on his back from Melody and cuts on his legs and head due to the shelving collapse. All veterinary costs Yari incurs for Cooper’s injuries are covered up to $1,000.

B. Who is An Insured

The Who is An Insured section is amended to remove insured status for any person when they provide or fail to provide professional veterinary services.

Example: Kelli, in the above example, has her veterinary license and provides immediate treatment to Cooper. Unfortunately, she was unaware of his underlying health issues, and his condition worsened instead of improved. Yari rushed him to his own veterinarian, and Cooper pulled through but only after a long and expensive course of treatment. Yari sued Kelli and Furry Fashions for these injuries that resulted from her professional care. Furry Fashion’s policy will not respond for either Kelli or Furry Fashion because Kelli was not an insured while providing those veterinary services.

IV. Definitions

Several definitions are added to the Commercial Package Policy via the PET SERVICES Program endorsement as follows:

Computer is a programmable electronic device 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 copy of money that is meant to deceive.

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

This term 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 the termination was 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 party signs another party'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.

Member is one of the owners of 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 that are 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 that result from a single act or series of acts caused by one or more employees.

Perishable Stock is food intended for pets or other animals that must be kept in a controlled environment in order to be preserved, and that could be damaged if the controlled environment is changed.

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.

ENDORSEMENTS

The forms and endorsements developed for the Market Segments series of programs carry the designation “MS.”

Several specific endorsements are available to modify the coverage provided under the pet services program. However, all of the endorsements available under the Property and General Liability Coverage Parts are available under this division.

Commercial Property Program Available Endorsements and Their Uses

Commercial General Liability Available Endorsements and Their Uses

MS PT 04–Pet Services-Veterinarians Professional Liability

The CGL is expanded to include losses related to professional veterinary services being provided or being denied. There is no separate limit for this coverage, so it is part of the CGL occurrence limit subject to the products/completed operations aggregate. It is important to closely compare this endorsement to any specific professional coverage before any coverage change recommendation is made.

MS PT 05–Pet Services-Loss or Damage to Animals Being Boarded (Legal Liability Coverage)

This endorsement provides legal liability coverage for damage to animals under the Building and Personal Property Coverage.

It offers protection against direct loss of or damage to animals while being boarded on the covered premises or temporarily off premises.

The exclusions in the Cause of Loss-Special Form do not apply, but the named insured must be legally liable. In addition, there is no coverage for incidents involving:

A specified cause of loss because coverage is already provided in the CP 00 10
Dishonest, intentional or criminal acts
Professional veterinary services provided by an insured
Pre-existing conditions in the animal

Because this is legal liability coverage, a list of Supplementary Payments is provided in addition to the limit of insurance available under this coverage.

The limits are shown on the Supplemental Schedule.

MS PT 06–Pet Services-Pet Groomers Professional Liability

The CGL is expanded to include losses related to professional pet grooming services either provided or denied. There is no separate limit for this coverage, so it is part of the CGL occurrence limit subject to the products/completed operations aggregate. It is important to closely compare this endorsement to any specific professional coverage before any coverage change recommendation is made.

MS PT 07–Pet Services-Pet Trainers Professional Liability

The CGL is expanded to include losses related to professional pet training services being provided or being denied. There is no separate limit for this coverage, so it is part of the CGL occurrence limit subject to the products/completed operations aggregate. It is important to closely compare this endorsement to any specific professional coverage before any coverage change recommendation is made.

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 the Market Segments Programs developed by the Insurance Services Office, Inc. (ISO), it normally has a set of qualifying criteria. Because there may be differences between the two sources of eligibility criteria, it is important for the insurance professional to be thoroughly familiar with the applicable new business and renewal qualifications.

The following review of the underlying and eligibility requirements for the Pet Services Program are for the ISO generic program.

Specific Pet Services Operations

Risks which use one or more of the following classifications are eligible for coverage under this market segment:

Pet Stores – 16403
Pet Training – 16404
Pet Grooming – 16402
Kennels – 45450
Veterinarian or Veterinary Hospital – 99851

A risk may include all of the above or be limited to only one. The one constant is that animals will be around, and employees will focus their attention on the animals.

Not all animal-related operations are the same. A store that specializes in teacup poodles will have dramatically different exposures from the operation that specializes in training guard dogs. However, there are constants. Animals are living stock that must be cared for. Although legally considered property, the emotion attached to many pets complicates any settlement. Poor treatment of animals has the potential to explode into headlines. In fact, one emerging legal trend seen in courtrooms is consideration of awards for emotional distress for the loss or injury to pets.

Vets who specialize in treating large animals have minimal office exposure, with basic storage of equipment, medicine and paperwork on premises. Small animal vets and clinics that do surgeries may use flammable anesthetic gases to help in the surgery. There is also cleaning equipment that is necessary to maintain a sterile environment. Medical equipment may be covered as personal property or under a Physicians and Surgeons form. If grooming and kennel services are offered, additional exposures are added. Key questions are the use of flammable liquids, storage items, and types of animals on premises. Damage to property due to animal escape is a concern. Crematories or incinerators on premises pose additional fire hazards due to the high temperatures required to cremate animals or burn body parts.

Many pet stores that sell dogs and cats are under constant pressure from animal rights activists, which can cause a liability issue and also potential vandalism problems. Other stores may support animal rescue groups and allow them to conduct events on their premises.

Kennel operations are changing, with more now providing open play areas. This can lead to aggressive behavior and injuries to animals and employees. Some kennels also offer live stream videos of their animals, which increases the overall property exposure. These videos can also be used against the insured in a lawsuit.

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.

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 t detail under the commercial general liability section.

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:

Accounts receivables are covered up to $10,000. The insured should have copies of records stored at a safe, off-premises location.

Outdoor Signs coverage is provided for up to $5,000 with very broad causes of loss. This can be significant if the operation is in a wind prone area.

Employee Tools coverage is limited but could be significant for certain operations, particularly if it has an above average number of employees.

Relocation of Animals expense coverage is provided for up to $5,000 when there is a power failure. A minor power outage could result in a significant loss if all of the animals must be moved.

Ordinance of Law – Equipment Coverage could add significantly to the replacement of property following a loss. The limits should be sufficient to pay for updating the equipment. It is also important to determine the moral hazard that this coverage could present.

Spoilage Coverage is at $5,000 but can be increased. This is coverage only for food. It is important to know how much is kept on premises at any one time.

Crime and Dishonesty Enhancements

The Pet Services Program endorsements add coverage for money and securities, money orders and counterfeit paper currency, forgery and alteration and employee dishonesty. The limits for money and securities and employee dishonesty can be increased. The veterinary medications can be very attractive for theft. There should be a procedure for its handling to prevent employee theft.

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.

It is important to know if the named insured has employees or independent contractors.

Related Article: Crime Underwriting Considerations

RATING CONSIDERATIONS

The rating for this product is the same as any other package product. All coverages must be rated according to the rules found in the ISO Commercial Lines Manual. The MS PT 01 has a number of enhancements, and pricing should be in place for any one that is used. It is rated based on the number of employees and whether Earthquake and/or Flood are covered in the policy's other parts.