Newly Acquired Property. ISO is removing the $100,000 extension for newly acquired business personal property
at the described premises. According to ISO, any increase in BPP is more appropriately handled by an endorsement to the policy or by use of a value reporting form. This change may create a gap if a large shipment is received and cannot be or is not reported until sometime later. The insured must be educated to notify the agent/carrier immediately.
Property in Storage Units. Coverage for BPP located in a temporary storage unit (such as PODS, Packrat, Door-to-Door, Big Blue Boxes, Mobile Mini, etc.) is not expressly provided by the current policy wording that extends coverage to BPP within 100 feet of the described premises. Currently, only property in the open or in vehicles is expressly covered by the policy wording. The new wording specifically extends coverage to BPP temporarily located in portable storage units and is found under the title: Business Personal Property Temporarily in Portable Storage Units
(A.6.g.). Limitations apply to this coverage extension: 1) coverage is provided for 90 days only; 2) the storage unit must be within 100 feet of the described premises; and 3) there is a $10,000 sublimit for all property stored in such units (regardless the number of storage units)(this sublimit can be increased). Whether or not this is broadens or restricts coverage is a function of the specific insurance carrier. If the carrier took the position that BPP in a temporary storage unit did not qualify for the coverage extension, this is a broadening of coverage. However, if the carrier's position was that BPP in storage units did qualify for protection, this is a narrowing of coverage because of the conditions and limits.
Ordinance or Law Exclusion. No change in coverage is created by the new ordinance or law exclusionary wording; the new wording in B.1.a. is simply a policy modernization stating that the exclusion applies to the enforcement of "
or compliance with" (added wording) any ordinance or law.... The term "compliance" seems to indicate that the insured is voluntarily complying with the current ordinance or law - which is a requirement of the permitting process anyway. So, punitive "enforcement" is not required for the exclusion to apply - and it never did. A second change to the provisions related to ordinance or law is found in the increased cost of construction wording (
5.l. under Additional Coverages). The phrase "enforcement of" is replaced with "the minimum standards of...." Again, there is no change in coverage or intent, simply recognition of the "required voluntary" nature of complying with a jurisdiction's building codes. Similar changes are made to the Business Income from Dependent Properties additional coverage wording, the Loss Payment Condition, and the definition of Period of Restoration.
Earth Movement Exclusion. ISO has revised the earth movement exclusion
(B.1.b.) to strengthen the intent of the form by reinforcing that earth movement is excluded regardless of the cause of the earth movement (natural or manmade conditions). Also earthquake is redefined to include tremors and aftershocks to add clarification to the intent of the exclusion.
Dishonesty. ISO actually broadens coverage with this revision to the Dishonesty exclusion
(B.2.f.). Currently loss caused by anyone to whom the insured entrusts insured property is excluded; this could be used to exclude coverage for damage caused by tenants and bailees. The new wording differentiates between those persons who are part of the insured's business (managers, officers, employees, etc.) and "others" not part of the business (such as the aforementioned tenants and bailees). With respect to the "others" category, the exclusion is limited to loss caused by theft. Additionally, the exception to the exclusion is revised to extend coverage to damage caused by authorized representatives (although theft is still excluded).
Employee Dishonesty. Optional Coverage G.3. Employee Dishonesty is changed by the addition of
G.3.b.(4) which excludes coverage when the employee commits a theft or other dishonest act prior to the policy period and the act is/was known by the insured (the you, members, managers, officers, directors or trustees) not in collusion with the employee prior to the policy period. A provision of this optional coverage is that an employee is no longer a covered employee once it is known by one of the above listed insureds has knowledge of a theft or other dishonest act. This new exclusion seems to be based on this coverage provision. If the employee in no longer covered once a theft or dishonest act is known by one of the listed insureds, then it seems reasonable that there should never have been coverage for an employee whose theft or dishonest act was known prior to the policy period (he never qualified for protection).
Specified Causes of Loss. The definition of "specified causes of loss
(H.12.) is expanded to include the accidental discharge or leakage of water or waterborne material as the direct result of the breaking apart or cracking of off-premises municipal water or sewer systems due to wear and tear
(H.12.c.(2)).
Section II - Liability Liquor Liability. ISO is revising the exclusion
(B.1.c.) to specifically state that it applies even when a claim alleges negligence or any other wrongdoing in the: 1) supervision, hiring, training or mentoring of employees or any other party; and/or 2) providing or failing to provide transportation when any person is or is suspected of being under the influence of alcohol. This additional wording can be viewed as either a lessening of coverage, but it appears to be more appropriately viewed as a tightening up of coverage to comply with the apparent original intent.
Electronic Data Exclusion (B.1.q.). ISO is broadening coverage by introducing an exception to the electronic data exclusion if bodily injury occurs.
Section III - Common Policy Conditions Other Insurance. ISO's change to the Other Insurance Condition
(H.2.b.) emanates from requests to remove the requirement in the condition that the named insured be added as an additional insured on another policy "
by endorsement." The "by endorsement" requirement is removed in recognition that some insurance carriers extend additional insured status within its policy language and no endorsement is required. The new wording states that the named insured's coverage will be excess over any other primary insurance that names the insured as an additional insured whether such addition is by endorsement or any other means.
Next week we review the altered and new endorsements specific to the BOP. I would love to hear your feedback, please send me an email
cboggs@ijacademy.com.
Until next time,
Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS
Director of Education
Academy of Insurance
cboggs@ijacademy.com 
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