| | | | | Businessowners Program Changes
Part 2 - Endorsements Insurance Services Office (ISO) filed revisions to 32 Businessowner Policy (BOP) endorsements. In the same filing, ISO introduced nine new endorsements. Like the revisions to the BOP form itself, many of these changes follow the alterations and additions made to the commercial property and general liability lines. As stated in part one of this two-part series, this filing begins taking effect July 1, 2013, but actual implementation varies by state. Article continues after the jump | | | | | | | | Can or should agents consider themselves the insured's "risk manager?" Can or should agents claim to provide "Enterprise Risk Management" services? Regular Price: $129 Just $89 Today » | | | | | | | Revised Endorsements Additional Insured - State Or Political Subdivisions - Permits Relating To Premises Endorsement (BP 04 07) and Additional Insured - State Or Political Subdivisions - Permits Endorsement (BP 04 52): These endorsements are revised to explicitly allow for any governmental agency or subdivision (federal or state) to be named as an additional insured. The endorsements are also revised to address situations in which a permit may not be issued, but the governmental agency or subdivision "authorizes" the insured to perform operations. This is accomplished by referencing the issuance of permits or the giving of authorization to the named insured to perform operation. Lastly, ISO revised the title of these endorsements to reflect these changes. Professional Services Endorsements: Five "professional services" exclusion endorsements are revised in this filing. The impetus for these changes is an unpublished Fourth Circuit Court of Appeals case from 1999, Liberty Life Ins. Co. v. Travelers Indem. Co. of Illinois. The court held that the exclusion in the CGL form that barred coverage for the claim against an employee did not apply to Liberty Life in its oversight role as the agent's principal (in essence, for its vicarious liability). In response to this finding, ISO enhanced the exclusionary wording to specifically address and exclude claims alleging insured negligence or other wrongdoing in the hiring, employment, training, supervision or monitoring of others. ISO views this as a reinforcement of coverage intent and not a reduction in coverage; however, these changes may be viewed as a reduction in states where courts have ruled that the professional services exclusion does not apply to these types of vicarious liability claims. These changes were made to 34 CGL professional services endorsements and to the following five BOP endorsements: - Barber Shops and Hair Solons Professional Liability Endorsement (BP 08 01)
- Optical and Hearing Aid Establishments Endorsement (BP 08 03)
- Pharmacists Endorsement (BP 08 07)
- Beauty Salons Professional Liability Endorsement (BP 08 09)
- Limited Exclusion - Personal and Advertising Injury - Lawyers Endorsement (BP 14 15)
Protective Safeguards Endorsement (BP 04 30): This endorsement is revised to add a symbol and description so that hood-and-duct fire extinguishing systems can now be included on the endorsement (using "P-5"). This seems to expand the ability of the insurance carrier to manage the payment of a claim (deny coverage) should the hood-and-duct system be disabled or non-operative (with the insured's knowledge). This could have been done previously by using P-9, but now it's specific. The new "P-5" defines the "Automatic Commercial Cooking Exhaust and Extinguishing System" to include the hood, grease removal device, duct system and wet chemical fire extinguishing equipment. Article continues after the jump | | | | | | | | 
Watch anytime, on-demand | | Kidnap & Ransom coverage can make or break not only the financial health of a company, but the health and safety of its owners and key employees. Regular Price: $129 Just $49 Today » | | | | | | | Food Contamination Endorsement (BP 04 31): The endorsement is revised to extend coverage to expenses incurred to provide employees who are potentially infected by food contamination necessary medical tests or vaccinations. Also, the definition of food contamination is revised as follows: - The definition now includes the distribution of tainted food.
- The definition now extends to the improper processing of food.
- The reference to the transmission of a communicable disease is removed and replaced by, "contaminated by virus or bacteria transmitted through one or more of your employees..."
- Employees now include temporary and leased employees.
Business Income Changes - Time Period Endorsement (BP 04 41): The endorsement is altered to reference secondary dependent properties. See the first part of this series for the changes to the Dependent Property Additional Coverage regarding secondary dependent property coverage. Ordinance or Law Coverage Endorsement (BP 04 46): No change in coverage is created by the new ordinance or law exclusionary wording; the new wording is simply a 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. 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. Water Back-Up and Sump Overflow Endorsement (BP 04 53): This endorsement is revised to reinforce that coverage does not apply to sump pump failure caused by or resulting from a power failure - unless the policy is endorsed to cover power failure. Also, the revised wording of this endorsement states that the term "drain" includes a roof drain and related fixtures. Utility Services - Direct Damage Endorsement (BP 04 56) and Utility Service - Time Element Endorsement (BP 04 57: These endorsements are reworded to clarify the intent to include all lines that transmit power or communication service to the insured (when coverage for power and communications is covered) - this includes, what are termed by the power industry, "transmission lines" and "distribution lines." No coverage change is created by this endorsement, only a clarification of previous intent. Utility Services - Time Element Endorsement (BP 04 57): ISO made two changes to this endorsement. The first is presented above. The second change creates a new coverage option for the insured. The new version of this endorsement adds wastewater removal property as a new category of eligible utility service. Wastewater removal property includes: sewer mains, pumping stations and similar equipment used to move effluent to a holding, treatment or disposal facility (including the facility itself). Coverage does not apply to a loss caused by a discharge of water or sewage due to heavy rainfall or flooding. Functional Building Valuation Endorsement (BP 04 84) and Apartment Building Endorsement (BP 07 75): Altered in the same manner as the ordinance or law endorsement presented previously. Electronic Data Liability - Limited Coverage Endorsement (BP 05 95): ISO is broadening coverage by introducing an exception to the electronic data exclusion if bodily injury occurs. Electronic Data Liability - Broad Coverage Endorsement (BP 05 96): The definition of "electronic data" is revised in this filing by defining "computer programs" as a set of related electronic instructions that direct the operations and functions of the computer or device enabling such device to receive, process, store, retrieve or send data. Restaurants Endorsement (BP 07 78): Like the Ordinance or Law Endorsement (BP 04 46), the Functional Building Valuation Endorsement (BP 04 84) and the Apartment Buildings Endorsement (BP 04 75), this endorsement is altered in a similar manner to the ordinance or law exclusion as described in the BP 04 46 description above. This endorsement is also altered similar to the Food Contamination Endorsement (BP 04 31) as it relates to the definition of food contamination. Residential Cleaning Services Endorsement (BP 07 81): This employee dishonesty section of this endorsement now refers to "an identified employee" to make it consistent with ISO's Crime and Fidelity Program. Article continues after the jump | | | | | | | | 
Watch anytime, on-demand | | Move beyond the "interview process" to an "interview experience" and give yourself an edge over the competition. Regular Price: $129 Just $49 Today » | | | | | | | Pharmacists Endorsement (BP 08 07): ISO effectively broadens the coverage provided to pharmacist operations by this endorsement by adding an exception to the exclusion relating to bodily injury or property damage arising out of professional health care services provided by a pharmacist. Bodily injury or property damage arising out of specified services are excluded in the current endorsement. In the new version, an exception is inserted for the administration of vaccinations in accordance with state or federal law. Earthquake Endorsement (BP 10 03): The reference to limits found in paragraph "F." of this endorsement now specifies which limits: "The applicable Building and/or Business Personal Property limit..." Named Perils Endorsement (BP 10 09): Because of the extension of coverage to vegetated roofs presented in part one of this two-part series on the changes to the BOP, this endorsement is revised to state that damage to vegetated roofs caused by hail is not covered. Additionally, the change to the dishonesty exclusion presented in part one of this series as it relates to Accounts Receivable and Valuable Papers is incorporated into this endorsement. Flood Coverage Endorsement (BP 10 79): ISO introduces two changes to this endorsement; one for clarification purposes, and the second to broaden coverage: - The newly worded endorsement specifies that the 72-hour "waiting period" does not apply to coverage requests and/or requests for increases in coverage limits made by the insured at policy inception if flood coverage was provided by another policy immediately prior to the effective date of the new policy (regardless whether it is a renewal policy or new carrier's policy).
- The current endorsement includes coverage for damage caused sewer backup or overflow occurring within 72 hours after the flood recedes. The revised endorsement expands coverage to include not only the backup of sewers, but also drains or sumps.
Windstorm or Hail Losses to Roof Surfacing - Actual Cash Value Loss Settlement Endorsement (BP 14 04): "Roof surfacing" is now defined in this endorsement to mean: shingles, tiles, cladding, metal or synthetic sheeting or similar materials covering the roof and includes roof-securing materials and materials applied to or under the roof surface for moisture protection and roof flashing. Debris Removal Additional Insurance Endorsement (BP 14 09): The endorsement is altered to reference the increase to $25,000 in the underlying additional coverage limit. Increased Cost of Loss and Related Expenses for Green Upgrades Endorsement (BP 14 75): Three changes are made to this endorsement: - The schedule is revised to allow the identification of personal property and to allow the use of different percentages for building and BPP.
- The endorsement now addresses how payment for Green Upgrades is to be handled when the underlying property loss is less than the deductible (paragraph B.1.d.). The least of the following is paid:
- If the cost of the underlying loss plus the green upgrades are less than the deductible, the carrier pays nothing;
- The actual cost of covered upgrades (as per the policy) less the "balance of the deductible." (The "balance of the deductible" is the difference between the value of the underlying loss and the deductible amount.)
- The amount of covered physical loss or damage prior to the application of the deductible multiplied by the appropriate increased cost of loss percentage found in the schedule.
- The green upgrades amount shown in the schedule.
- Because vegetated roofs are now (after the effective date of these changes) covered in the underlying property coverage, the provisions are removed from this endorsement.
Condominium Association Coverage Endorsement (BP 17 01) and Condominium Commercial Unit-owners Coverage Endorsement (BP 17 02): These endorsements are incorporating two changes included in the underlying BOP: - Business Personal Property in Described Structures. Essentially, the new wording allows coverage for business personal property (BPP) and property of others (PPO) to extend to such property located in "structures" not just "buildings."
- Coverage Radius. The coverage radius is also revised to extend protection to business personal property (BPP) and personal property of others (PPO) located within 100 feet of the described premises OR the building or structure in which the insured is located.
Article continues after the jump | | | | | | | | Live March 27: Sometimes, a name says it all. There are slightly more than a handful of insurance industry cases that have become known by name. This seminar explores this phenomenon by looking at the cases which can be known by one name and providing a substantive discussion of the principles they represent. Regular Price: $197 Just $97 Today » | | | | | | | Condominium Commercial Unit-owners Coverage Endorsement (BP 17 02): The endorsement is altered to include leased personal property the insured is responsible for insuring. Condominium Commercial Unit-owners Optional Coverages Endorsement (BP 17 03): The revised endorsement allows the $1,000 sublimit related to loss assessment arising from an insurance deductible to be increased. The current endorsement does not have this ability. New Endorsements Exclusion of Loss Due to By-Products of Production or Processing Operations (Rental Properties) Endorsement (BP 14 78): This new endorsement is to be attached to policies issued to owners and tenants of rental premises. Property damage caused by the tenant's business operation is excluded by this endorsement; essentially, this is a business-risk exclusion. ISO's restaurant example follows: Damage caused by the long-term presence of grease released by the tenant restaurant's cooking operations as the presence and "distribution" of grease is a part of the business operations and is not accidental and unexpected and is thus excluded from coverage. According to ISO, the endorsement's genesis is a Washington State Court of Appeals finding: Graff v. Allstate Insurance Company. The case involved a methamphetamine lab and the damage the "cooking" caused the rental property over a period of time. The insurer denied the claim, the court disagreed. This new endorsement acts to exclude all such damage caused by the "by-products" of the tenant's operations. Again, it is attached to both the tenant's and the landlord's policy so that neither can be called upon to pay for the "expected" damage. Specified Business Personal Property Temporarily Away from Premises (BP 14 79): This new optional endorsement extends coverage to business personal property (BPP) temporarily away from the described premises. Two requirements must be met for this coverage extension to apply: 1) the BPP must be away from the premises as part of the daily business activities; and 2) the BPP must be in the care, custody or control of the insured or an employee of the insured. Laptops and other like BPP are the main focus of this endorsement. Coverage under this endorsement is activated by: 1) describing the BPP in the schedule (either by item or by category); and 2) entering a limit of coverage in the schedule. Other provisions of this endorsement include: - The endorsement does not cover BPP possessed by salespersons (except at a fair, trade show or exhibition);
- Coverage is not extended to stock or other business products (except at a fair, trade show or exhibition);
- Coverage is not extended to BPP in the care, custody or control of a common or contract carrier or a bailee for hire;
- Theft from a motor vehicle is covered if specified evidences of theft exist;
- The coverage territory specified in the underlying form applies to BPP covered by this endorsement; and
- When there is an overlap in coverage with another section of the underlying policy, the insured can elect payment under whichever provision provides the greatest amount of coverage.
Higher Limits Endorsement (BP 14 80): This new endorsement allows the insured to increase limits for certain property by attachment of the endorsement in lieu of using the declarations to increase limits. Several coverage grants limited in the policy can be increased by noting such increase in the declaration; this new endorsement allows the insured to increase these limits by use of the endorsement rather than depending on a note/change in the declaration. This endorsement does NOT replace and shall not be used in place of specific limit-increasing endorsements (i.e. debris removal, newly acquired property, and others). Limitations on Coverage for Roof Surfacing Endorsement (BP 14 81): This new coverage option allows insurance carriers to limit the valuation on "roof surfacing" to actual cash value (ACV), even when the remainder of the building applies replacement cost as the valuation method. Additionally, the endorsement excludes "cosmetic" damage to the "roof surfacing" caused by wind and/or hail. - "Roof surfacing" means: shingles, tiles, cladding, metal or synthetic sheeting or similar materials covering the roof. The definition includes all materials used to secure the roof surface and all materials applied to or under the roof surface for moisture protection (this includes roof flashing).
- "Cosmetic" means: marring, pitting or other superficial damage that alters the appearance of the roof surface but does not prevent the roof from functioning normally.
Increase in Rebuilding Expense Following Disaster (Additional Expense Coverage in Annual Aggregate Basis) Endorsement (BP 14 82): A BOP property endorsement addressing the increase in all building costs (materials, labor, etc.) following a communal disaster. This endorsement is triggered when all the following apply: - The event causing the covered loss either: 1) results in the declaration of a state of disaster by federal or state authorities; or 2) occurs in close temporal proximity to the event that resulted in the declaration;
- Labor and/or building material costs increase as a result of the disaster causing the cost to repair or replace the insured building or structure to exceed the limit of insurance;
- The insured actually repairs or replaces the building; and
- During the policy term, the insured notifies the insurance carrier within 30 days of any improvements, alterations or additions to the building which increases the replacement cost by 5% or more (allowing the insurance carrier to adjust the limit).
Employee Dishonesty - Named Employee(s) Endorsement (BP 14 83): Employees who are known to have previously committed theft or any other dishonest act prior to the effective date of the policy can be scheduled on this endorsement. When scheduled, the exclusionary provision within the Employee Dishonesty Optional Coverage no longer applies to the listed employee(s). Windstorm or Hail Exclusion Endorsement (BP 14 84): Insurers can attach this endorsement to exclude damage caused directly or indirectly by windstorm or hail. Communicable Disease Exclusion Endorsement (BP 14 86): This endorsement removes or excludes coverage for bodily injury, property damage, or personal and advertising injury arising out of the actual or even alleged transmission of a communicable disease. The exclusion applies even if the charges allege negligence or wrongdoing in the supervising, hiring, training, employing, monitoring of others who may have and spread the disease. It also excludes coverage for the testing for a communicable disease; failure to prevent the disease, or failure to report the disease to authorities. No definition of communicable disease is provided within the endorsement leaving it open to very broad interpretation. New "Class of Business" Endorsements ISO introduces in this filing four optional endorsements specifically designed to meet the needs of photographers. These endorsements are: - The Photography Endorsement (BP 07 83): This endorsement provides: 1) Coverage for photographic equipment owned by employees is covered under BPP: 2) Off-premises coverage is provided for photographic equipment owned by the insured or its employees, or in the insured's care, custody or control (subject to specific limits - see #3); 3) Unscheduled photographic equipment is limited to $5,000 per item and $25,000 per occurrence for off premises coverage (scheduled equipment is subject to the scheduled amount); 4) Reward reimbursement protection is provided up to $5,000 for information or return (subject to specific provisions); 5) Employee dishonesty coverage extends to property of customers; and 6) Liability coverage for failure to deliver promised photographic products ($5,000 per occurrence / $10,000 annual aggregate subject to a $250 deductible).
- The Photography - Makeup and Hairstyling Endorsement (BP 07 84): This excepts the makeup and hairstyling services a photographer may provide as part of its business from the professional services exclusion giving coverage back for such services done as part of the photographer's business.
- The Photography - Amendment of Coverage Territory for Photographic Equipment - Worldwide Coverage (BP 07 87): Coverage for photographic equipment is provided anywhere in the world except specifically scheduled countries and countries against which the US has trade sanctions.
- The Photography - Supplemental Photographic Equipment Schedule Endorsement (BP DS 07): Allows the insured to individually list and extend coverage (and limits) to the listed equipment.
Key definitions developed and used by ISO in these new endorsements include: - "Photographic equipment": This extends to property used in the course of producing, manipulating or storing "photographic product." This includes but is not limited to: camera bodies, camera lenses, photographic lighting equipment and accessories (such as flash or strobe lighting, continuous or flood lighting, umbrellas, soft boxes and filters), meters, flash cards and other media storage, film, tripods and other supports. Also included in this definition is: photographic backgrounds, film developing equipment, "computers" used to store or manipulate images, props, makeup kits, posing tools and shooting tables.
- "Photographic product": This means still or moving images produced by a photographer for customers using photographic film or electronic media.
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 | | | | | | Featured Book This book details 12 insurance coverages, exclusions, and concepts that many, if not most, insurance practitioners don't fully understand or simply choose to ignore. | | | | | On Sale This Week You can watch anytime, or even load on your ipad, iphone, mp3 or other mobile device. Recordings of live courses will be available 48 hours after the event. | | | | | | 
Watch anytime, on-demand | | Can or should agents consider themselves the insured's "risk manager?" Can or should agents claim to provide "Enterprise Risk Management" services? Regular Price: $129 Just $89 Today » | | | | | |
Watch anytime, on-demand | | Kidnap & Ransom coverage can make or break not only the financial health of a company, but the health and safety of its owners and key employees. Regular Price: $129 Just $49 Today » | | | | | |
Watch anytime, on-demand | | Move beyond the "interview process" to an "interview experience" and give yourself an edge over the competition. Regular Price: $129 Just $49 Today » | | | | | | 
Watch anytime, on-demand | | This seminar explores a handful of cases which can be known by one name and providing a substantive discussion of the principles they represent. Regular Price: $197 Just $97 Today » | | | | | | |
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