BUSINESS OWNERS POLICIES
Selected Endorsements Named Peril Endorsement (BP 10 09)
A "named peril" endorsement sets up named peril coverage in place of the open peril coverage that is usually offered under the coverage form.
Selected Endorsements Protective Safeguards (BP 04 30)
A "protective safeguards" endorsement makes it so that an insured is required to maintain things like sprinkler systems, fire alarms, and security services. The insurer will not have to reimburse the insured for losses or damage caused by a fire if the insured knew the safety systems were not working effectively or not working at all. Additionally, the insured has to inform the insurer if an automatic sprinkler system is going to be turned off for more than 48 hours.
Selected Endorsements Utility Services Direct Damage (BP 04 56)
A "utility services direct damage" endorsement establishes payments for loss to a covered property which is caused by an interruption of service to the described premises. The interruption has to be from a direct physical loss that is caused by a covered cause of loss. This endorsement specifically deals with interruptions of water supply, communication supply, or power supply services. This endorsement does not normally consider overhead transmission lines to be part of water supply services or communications supply services. This endorsement does not increase the relevant limit of insurance.
Selected Endorsements Utility Services Time Element (BP 04 57)
A "utility services time element" endorsement pays for a loss of business income or extra expenses at the described premises which is caused by an interruption of water, communications, or power supply services to the described premises.
Property - Part 2: Coverages Coverages Loss Settlement
A Business Owner's policy pays for Building and Business Personal Property losses on a Replacement Cost basis, assuming that the amount of the policy is at least 80% of the replacement cost. If the amount of insurance happens to decrease below the 80% threshold, losses are settled on an Actual Cash Value basis.
Property - Part 1: Risks BOP: Overview
A Business Owners policy is an Open Perils contract. It is typically paired with a standard deductible of $500, but this can be raised to a maximum of $2,500. The deductible does not apply to Fire Service charges, Business Income, or Extra Expense losses. The types of businesses which are eligible for a BOP are low-risk, simple businesses which don't have dangerous exposures. To illustrate this, let's look at some businesses which aren't eligible for a BOP... Auto Dealers Auto Repair or Service Businesses Manufacturing Businesses Amusement Parks, Theaters, Bowling Alleys Banks, Credit Unions, and Other Financial Institutions Restaurants and Bars (sometimes)
Property - Part 3 Definitions Computer
A computer is defined in this coverage form is a programmable electronic equipment that is used to store, retrieve, and process data. Equipment that is associated with a computer is included if they do things like provide communication and transmit data. This does not include devices used to operate production-type machinery or equipment.
Liability Definitions Insured's Product
An insured's product also includes the following... Warranties and Representations (relating to the fitness of the product) Warnings and Instructions (for the safe use of the product) Containers for the Product
Property - Part 1: Risks Eligible Risks Apartment Building
Apartment buildings can be of any size and can include condominium associations. Incidental occupancies that are permitted include the following... Offices less than 6 stories and 100,000 sq. feet. Mercantile, service or processing, wholesalers and contractors that aren't more than 25,000 square feet in size. Contractors that don't occupy more than 7,500 square feet or more than 15% of the total area.
Liability General Conditions
Bankruptcy (the insurer remains liable for any claims filed against an insured even if that insured becomes insolvent or files for bankruptcy protection) Duties In The Event Of Occurrence, Offense, Claim, or Suit (the insured must provide information on the claim that is complete, accurate, and timely (including providing copies of any legal papers or filings), authorize the insurer to obtain records and other information, and cooperate with the insurer in defense, investigation, and settlement, as well as in pursuit of damages owed to the insurer) Financial Responsibilities Law (if a policy is certified as proof of financial responsibility for the future, in accordance with a motor vehicle financial responsibility law, the insurance established by the policy must comply with the law) Legal Action Against The Insurer (the insurer is not a party in a liability claim; the insured cannot file a suit against the insurer if they have failed to comply with all terms of coverage or sue for damages not included in the terms of coverage) Separation Of Insureds (except with regard to any limits of insurance and any rights or duties assigned to the first named insured, Business Owners coverage applies to each named insured as if they were the only insured. Furthermore, coverage is applied separately to each insured who has a claim made against them or a suit brought against them)
Property - Part 1: Risks Eligible Risks Wholesalers
Buildings and business personal property for businesses that operate as wholesalers are eligible risks as long as not more than 25% of the annual gross sales come from retail operations, and no more than 25% of the floor area is open to the public.
Property - Part 3 Deductibles
Business Owners policies usually have a base deductible ranging from $250 up to $2,500. This kind of policy may also have a second deductible that applies to optional coverages. The deductible does not apply to the following additional coverages... Fire Department Service Charge Business Income Extra Expenses Civil Authority Fire Extinguisher Systems Recharge Expense
Common Policy Conditions
Cancellation (the insurer may usually cancel this kind of policy by mailing or delivering a written notice to the first named insured, the notice must be mailed or delivered to the first named insured at least five days before the policy is cancelled if any of the following conditions exist... the building has been vacant for sixty days or more, permanent repairs to a property damaged by a covered loss have not started, or there has been no contracting for the repairs within thirty days of the initial payment for the loss, the building has an outstanding order to vacate or demolition order, this also applies if a government agency has declared the building to be unsafe, items that are fixed or salvageable have been (or are in the process of being) removed from the building, there can't be any intention to replace the items, there has been a failure to furnish proper heat, water, sewer service, or electricity for more than 30 consecutive days, there has been a failure to pay property taxes and those taxes have been outstanding for more than a year) Changes (must be in writing and agreed to by all parties) Concealment, Misrepresentation, or Fraud (policies may be canceled and/or claims denied if the insured engages in deceptive practices related to the policy) Examination of the Insured's Books and Records (gives the insurer a right to review the insured's financial, insurance, and safety records) Inspections and Surveys (allows the insurer to gather additional information at the work site) Insurance Under Two or More Coverages Other Insurance (allows for coordination of coverage to avoid duplication, overpayment, or illegitimate assignment of liability) Liberalization (allows insured parties to take advantage of extended coverage now offered by the insurer (for example, if coverage on a policy and any relevant endorsements is broadened by legislation, holders of the affected policy do not have to pay extra to get the extended coverage nor must they set up endorsements to obtain the expanded coverage) Premiums Premium Audit (allows the insurer to arrange for an audit of exposure to adjust rates to reflect true level of risk (usually on an annual basis) with either a refund if the premium covering the current period is too high or a bill for the additional premium required if the audit requires an upward adjustment of premium rates) Transfer of Rights of Recovery Against Others to the Insurer (subrogation rights) Transfer of the Insured's Rights and Duties Under This Policy (the named insured's rights or duties under this policy may not be transferred without the insurer's written consent)
Property - Part 1: Risks
Commercial Package policies can be ideal solutions for many large and complex businesses needing insurance coverage. However, for small or simple businesses, a Commercial Package may be overkill. That's where a Business Owners Policy (BOP) comes in - it's a prepackaged policy with very few decisions to make or options to consider. The perils covered are essentially the same as a CPP. While many of the coverages under a BOP are similar to a Commercial Property Package, eligibility guidelines are different.
Property - Part 2: Coverages Coverages Coverage Extensions
Coverage extensions under a BOP are automatic; they do not have to be earned. The following are the extensions of coverage offered under this coverage form... Newly Acquired or Constructed Property (the insurer will pay up to $250,000 for each building and up to $100,000 for business personal property at each premises, for up to thirty days) Personal Property Off-Premises (the insurer will extend up to $5,000 to cover property that is in transit to, or at, a premises the insured does not own or lease) Outdoor Property (outdoor property will only be covered from the perils of fire, lightning, aircraft, riots, or explosions (FLARE), the policy will pay $2,500, but no more than $500 for any one tree, shrub or plant) Personal Effects (the insurer will pay up to $2,500 for the personal effects owned by the insured's officers, partners, managers, or employees) Valuable Papers and Records (the insurer will pay up to $10,000 for the loss or damage to valuable papers or records that are at the described premises, and $5,000 that are not at the described premises) Accounts Receivable (the insurance that normally applies to business personal property may be extended to apply to the direct physical loss of records of accounts receivable. The limit on the amount the insurer will pay for this coverage extension is the same as the limit on the coverage extension for valuable papers and records)
Property - Part 2: Coverages Coverages Additional Coverages
Debris Removal (the insurer will pay up to $25,000 for each location in any one occurrence, if the cost of debris removal and the amount paid for the loss or damage is larger than the limit on the insurance for the covered property) Preservation of Property (property that is being moved or temporarily stored at another location is covered for thirty days on an open peril basis) Fire Department Service Charges (the insurer will pay up to $1,000 for the insured's liability for fire department service charges) Collapse (collapse is defined as the sudden falling down or caving in of a building (or any part of a building) which makes the building (or portion of the building) impossible to occupy for its intended purpose) Water Damage, Other Liquids, Powder, or Molten Material Damage Business Income and Extra Expenses (this coverage lasts for 12 months up to the limits established in the declarations page, payroll expenses coverage is limited to 60 days) Pollution Clean Up and Removal (the insurer will pay up to $10,000 per location) Civil Authority Money Orders and Counterfeit Paper Currency (the insured will pay up to $1,000 for a loss caused by the acceptance of these kinds of items) Forgery or Alteration (the insured will pay up to $2,500 for a loss that is caused by forgery) Increased Cost of Construction (the insurer will pay up to $10,000 for each building) Business Income from Dependent Properties (the insurer will pay up to $5,000 for the actual loss of business income that was sustained by the insured because of a physical loss or damage that occurred on the premises of a dependent property) Glass Expense Fire Extinguisher System Recharge Expense (the insurer will pay up to $5,000 to recharge or replace fire extinguishers and fire suppression systems if they happen to be discharged after installation or testing) Electronic Data (the insurer will cover the cost of replacing data that is stored electronically which has been damaged or destroyed by a covered cause of loss, there is a $10,000 limit on damage caused by a virus) Interruption of Computer Operations (the insurer will cover business income or extra expenses caused by an interruption of computer operations, the interruption must arise from damage to electronic data which was caused by a covered peril, the limit on this coverage is $10,000) Limited Coverage for Fungi, Rot, and Bacteria (the insurer will cover loss or damage that is caused by fungi growths, rot, or bacteria, the fungi, rot, or bacteria must have been a result of a covered cause of loss, the limit on coverage is $15,000)
Property - Part 2: Coverages Coverages Covered Causes of Loss
Direct physical loss to covered property is covered on an open peril basis.
Property - Part 1: Risks Eligible Risks Contractors
Eligible contractors can be any of the following as long as total yearly payroll does not go over $300,000. Additionally, the total gross receipts from contracting cannot be more than $3,000,000... Air Conditioning, Plumbing, Heating, and Refrigeration Systems Carpentry Construction (of residential property that does not go over 3 stories in height) Carpet Cleaning (on a customer's premises) Ceiling and Drywall Installation Concrete Construction Driveways, Parking, and Sidewalk Paving Electrical Work Lawn Sprinkler Installation Masonry, Plastering, Stone, and Tile Work Painting of Buildings and Structures (that are less than 3 stories tall) Residential Roofing Sign Painting and Lettering Inside of a Building Window Cleaning
Property - Part 1: Risks Eligible Risks Motels
Eligible motels are not actually limited by their floor area. However, to be eligible, they cannot be more than three stories tall, cannot contain a bar or cocktail lounge, and cannot operate on a seasonal basis. Restaurants that are eligible risks are acceptable.
Business Liability Coverage Exclusions
Expected or Intentional Injury Contractual Liability Liquor Liability Workers' Compensation and Similar Laws Employer's Liability Pollution Aircraft, Auto, or Watercraft Mobile Equipment War Professional Services Damage to the Insured's Property Damage to the Insured's Product Damage to the Insured's Work Damage to the Impaired Property (or property that is not physically injured) Personal and Advertising Injury (personal or advertising injury is not covered if it resulted from material that the insured knew was false. Neither is it covered if the injury occurred before the policy period, if losses come out of a breach of contract, if a product fails to match the advertised quality, or is the wrong price. If the insured's business is advertising, publishing, or telecasting personal or advertising injuries are excluded) Bodily Injury or Property Damage is excluded if the insured is also an insured under a "nuclear energy liability policy."
Property - Part 1: Risks Eligible Risks Convenience Food/ Gasoline Stores
For this kind of operation to be an eligible risk, the sale of gasoline cannot make up more than a specified amount of the total annual gross sales. The percentage of total sales is commonly between 50% and 75%. In addition, this kind of operation cannot have car servicing or repair, a car wash, or propane or kerosene tank filling services.
Medical Expense Coverage Exclusions
Insureds, Except for Volunteer Workers Any Person Hired to do Work for any Insured or Tenant Any Person Whose Benefits for Bodily Injury are Payable Workers' Compensation Coverage Athletics Products/Completed Operations Hazard Bodily Injury that is Specifically Excluded from Business Liability Coverage War Nuclear Materials
Property - Part 1: Risks Eligible Risks Office Buildings
Office buildings are eligible if they are primarily occupied for office purposes. This can include office condominium associations. The office building cannot be more than 6 stories tall or more than 100,000 square feet in total area. Incidental occupancies that are permitted include the following... Apartments Mercantile, service or processing, wholesalers and contractors that aren't more than 25,000 square feet in size. Contractors that don't occupy more than 7,500 square feet or more than 15% of the total area. Buildings that are occupied by the insured for storage are eligible as long as they are not more than 25,000 square feet in size, and are incidental to mercantile, service or processing, or wholesaler risk.
Property - Part 3 Exclusions
Ordinance or Law Earth Movement Governmental Action Nuclear Hazard Power Failure (away from the premises) War and Military Action Water Computer Related-Losses (associated with failure, malfunction, or inadequacy of hardware, software, operating systems, and networks) Fungi, Rot, and Bacteria Electrical Apparatus Consequential Loss Industrial or Agricultural Smoke or Smudging Steam Boiler Explosion Freezing of Plumbing (this exclusion does not apply if heat was maintained in the building) Dishonest Acts (committed by the insured or employees) Voluntary Surrender (of property that is the result of a scam) Damage to Business Personal Property (from rain, snow, ice, or sleet if the property was left outside) Pollution (this exclusion does not apply if the pollution was caused by a covered cause of loss) Neglect Continuous Seepage or Leakage Failure to Act
Property - Part 1: Risks Eligible Risks Self-Storage
Self-storage locations are not limited by their floor area. To be eligible they can't be more than two stories tall. Cold storage, storage of industrial materials, storage of chemicals, storage of pollutants, and storage of waste are not eligible risks.
Selected Endorsements Hired Auto and Non-Owned Auto Liability (BP 04 04)
The "hired auto and non-owned auto liability" endorsement provides coverage for liability associated with hired and non-hired autos that are used for the insured's business. Under this endorsement, autos which are rented, leased, or borrowed by the insured have coverage for bodily injury and property damage liability. This endorsement is only available to insureds who do not have a separate commercial auto policy. Non-owned auto liability is for autos that are not owned by the named insured and are used by people besides the named insured to carry out the named insured's business. One example would be a situation where an employee of the named insured uses his or her own car while performing tasks that are connected to the business.
Liability Limits of the Insurance
The "liability and medical expenses" limit applies on a per occurrence basis for bodily injury, property damage, and medical expenses. This limit applies on a per person or organization basis for personal and advertising injuries. The "damage to premises rented to you" limit is the limit on property damage liability coverage for damage to a premises rented to, or temporarily occupied by, the insured that is caused by one fire or explosion. There are two aggregate limits that are both twice the "liability and medical expenses limit." The first limit applies to bodily injury and property damage that is concluded in the product/completed operations hazard. The second limit deals with losses, medical expenses, and all personal injury and advertising injury.
Property - Part 1: Risks Eligible Risks Condominium Commercial Unit-Owners
The business personal property of owners of condominium units is insured if the condominium units are used for eligible office, mercantile, wholesale, service or processing, or contracting businesses.
Property - Part 1: Risks Eligible Risks Service or Processing
The following are eligible risks as long as sales brought in from operations that take place off-premises are not more that 25% of the gross sales... Appliance and Accessories (this includes installation, repair, and service) Bakeries (that do baking on the premises) Barber Shops and Beauty Salons Dental Laboratories Engraving Funeral Homes Jewelry Repair Laundries and Dry Cleaning Lithographing Mailbox and Packaging Stores Nail Salons Photoengraving and Photographers Printing Shoe Repair Custom Tailoring and Dressmaking Taxidermists
Property - Part 3 General Conditions
The following are general conditions found in a Business Owner's policy... Control of Property (coverage under the policy will not be affected by the acts or omissions of persons other than the insured if those persons are not acting under the direction/control of the insured; and violation of a policy condition at one location will not affect coverage at another location) Mortgageholders (provisions to pay a mortgage holder in lieu of the insured, where appropriate) No Benefit to the Bailee (that only the insured is covered, not anyone who has independent control of the materials or effects of the business) Policy Period and Coverage Territory
Property - Part 2: Coverages Coverages Property Not Covered
The following are not covered under this coverage form... Aircraft, Cars, Motor Trucks (and other vehicles that require motor vehicle registration) Money or Securities Contraband (or property that is being illegally transported or traded) Land Outdoor Fences Radio or Television Antennas, Satellite Dishes (and any lead in wiring, masts, or towers) Trees, Shrubs, or Plants Watercraft (while afloat) Accounts, Bills, Food Stamps, Other Evidence of Debt, Accounts Receivable, or Valuable Papers and Records Computers (which are permanently installed, this includes computers which are designed to be permanently installed in an aircraft, watercraft, motor truck, or other vehicle that requires motor vehicle registration, the exception to this is if it is being held as stock)
Property - Part 3 Loss Conditions
The following are the property loss conditions that are found in a Business Owner's policy... Abandonment Appraisal Duties in The Event of Loss or Damage Legal Action Against the Insurer Electronic Media and Records Limitation Loss Payment Recovered Property Resumption of Operations Vacancy
Property - Part 1: Risks Ineligible Risks
The following classifications of businesses are not eligible risks... Automobile Repair or Service Stations Automobile, Mobile Home, and Motorcycle Dealers Restaurants, Bars, and Grills (unless they are limited-cooking or fast-food restaurants) Condominium Associations (that are not residential or office condominiums) Buildings (that are used wholly or in part for manufacturing or processing) Places of Amusement Banks, Credit Unions, Savings and Loans Associations, Stockbrokers, or Similar Organizations Household Personal Property One or Two Family Dwellings Self-Storage Facilities (that provide outdoor storage for motorized or recreational vehicles)
Property - Part 1: Risks Eligible Risks
The following items are risks that can be written under a Business Owners policy.
Property - Part 3 Limits
The insurer will generally pay a maximum of $1,000 per sign (per occurrence) for damage to outdoor signs attached to a building. The insurance limit for business personal property automatically increases by 25% (while providing for seasonal variations) if the limit shown for business personal property is at least 100% of the insured's average monthly values during the last twelve months.
Property - Part 2: Coverages Coverages Limitations
The insurer will not pay for loss or damage to a piece of covered property that is missing, and the only evidence of the loss or damage is a shortage that is found while taking inventory. The insurer will not pay if there is no evidence, at all, to show what happened to the property. If loss or damage is caused by theft the following types of property are covered, but only to the specified limits... $2,500 for furs and garments that are either made from furs or trimmed in furs. $2,500 for jewelry, watches, pearls, and precious or semi-precious stones. $2,500 for patterns, dyes, molds, and forms.
Property - Part 3 Optional Coverages Interior Glass
The interior glass optional coverage applies to any glass that is permanently mounted to the interior walls, floors, or ceilings of an insured building.
Selected Endorsements Comprehensive Business Liability Exclusion (BP 04 01)
The point of this kind of endorsement is to exclude certain projects, location hazards, operations, or equipment. The specified project, location hazard, operation, or piece of equipment has to be defined and separate.
Selected Endorsements Fungi and Bacteria Limited Fungi or Bacteria Coverage Endorsements (BP 05 76 and BP 05 78)
The property form of this endorsement (BP 05 76) alters the coverage form to provide coverage for property damage that is a result of fungi or bacteria. The limit for this additional coverage is $15,000. The liability form of this endorsement (BP 05 78) changes the coverage form to set up coverage for bodily injury and property damage liability that is caused by fungi or bacteria. A separate fungi and bacteria liability aggregate limit is established by this endorsement.
Property - Part 2: Coverages Coverages Covered Property Coverage A: Buildings
The term "building" refers to buildings and structures at the described premises. This includes the following... Completed Additions Fixtures (including outdoor fixtures) Machinery and Equipment (that has been permanently installed) Any of the Insured's Personal Property (that is used in apartments, rooms, or common areas which were furnished by the insured who was acting as landlord) Personal Property (which is owned by the insured and is used to maintain or service the buildings or the premises) (this includes fire-fighting equipment, outdoor furniture, floor coverings, and appliances used for refrigerating, ventilating, cooking, dishwashing, or laundering) The following, if they are not covered by other insurance... Additions Under Construction Alterations and Repairs to a Building Materials, Equipment, Supplies, and Temporary Structures (on or within 100 feet of the described premises which are used for making additions, alterations, or repairs to a building) The limit on building coverage is increased at each annual review by a percentage that is specified in the declarations page.
Property - Part 1: Risks Standardized Forms
This class based on standardized form language from the ISO and AAIS. Insurance companies are encouraged, and often do, follow these forms but they are not required to do so. It is important that you review the policies you are selling thoroughly to ensure that you understand what they do and do not cover.
Liability Coverages Business Liability
This coverage form provides coverage for bodily injury, property damage, personal injury, and advertising injury liability. Bodily injury includes damages claimed by a person or organization for care, loss of services, or death that results from the physical injuries. This coverage form also covers medical payments and extends coverage to deal with supplementary payments. The liability section of a Business Owners policy includes coverage for the following... Premise and Operations Products and Completed Operations Personal Injury Host Liquor Personal and Advertising Injury Fire Legal Liability Premise Medical Payments Supplementary Payments There are few differences between Business Owners liability coverage and the very similar Commercial General Liability coverage. Business Owners liability coverage is occurrence-triggered. There is no claims made Business Owners liability form. Business Owners liability limits can only be selected from preset choices. The minimum occurrence limit is $300,000. The limit can be increased to $500,000 or $1,000,000. The general aggregate limit and products and completed operations aggregates are double the occurrence limit. Premise medical payment limits for a Business Owners policy are $5,000 per person. The fire legal limit is $50,000 per occurrence.
Selected Endorsements Fungi and Bacteria Fungi or Bacteria Exclusion (Liability) (BP 05 77)
This endorsement actually excludes bodily injury, property damage, personal injury, and advertising injury that would not have happened if there was not an actual, alleged, or threatened exposure to fungi or bacteria.
Property - Part 3 Optional Coverages Outdoor Signs
This is an optional coverage for that deals with direct physical loss of, or damage to, outdoor signs that are at the described premises.
Selected Endorsements Limited Pharmacists Liability Coverage (BP 08 06)
This kind of endorsement establishes coverage for bodily injury, property damage, personal injury, advertising injury, or other injuries that are related to the professional services of a pharmacist.
Selected Endorsements Exclusion of Certified Acts of Terrorism Endorsement (BP 05 25)
This kind of endorsement excludes coverage for losses or damage that is caused by an act of terrorism as it is defined in the Terrorism Risk Insurance Act (TRIA) of 2002. An act is determined to be an act of terrorism by the Secretary of the Treasury, Secretary of State, and Attorney General. The act has to be... violent or dangerous to life, property, or infrastructure, damaging within the United States, on a US air carrier or vessel, or on a US mission and committed by people acting for a foreign party with the intent of coercively change the conduct of the civilian population or government of the US, or affect US policy. An act of terrorism is not certified during a war if the aggregate property and casualty losses (with the exception of workers compensation losses) are less than $5,000,000.
Property - Part 2: Coverages Coverages Covered Property Coverage B: Business Personal Property
This kind of property has to be in, on, or within 100 feet (either in the open or a vehicle) of the described premises. The following are classified as business personal property... Property, Owned by the Insured (which is used in the insured's business) Property (that belongs to other parties which is in the insured's care, custody or control) Tenant's Improvements and Betterments (this includes the following, if they are made part of the building a tenant occupies but does not own Fixtures, Alterations, Installations, Additions) Leased Personal Property (that the insured is legally responsible for insuring) Exterior Building Glass (but only if the insured is a tenant and no insurance limit is shown in the declarations page for building property)
Property - Part 3 Optional Coverages Money and Securities
This optional coverage establishes coverage for money and securities that are used in the insured's business. Coverage is provided against theft, disappearance, or destruction when the money or securities are in one of the following locations... A Bank or Savings Institution Where the Insured Lives Where the Partners, Managers, or Employees of the Insured Live The Described Premises In Transit Between any of the Previously Mentioned Locations
Property - Part 3 Optional Coverages Equipment/Mechanical Breakdown
This optional coverage offers protection for losses related to the breakdown of or damage to mechanical and electrical equipment (i.e., refrigeration units, boilers, compressors, air conditioning units, communications equipment, copiers, computers, shop equipment, etc.) resulting from power surges, electrical arcing, mechanical breakdown, boiler malfunction, and operator error. Most property policies exclude losses from electrical or mechanical breakdown (as does a Business Owners policy); equipment or mechanical breakdown coverage closes this potential coverage gap. One provision of this endorsement is that it also grants the insurer the right to make an inspection without notice or arrange for such inspections. Furthermore, the insurer may immediately suspend coverage when equipment is found to be unsafe.
Property - Part 3 Optional Coverages Employee Dishonesty
This optional coverage sets up coverage for loss of, or damage to, business personal property that is caused by the dishonest acts of the insured's employees. The discovery period lasts for 1 year, but if an employer becomes aware of an employee acting dishonestly, coverage on that employee ceases immediately.
Liability Who is an Insured?
This section defines who is to be held liable in the event the business may be held to have injured or harmed someone (i.e., the "insured"). For example, an employee who is acting on behalf of the business is not personally held liable (in this situation, the business is liable and is the "insured"). An employee can be held independently liable if that employee is acting in a professional capacity for which the individual would normally be held professionally accountable. In such situations, the businessowners policy would not apply and the individual would be responsible for obtaining E&O, malpractice, or other appropriate professional insurance coverage. An insured is any of the following if they are designated a such on the declarations page... An Individual and his or her Spouse A Partnership or Joint Venture LLC An Organization (that is not a partnership, joint venture, or limited liability company) Volunteer workers Real Estate Manager Legal Representative Anyone Given Permission by the Named Insured to Drive Mobile Equipment (that is owned by the named insured on a public highway)
Property - Part 1: Risks Eligible Risks Restaurants
To be an eligible risk, a restaurant has to be classified as a limited-cooking restaurant or a fast-food restaurant. A limited cooking restaurant has the following qualities... Food is prepared cold or by equipment that does not emit smoke or grease laden vapors which have to be removed by an exhaust system. The restaurant is less than 7,500 square feet in total area, the restaurant seats less than 75 people, sale of alcoholic beverages is limited to beer or wine, and those sales do not make up more than 25% of the gross sales, the restaurant does not have seasonal operations. A fast food restaurant has the following qualities... If the restaurant has an exhaust system it can do the following types of cooking which produce grease-laden vapors (Grilling, Enclosed Broiling, Deep-Fat Frying, Roasting, Barbequing), the restaurant cannot have more than 7,500 square feet in total floor area, the restaurant cannot have table service, the restaurant cannot seat more than 150 people, the restaurant cannot sell alcohol besides wine and beer (the sales of wine and beer cannot be more than 25% of the total sales), the restaurant cannot be a seasonal operation, the restaurant cannot operate without the installation (and regular upkeep) of an automatic fire extinguishing system for the cooking that is equivalent to NFPA (National Fire Prevention Association) standards.
Selected Endorsements Earthquake Endorsement (BP 10 03)
When this endorsement is added to a Business Owner's policy coverage is extended to include losses that are a result of earthquakes and volcanic eruptions. The coverage has a 72-hour window after the end of the policy period for an earthquake or volcanic eruption that began while the policy was still in effect. A form of deductible applies to this endorsement. The insurer will subtract a sum from the amount of loss or damage from a single occurrence. The sum that is subtracted for each damaged or destroyed item is a set percentage of that item's value. The percentage is listed in the declarations page. This deductible is applied separately to each building or structure, to the contents of each building or structure, and to personal property that is in the open.
