Ch 8 Commercial Property Insurance

What is the limit of coverage for business personal property away from the premises under the Business and Personal Property coverage form?

$10,000

How much can be paid under the Business and Personal Property Coverage Form for debris removal due to a covered loss?

25% of the loss amount

property off premises

A limit of $10,000 of coverage is extended for the insured's covered property (other than stock) while it is temporarily at a location the insured does not own, lease, or operate This includes property located at a fair, trade show, or exhibition; in or on a vehicle; or in the care, custody, or control of the named insured's salesperson

Note 1

A monthly limit of indemnity option may be added, which limits the policy amount that the insured may receive such as 40% / 80% / 100%. If the period of restoration is 30 days or less, the first percentage applies. If the period of restoration exceeds 30 days, but is less than 60 days, the second percentage applies. If the period of restoration exceeds 60 days, the third percentage applies.

commercial package policy key facts

A single coverage module is a standalone (monoline) policy, not a package policy 2 or more coverage parts or modules are required for the policy to be a package policy 4 Key Components make up a Commercial Package Policy (CPP) 7 Modules make up the available coverage parts in a Commercial Package Policy (CPP)

Optional Coverages

Agreed value inflation guard replacement cost - business personal property only extension of replacement cost to personal property of others

Property Not Covered

Although most classes of property may be insured on the Building and Personal Property Coverage Form, certain classes of property are not covered. They are either uninsurable or must be insured separately.

When a condominium association is responsible for insuring a condo building, the Condominium Association Coverage Form is used in place of which coverage form?

Building and personal property coverage form

Three forms of business income coverage exist:

Business Income including Rental Value Business Income other than Rental Value Rental Value

Newly Acquired or Constructed Property

Coverage may be extended to cover new buildings to be constructed on the described premises, and newly acquired or constructed property at other locations. The coverage limit is $250,000 at each building. Coverage may be extended to cover newly acquired business personal property, up to $100,000 at each building This automatic coverage ends at the earliest of the following 3 circumstances: The policy expires The end of 30 days The values of the newly acquired or constructed property are reported to the insurance company

Time Element (Business Income) Coverage Forms Business Income and Extra Expense Coverage

Covers the actual loss of business income sustained during the period of restoration due to suspension of operations, as a result of a direct physical loss caused by a covered cause of loss. Business income is the pre-tax net profit or loss that would have been earned plus normal continuing operating expenses, including payroll, rent, taxes, insurance, and debt payments. The Period of Restoration begins 72 hours after the time of loss, and ends on the earlier of the date when the property should be repaired or rebuilt with reasonable speed, or the date when business is resumed at a new permanent location.

Example 2

Eggs that have spoiled that are on the loading dock for a prolonged period of time would not be covered.

Note 2

Extra Expense Coverage may also be included in the Business Income Coverage Form. This is almost identical to Business Income Coverage but provides additional money to continue operation.

Personal Property of Others

For coverage to apply, the property must be in the care, custody, or control of the named insured AND be located in or on a building shown on the Declarations, in the open (or in a vehicle) within 100 feet of the described premises. Any claim payment will be made only to the owner of the insured property.

Example

If a risk insured under a $100,000 Extra Expense Coverage Form, with a 40/80/100 percentage suffers a $90,000 loss with a 50 day restoration, the policy will pay $80,000.

TEST TIP

If asked which one is best to provide Operational Expense, the answer is: Extra Expense Coverage.

Vacancy

If, at the time of loss, the building where loss or damage occurs has been vacant for more than 60 consecutive days before the loss, there is no coverage for loss resulting from the following perils: vandalism, sprinkler leakage, building glass breakage, water damage, and theft or attempted theft. For all other covered causes of loss, loss payment will be reduced by 15%. If the insured is a tenant, the portion of the building rented or leased to the insured is considered vacant if it doesn't contain enough business personal property to conduct customary operations. If the insured is the owner or general lessee of the building, it is considered vacant unless at least 31% of its total square footage is used to conduct customary operations. Buildings under construction or renovation are not considered vacant. If an insured desires coverage for vandalism, sprinkler leakage, building glass breakage, theft or attempted theft, and water damage for a building that remains vacant beyond the basic 60 days stated in the vacancy provision, it may request a vacancy permit endorsement to cover the excluded perils during a term of vacancy. This endorsement allows the 60-day Vacancy Condition to be waived for the "permit period." If the insurer doesn't agree to add the endorsement, the insured should purchase a specialty vacant property policy.

Loss Conditions

In addition to the Common Policy Conditions and the Commercial Property Conditions, the following conditions, most of which were discussed previously, apply: abandonment, appraisal, duties in the even of loss or damage

Valuation

In the event of a loss, the value of covered property will be determined as follows: Actual cash value (ACV) at the time of loss, except as provided below If the coinsurance requirement is met, and the loss is $2,500 or less, the policy will pay for building repairs or replacement. However, the following property will continue to be valued at actual cash value even when attached to the building: Awnings or floor coverings Appliances Outdoor equipment or furniture Stock the named insured has sold, but not delivered, at selling price, less discounts and expenses the insured otherwise would have had Glass at the cost of replacement with safety glazing material if required by law Tenant's Improvements and Betterments at actual cash value if repairs are made promptly, at a proportion of the insured's original cost if repairs are not made promptly, and no payment is made if repairs or replacement are paid for by others

Optional Coverages that may be made with entry in the Declarations include:

Maximum Period of Indemnity Monthly Limit of Indemnity Business Income Agreed Value

The mortgage holder will be paid, even if coverage is denied to the insured, subject to certain provisions. Payment will be made to the mortgage holder, but only if the mortgage holder:

Pays any premiums due if the insured hasn't done so Submits a signed, sworn, proof of loss within 60 days of being notified that the insured failed to submit such proof of loss; AND Has notified the insurer of any change in ownership, occupancy, or substantial change in risk about which it was aware

Valuable papers and records - cost of research

Pays for loss or damage by a covered peril that requires the replacement or restoration of lost information on valuable papers and records The maximum amount paid is $2,500 at each described premises, unless a higher limit is shown in the Declarations

Debris Removal

Pays the expense of removing debris following a covered loss and is subject to a maximum of 25% of the coverage applying to direct physical loss. However, in the event of a total loss where the limit of insurance on the building is exhausted, the policy will pay up to an additional $10,000 for debris removal.

Pollutant clean up and removal

Pays the insured's expense, up to $10,000 aggregate limit, for each described location in a policy period, to extract pollutants from land or water at the described premises if the discharge or escape of the pollutants is caused by or results from a covered cause of loss

Electronic Data

Pays up to $2,500 aggregate in any one policy year, regardless of the number of locations, for the cost to replace or restore electronic data that has been destroyed or corrupted by a covered cause of loss

Example 1

Perishable goods that have spoiled due to breakdown or power outage for a prolonged period of time would be covered.

Preservation of property

Provides open peril coverage for a maximum period of 30 days on insured property that is being moved or temporarily stored at another location because of endangerment by a covered peril

Causes of Loss - Basic Form

The Basic Form provides coverage for the following causes of loss (perils): fire, lightning, windstorm, or hail, smoke, aircraft, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.

Building and Personal Property Coverage Form

The Building and Personal Property Coverage Form pays direct physical loss of or damage to covered property described in the Declarations. It describes how property coverage applies to the following classes of property: buildings, business personal property of the insured, and personal property of others. There is no liability coverage provided by this form.

changes

The First Named Insured has the right to request policy changes. Changes can only be made, in writing, with the consent of the insurer.

Exclusion and Limitations

The applicable Causes of Loss Form shown in the Declarations contains the applicable coverage exclusions and limitations.

Additional Coverages

The coverages extend the insurance provided and are automatically included at no extra cost to the insured.

Additional Conditions

The following conditions apply in addition to the Common Policy Conditions and the Commercial Property Conditions.

For example, assume a building with a $100,000 replacement value were insured on a policy with an 80% coinsurance percentage and suffered a $10,000 loss. If the amount of insurance on the dwelling were $40,000, the policy would only pay 50% of the $10,000 loss, or $5,000, before application of the deductible. Because the building is insured to one-half the amount required by the coinsurance clause ($80,000), the loss penalty will be 50%.

The formula that is applied in the event of a partial loss is as follows: Amount of Insured Carried ÷ Amount of Insurance Required x Amount of Loss = The amount the insurer pays (Carried) $40,000 ÷ (Required) $80,000 x $10,000 (Amount of loss) = $5,000 (Amount the insurer pays)

Coinsurance

The insured is required to insure all covered property to a percentage of its replacement value; failure to do so results in a penalty in the event of partial losses. The coinsurance percentage is shown on the Declarations; and the standard coinsurance percentage is 80%. Any applicable loss penalty is determined based on the percentage of insurance to value.

Outdoor property

The insured may extend a maximum amount of $1,000 to cover loss to outdoor fences, detached signs, antennas, trees, shrubs, and plants. A sublimit of $250 applies to any one tree, shrub, or plant. The perils covered by this extension are fire, lightning, explosion, riot or civil commotion, and aircraft

Mortgage Holders

The policy will pay to each mortgage holder shown in the Declarations its share of a covered loss or damage, in order of precedence, as its interests may appear.

causes of loss forms

There are four Causes of Loss forms available to specify the perils covered under the property coverage parts of the policy. More than one Causes of Loss Form may be attached to the coverage part with different causes applying to different locations or classes of property. Most exclusions in the commercial property policy are found in the causes of loss form.

Interline endorsements

These endorsements coordinate the coverage contained in one coverage part of the policy with other coverage parts to prevent duplication. If only 1 coverage part is affected by a change, it is called a Monoline Endorsement.

Legal Liability Coverage Form (Bailee's Coverage)

This coverage form provides coverage for the insured's legal liability for loss or damage to real or personal property owned by others when it is in the insured's care, custody, or control and is damaged by a covered peril. It is most commonly written for the tenant of a commercial building when the tenant, under the terms of a lease, is legally responsible for damage to the building. the form also covers for loss of use of the property, and provides defense coverage.

Vacancy Permit ( CP 04 50)

This endorsement extends coverage on a building that has been vacant or unoccupied beyond the limitation period specified in a policy (usually 30 or 60 days). Usually, the permit is granted free of charge when the structure is in an area with satisfactory fire protection. The perils of vandalism and sprinkler leakage are excluded under this endorsement.

Condominium Commercial Unit-Owners Coverage Form

This form is used for commercial unit-owners instead of the personal lines Unit-owners Coverage Form (HO-6), which is used by the owners of residential condominium and cooperative units. Only the business personal property of the unit-owner is insured. In the event of duplicate coverage issued by this policy and the policy issued to the condominium association or cooperative corporation, the Unit-Owners Form acts as excess insurance. Covered property includes fixtures, improvements and alterations, and appliances owned by the insured and making up part of the building.

Value Reporting Form (Full Value Form) (CP 13 10) or Builders Risk Reporting Form

Under this form, an insured that owns business personal property that fluctuates in value is protected for the values actually at risk. The insured pays an advance premium at the beginning of the policy period. Reports are filed either daily, weekly, monthly, or quarterly. The final premium is based upon the average values reported and is determined at the end of the policy year. This form may be attached to the Building and Personal Property Form and the Condominium Commercial Unit-Owners Form. The insured is required to report 100% of values with each report. Late reporting or under-reporting will result in a penalty in the event of a loss.

The Available Coverage Parts

When purchasing only one coverage part (or module), it is considered a standalone policy and not a package policy. Two or more coverage parts must be included to be considered a package policy or CPP.

The CPP contains four key components:

Who: the named insured, which is the individual or business entity for whom insurance is provided. What: A description of the business being insured. When: the policy period, which includes the effective and expiration dates. Commercial package policies are written for terms of one year. Where: the mailing address of the named insured. How much: on the common declarations, this includes the total premium charged for each coverage part as well as the total policy premium. If a premium does not appear next to a coverage part on the common declarations, no coverage is provided.

Commercial property may consist of one or more of the following

building and personal property coverage form commercial builders risk coverage form condominium association form condominium unit-owners coverage form business income coverage form extra expense coverage form legal liability coverage form

Common policy conditions contains the legal obligations and duties of the insured and insurer, such as:

cancellation changes examination of your books and records inspections and surveys premiums transfer of your rights and duties under this policy

common policy conditions

cancellation rights transfer of your rights and duties request to make policy changes examination of your books and records inspections and surveys

Agreed Value

coinsurance clause is suspended when this optional coverage applies the insured and insurer agree on value specified on the declarations page the optional coverage only applies to loss or damage that occurs after the effective date of the optional coverage and before the agreed value expiration date shown in the declarations this coverage does not automatically renew; the insured most choose it.

The coverage parts available on a commercial package policy include

commercial property commercial inland marine coverage part equipment breakdown (formerly called boiler and machinery) farm property and liability coverage part commercial general liability coverage part commercial crime coverage part commercial automobile coverage part

coverage parts

equipment breakdown commercial crime commercial auto farm property and liability commercial general liability commercial property form commercial inland marine

The Outdoor Property coverage extension under the Building and Personal Coverage Form insures against which of the following perils?

explosion, riot, and civil commotion

the common policy conditions in commercial property insurance include all of the following, except:

fire department service charge

inspections and surveys

insurer has the right, but is not obligated, to make inspections and surveys at anytime. these surveys are for purposes of underwriting and rating and are not for safety inspections.

Endorsements and Coverage Parts

interline endorsements the available coverage parts

choose the false statement regarding the extra expense coverage form:

it provides coverage for direct losses under the policy

cancellation

who may cancel and when written notice must be given. The first named insured has the right to cancel the policy. the insurance company may also cancel the policy, subject to insurance regulations and the contents of the insurance contract

A building is considered vacant unless what percentage of the building's total square footage is rented or used to conduct customary operations?

31%

When an insured has time element coverage for loss of business income, coverage is provided during the period of restoration, which begins at what time?

72 hours after the loss

Covered Property

Building or structure described in the Declarations, including: Completed additions; outdoor fixtures; and permanently installed fixtures, machinery, and equipment. For example, a print shop that owns four commercial printers that are affixed to the cement floor would insure the printers as building items rather than items of business personal property. Personal property owned by the named insured and used to service and maintain the insured buildings, structures, and premises. Lawn mowing and snow removal equipment not otherwise excluded fall into this category of business personal property. Also included are materials and supplies of the business that are on the premises or within 100 feet of the premises. If the named insured is making an addition to an insured building or structure, or conducting alterations or repairs on an insured building or structure, the materials, equipment, supplies, and temporary structures used in connection with these activities are insured as building items if they are located on the described location or within 100 feet of it

Peak Season Limit of Insurance (CP 12 30)

Coverage is provided for a specified increase in the business personal property limit of insurance during a designated period of time, such as the Christmas shopping season. The insured chooses the property for which the value will be increased, the amount of the insurance, and the applicable time period.

Spoilage (CP 04 40)

Coverage is provided on perishable property in the care, custody, or control of the insured at the insured premises. This endorsement includes losses due to breakdown, contamination and power outage. Breakdown or contamination includes changes in temperature or humidity as the result of mechanical failure of refrigeration, cooling, or humidity-control equipment at the insured location Power outage includes changes in temperature or humidity as the result of interruption of electrical power either on or off the insured premises

Non-owned detached trailers

Extends insurance that applies to the insured's business personal property to apply to loss or damage to trailers the named insured does not own, provided the trailer is used in the insured's business, is in the insured's care, custody, or control at the described premises, and the insured has the contractual responsibility to pay for loss or damage to the trailer The most the insurer will pay for loss or damage is $5,000 unless a higher limit is shown in the Declarations Loss or damage is not covered while the trailer is attached to any motor vehicle or during hitching or unhitching operations

Increased cost of construction

In the event of damage to a covered building for a loss to which Replacement Cost Optional Coverage applies, the insurer will pay the increased costs, up to a $10,000 aggregate limit, incurred to comply with enforcement of an ordinance or law regulating the repair, rebuilding, or replacement of damaged parts

Coverage Extensions If a coinsurance percentage of 80% is shown in the Declarations, the insured may extend the insurance provided by the Commercial Property Coverage Part as follows:

Newly acquired or constructed property personal effects and property of others valuable papers and records - cost of research property off premises outdoor property non-owned detached trailers

Personal effects and property of others

Personal effects of the insured and the personal property of others in the insured's care, custody, and control are covered for up to $2,500 at each described premises. Coverage does not include loss by theft.

Fire department service charge

Provides, as an additional amount of insurance, up to $1,000 for the payment of fire department service charges when the department is called to protect insured property. No deductible applies to this coverage.

Earthquake and Volcanic Eruption Endorsement

The Earthquake and Volcanic Eruption Endorsement must be added to one of the causes of loss forms (basic, broad, or special) and cannot be purchased alone. The only causes of loss provided by this endorsement are earthquake and volcanic eruption. All earthquake shocks and volcanic eruptions that occur within any 168-hour period are considered a single earthquake or volcanic eruption. Separate deductibles apply to each building, and personal property located at each building, and personal property in the open. The deductibles are chosen by the insured as a percentage of the limit of liability applying to each class of property. The deductible does NOT apply to business income and/or extra expense coverage.

Recovered property

The insured, not the insurance company, has the option of keeping any recovered property and reimbursing the insurer for the amount of the loss settlement already received. Regardless of who retains the recovered property, the insurer pays the costs of recovery and any expenses required to repair the recovered property, subject to the limit of insurance.

loss payment

The insurer has the option of making payment for the value of the lost or damaged property or the cost to repair or replace. If it chooses, it may also take the property at an agreed or appraised value or actually arrange for the repair, rebuilding, or replacement of damaged property.

examination of your books and records

The insurer may examine the insured's books and records anytime during the policy period and up to 3 years afterward.

Endorsements Available Ordinance or Law Coverage (CP 04 05) This endorsement responds if the enforcement of any building, zoning, or land use law, results in:

The loss in value of the undamaged portion of a building because of enforcement of an ordinance or law that requires demolition of the undamaged parts of a building Demolition site and clearance of the undamaged parts of a building Increased cost of repairing or reconstructing damaged parts of a building

Limits of Insurance

The most the policy will pay for loss or damage in any one occurrence is the limit of insurance shown in the Declarations. the most the policy will pay for loss or damage to outdoor signs attached to the building is $1,000 per sign in any one occurrence the limits applicable to the fire department service charge and pollutant clean up and removal additional coverages are in addition to the limits of insurance

Causes of Loss - Earthquake Form (Earthquake Endorsement)

This form is basically an endorsement because it can only be used with another Causes of Loss Form. Coverage is provided for losses caused by earthquake or volcanic eruption that occur during the policy period, including damage caused by earthquake occurring within a 168-hour period after the expiration of the policy, providing loss began prior to the expiration of the policy. A deductible that is a percentage of the limit of insurance applies.

Condominium Association Coverage Form

This form is used in place of the Building and Personal Property Coverage Form when insuring property in the name of a condominium association. Coverage includes the buildings and the fixtures that are a part of the building, such as refrigerators, air conditioners, and other appliances, if the Association Agreement requires the association insure the property. This includes common buildings on the property, such as: clubhouse, pool, etc. If the unit-owner has insurance covering the same property, the association's coverage will be primary.

Extension of Replacement Cost to Personal Property of Others

This optional coverage allows replacement cost loss settlement, instead of actual cash value loss settlement, to apply for loss to personal property of others.

Each of the following is covered under the Legal Liability Coverage Form; except: loss of use damage to real or personal property owned by others when it is in the insured's care loss of income defense costs

loss of income

When ordered by a building, zoning, or land use law, the Ordinance or Law Coverage Endorsement covers all of the following losses, except: demolition of the undamaged parts of a building increased cost of repairing damaged parts of the building clearance of the undamaged parts of the building loss of value in the damaged portion of the building

loss of value in the damaged portion of the building

common policy declarations page

name insured description of insured business effective and expiration dates mailing address of name insured premium charged for each coverage section

for property coverages on a commercial package policy, which of the following perils is excluded by the causes of loss-basic form?

off premises utility services

The Condominium Commercial Unit-Owners Coverage covers each of the following, except:

personal property

Builders risk coverage begins on the effective date of the policy or at the time the insured becomes legally responsible for the property if that date occurs after policy's effective date. coverage ends automatically at the earliest of the following events, if they occur before the end of the policy period:

policy expires or is cancelled covered property is accepted by a purchaser insured's interest in the property ends insured abandons the property and doesn't intend to complete construction 90 days after construction is complete 60 days after any covered building is partially or fully occupied OR is put to its intended use

which of the following perils is not one of the three included on the broad causes of loss form

steam boiler explosion

premiums

the first named insured is responsible for the premium payments and will be the recipient of any return premiums

Replacement Cost - Business Personal Property Only

the insured may purchase coverage for replacement cost loss valuation instead of the actual cash value method of valuation contained in the form this optional coverage does not apply to: personal property of others, contents of residence, works of art, antiques, rare articles, etc., stock, unless the stock option is shown in the declarations, tenants' improvements and betterments are NOT considered personal property of others under this coverage

transfer of your rights and duties under this policy

the insured rights may not be transferred without the written consent of the insurer, unless the insured dies, and then rights are automatically transferred to the insured's legal representative.

Inflation Guard

the limit of insurance for property subject to this additional coverage automatically increases by the annual percentage show in the declarations this percentage of increase is applied to the policy at the rate of 1/365 of each day

Deductible

the policy will not pay for a loss until the amount of loss exceeds the deductible amount shown in the declarations. The standard deductible is $500

The exclusions contained in the causes of loss

Basic Form Exclusions include ordinance or law, earth movement, flood; governmental action, nuclear hazard, utility services, war and military action; water or fungus, wet or dry rot, and bacteria. A special exclusion exists for business income and extra expense coverages. Vandalism does not include coverage for theft but does cover building damage caused by the breaking or exiting of burglars Smoke does not include coverage for smoke from agricultural smudging or industrial operations. The basic causes of loss form contains a Limitation provision that specifies loss of animals is covered but only if they are killed or their destruction is made necessary. The basic form includes the Additional Coverage - Limited Coverage for Fungus, Wet Rot, Dry Rot, and Bacteria. The Limit of insurance is up to $15,000 for all covered losses that take place during the 12-month period that begins with the policy's inception date.

Causes of Loss - Special Form

Instead of providing coverage for named causes of loss, the special form provides coverage for risks of Direct Physical Loss unless the peril or cause of loss is specifically excluded or limited. Coverage under the Special Causes of Loss Form is on an open perils basis. The Limitations section of the Special Causes of Loss Form contains language not found in the Basic and Broad Forms, such as: No coverage is provided for most damage to steam boilers and equipment due to events inside the boilers and equipment No coverage is provided for damage to the interior of a building caused by rain, snow, sleet, ice, sand, or dust unless the exterior of the building or structure first sustains damage No coverage is provided for inventory shortage No coverage is provided for the following, unless specifically endorsed: fragile articles and builders machinery, tools, and equipment Special limits of insurance apply to the following classes of personal property: $2,500 for furs and fur garments; $2,500 for jewelry, watches, jewels, precious and semi-precious stones, gold, silver, etc.; $2,500 for patterns, dies, molds, and forms; and $250 for stamps, tickets, and letters of credit

Covered Causes of Loss

The Building and Personal Property Coverage Form requires the insured to select one or more of the cause of loss forms to be attached. These forms vary and allow the insured to select the appropriate form for a particular class or type of property. For example, the insured may want building items to be insured under a special causes of loss form and business personal property to be insured under a broad causes of loss form.

Components of a Commercial Package Policy

Every CPP includes a Common Policy Declarations and Common Policy Conditions form. These policy sections apply to the entire policy, regardless of the types of coverage written. For example, one client may wish to package Crime and Commercial General Liability coverages; another client may wish to package Inland Marine and Business Auto coverages. Although each client will have different and specific coverage forms, their policies will contain the same common policy declarations and common policy conditions form. The CPP contains four key components explained on the subsequent slides.

Extra Expense Coverage Form

Extra expense means the necessary additional expenses incurred during the period of restoration, and which the insured would not have incurred if there had been no direct physical loss. Examples of such expenses include relocation expenses and costs to equip a temporary location. Extra expense coverage may be purchased without business income coverage by clients that will not suffer a consequential loss of business income after a property loss but that would incur additional expenses. This form permits business continuation without interruption. It allows the business to maintain operation while undergoing repairs in hopes of keeping customers serviced and not losing them to a competitor during the down time.

The form does not provide liability coverage. The standard builders risk coverage form is written on a Completed Value Form. The limit of coverage is chosen and reflects the anticipated replacement value of the covered building(s) and structure(s) when construction is completed. If an insured is working on several projects at a time, the builders risk reporting form will be added to the policy by endorsement. It allows the limit of insurance to be adjusted based on reports filed per the reporting period on the policy; reporting periods can be daily, weekly, monthly, or quarterly. The amount of coverage increases at intervals to correspond with the increasing value of the building.

Failure to submit reports as required results in penalties that range from 25% of the amount the insurer would otherwise have paid or the amount contained on the most recently filed report before the loss. The form is written equivalent to 100% coinsurance. The causes of loss on the builders risk form appearing on the Declarations are the same as those used with the Building and Personal Property Coverage Form.

Causes of Loss - Broad Form

Includes the perils contained in the basic form, plus 3 additional causes of loss: Falling Objects - Damage caused by falling objects, but not to the object itself. Coverage for the interior of the building and its contents is only if the exterior of the building is first damaged by the falling object. Weight of Ice, Snow, or Sleet - Does not include coverage for personal property outside of buildings or structures. Water Damage Caused by Accidental Discharge - Coverage for water damage is provided when accidental discharge or leakage of water or steam occurs as the direct result of the breaking apart or cracking of a plumbing, heating, air conditioning, or other system or appliance that is located on the described premises and contains water or steam. Coverage is NOT provided for discharge or leakage from an automatic sprinkler leakage system, a sump or related equipment, roof drains, gutters, downspouts, etc. Coverage also will not be provided if continuous or repeated seepage or leakage of water takes place over a period of 14 or more days. Plumbing is not covered. The Causes of Loss - Broad Form contains the same exclusions, additional coverages, and limitation found in the basic form; however, it also includes the Additional Coverage - Collapse.

Business Personal Property owned by the Insured

Some business personal property is only insured if it is located in or on a building described on the Declarations or within 100 feet of it. Covered business personal property includes: Furniture & Fixrures - Such as office furniture or shelving. Machinery & Equipment - Such as refrigerators and telephone systems. Stock - Merchandise held in storage or for sale, raw materials, and supplies used for packaging or shipping such stock. Any other personal property owned by the named insured and used in the named insured's business Tenants' improvements or betterments made to the part of a building occupied, but not owned, by the named insured Leased personal property for which the named insured has a contractual obligation to insure, unless insured elsewhere on the policy

Types of property not covered on the Building and Personal Property Coverage Form include:

accounts, bills, currency, food stamps, or other evidences of debt, money, notes, and securities are not covered. ($5,000 cash burned in a fire would not be covered) Animals, unless they are owned by others and boarded by the name insured OR owned by the insured when they are "stock" and inside buildings Autos held for sale, including cars, trucks motorcycles, motor homes, etc. Bridges, roadways, sidewalks, patios, and other paved surfaces. Contraband, stolen property, or property used in the course of illegal transportation or trade The cost of excavations, grading, backfilling, or filling The foundations of buildings, structures, machinery, or boilers if the foundations are below the lowest basement floor or the surface of the ground if there is no basement. Land, including land on which covered buildings and structures are located, water, growing crops, and lawns. Personal property while it is being transported in the air or on water Bulkheads, pilings, piers, wharves, or docks Property insured by the policy under another coverage part, or property specifically insured on another policy Retaining walls that are not part of a building and underground pipes, flues, and drains Electronic data, including information, facts, and computer programs and the cost to replace or restore such information Vehicles and self-propelled machines, including aircraft and watercraft, if they're licensed for use on public roads OR are operated principally away from the described premises Property manufactured, processed, or warehoused by the insured Rowboats and canoes out of water at the described location Motorized vehicles that are not autos and are held for sale by the insured When outside of buildings: grain, hay, straw, other crops; fences, radio and TV antennas and their wiring, masts or towers; trees, shrubs, or plants that are not "stock"

Property coverage is provided on buildings or structures under construction if they are designated in the Declarations. The following types of property are covered IF they are to be permanently located in or on covered buildings and structures OR within 100 feet of its premises:

the foundations of buildings and structures fixtures and machinery that will become part of the covered buildings and structures equipment used to service the covered buildings and structures the insured's building materials and supplies used for construction property not covered includes: land, lawns, trees, shrubs, plants, outside antennas, and signs that are not attached to buildings