ISO form and endorsement changes approved by individual states, August 1995

Rough Notes, Nov 1995 by Kowatch, Diana

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Includes copyrighted material of Insurance Services Office, Inc. or SO Commercial Risk Services, Inc. With its permission.; (c) Copyright, Insurance Services Office, Inc., 1995 (c) Copyright ISO Commercial Risk Services, Inc., 1995.

OVERVIEW

In July of 1994, ISO filed extensive revisions, clarifications and updates to the commercial property program. Approvals have been received in many states for the implementation of the commercial property revisions. Although we will not address all of the changes, we will try to highlight some of the most obvious below in the Countrywide section. Other items of note for August have been the receipt of approvals in a number of jurisdictions for the countrywide revisions to the commercial crime forms and endorsements. Overall, August was a very active month with respect to filings and approvals.

COUNTRYWIDE

Commercial Property Revisions

Numerous changes have been made to the business income coverage forms. The most important is the implementation of a 72-hour waiting period or deductible. Another is how the amount of loss is determined. Wording has been added to clarify that coverage will be provided only for the loss of income that would have been realized had no loss occurred. In other words, an attempt is made to clarify that the coverage form will not consider windfall profit others are experiencing as a result of the loss, to be covered. The period of restoration with respect to business income has been defined. Numerous other changes are made to the time element coverage forms and endorsements.

Builders risk changes have been noted which clarify that permanently installed equipment to service a building is now covered. The limit for building materials has been increased from $2,500 to $5,000, as has property in transit. Changes have been made to waiver of rights of recovery against others. Clarifications have been made to the builders risk form with respect to when coverage ends--coverage ceases as soon as the building is occupied, in whole or in part, for its intended use. A new endorsement is available for theft of building materials.

Significant exclusions have been added to the cause of loss forms. Of key importance is the clarification that if earthquake occurs and subsequent fire ensues, only the fire damage is covered. Losses experienced as a result of off premises services such as utilities, have been clarified. Only direct loss within the building is covered. Read the exclusion carefully for its full impact. Satellite dishes are added to the list of antennae and towers excluded. Additional damage caused by insects, birds, and animals is excluded but the exclusion must be very carefully read. Dishonest acts of leased employees are now also excluded.

Several coverage extensions have been upgraded, such as the lengthening of the preservation of property provision. Coverage is available now for 30 days, instead of 10, when property has been removed from the premises to preserve it after a loss. Other extensions, such as those for valuable papers, newly acquired property, property off-premises, outdoor property, and debris removal, have been increased.

Coverage clarifications include one for falling glass. When glass is covered, not only does the coverage apply to the glass itself, but also any property the falling glass may damage. Additional collapse coverages have been defined and added.

Extensive changes have been made to the definitions, exclusions, and applications of vacancy and unoccupancy.

Overall, the property changes are significant. Careful evaluation and review are needed to realize the full extent of the new revisions. Again, this discussion provides only a sketch of the most significant. Listed below in the individual states will be those that have approved the new property program and their effective date.

Commercial Crime

Editorial clarifications have been made to two crime forms that have no coverage or rating impact, CR 00 19--Money Orders and Counterfeit Paper Currency Coverage Form R and CR 10 00--Crime General Provisions. Endorsement CR 30 01--Include Fire Damage, has been withdrawn as fire coverage is now provided in CR 00 13--Liability For Guests Property -- Premises Coverage Form L, so this endorsement is no longer necessary. Numerous state specific amendatory endorsements j have also been revised or updated.

Listed below in the individual states will be those that have approved the crime revisions and their effective date.

ALABAMA

The commercial property program revisions referenced in the Countrywide section above, have been approved for all policies written on or after December 1, 1995, in this state.