ISO form and endorsement changes approved by individual states

Rough Notes, Mar 1996 by Kowatch, Diana

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Includes copyrighted material of Insurance Services Office, Inc. or ISO Commercial Risk Services, Inc., with its permission; (at)Copyright, Insurance Services Office, Inc., 1996 (at)Copyright, ISO Commercial Risk Services, n c, 1996.

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 only the loss of income that would have been realized had no loss occurred, will be covered. In other words, an attempt is made to clarify that the coverage form will not consider windfall profits others are experiencing as a result of the loss to be covered. The period of restoration, with respects to business income, has been defined. Numerous other changes are made to the time element coverage forms and endorsements.

Builders risk changes 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 builders risk as 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 are excluded but the exclusion must be very carefully read. Dishonest acts of leased employees are also excluded.

Several coverage extensions have been upgraded, such as the lengthening of the preservation of property provision for 30 days, instead of 10, when property has been removed from the premises to preserve it after a loss. Other extensions such as 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, coverage applies to the glass itself, but also to any property the falling glass may damage. Additional collapse coverages have been defined and added.

Extensive changes have been made to 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. This discussion provides only a sketch of the most significant.

Listed below in the states sections will be those that have approved the new property program. The text will refer to this Countrywide section. The date the revision has been approved for use is March 1, 1996, unless otherwise shown below.

Commercial property manual rules and SCOPES revisions

Commercial property changes were made to rules, loss costs, forms, and SCOPES filings including: an increase in the base property damage deductible for buildings, personal property, spoilage, and builders risk from $250 to $500, with a $250 buyback available. Optional deductibles now start at $1,000 instead of $500. Condo Commercial Unit-Owners Optional Coverage Form CP 04 18 is revised: changes in rates were filed to coincide with the increase in the base deductible from $250 to $500.

Provisions were made for additional loss assessment coverage subject to a separate schedule and limit, but no more than $1,000 for an assessment due to the condominium association's policy deductible. The form has also been revised to allow for the insertion of a deductible for loss assessment.

A major SCOPES change is to the property protection class multipliers which have been revised and now base the multipliers on the building construction in addition to the protection class. The table for windstorm or hail percentage deductibles has been modified to adjust the ranges of the amounts of insurance at each location to complement the deductible changes. The rating examples appendix has been amended to reflect the above changes. Listed below in the state sections are those that have approved these revisions. The text will refer to this Country-wide section.