09.05. Commercial Property Endorsements

  1. Usage of BPP Endorsements
    • provide coverage enhancements
    • eliminate coverage for certain exposures
    • change policy provision to meet insured's needs
    • amend policy to comply with state law
  2. Ordinance or Law Coverage
    • Coverage A: covers value of undamaged portion of a building that must be demolished
    • Coverage B: covers the cost to demolish and remove debris when demolition is required by law
    • Coverage C: increased cost to repair or rebuild property
    • Blanket: Coverages B and C can be provided under a blanket limit
  3. Spoilage Coverage
    • covers damage to perishable stock due to power outages, on-premise breakdown, contamination of equipment
    • power outage must be caused by conditions outside of the insured's control
  4. Flood Coverage
    • National Flood Insurance Program (NFIP): for eligible communities, max limit of $500K per building and $500K for contents; sold by brokers, backed up by US government
    • Private insurers: most insurer don't write flood in zones where freq is greater than once-in-100-years; deductible is often $25K and more; can also offer excess of NFIP
  5. Earthquake and volcanic eruption coverage
    • limited coverage and availability in high risk area such as California, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee
    • generally available but overlooked in other areas
    • 2 ISO endorsement: one with coinsurance and full policy limit, one with sub-limit (usually lower) and no coinsurance
  6. Peak season limit of insurance endorsement
    covers the fluctuating value of business personal property
  7. Value Reporting Form
    • provides insurance for the insured's maximum expected value and requires the insured to periodically report property values to the insurer
    • penalties apply for failure to report (loss payment reduced to 75%), or past due reports and inaccurate reports
    • premium advance is based on 75% of limit of insurance
    • should select high enough limit to cover large reported values
    • limitations: small insureds may not have sufficient accounting system procedures and sophistication to generate reports; insurer wouldn't want to use this endorsement on small insured since premium isn't large enough to warrant added expense of processing those reports
Card Set
09.05. Commercial Property Endorsements
Commercial Property Endorsements