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Chapter 16: businessowners program endorsements.

This chapter addresses the most common businessowners program endorsements used to amend businessowner policies. A substantial number of new endorsements have been introduced under the Businessowners Policy 2010 edition reflective of its continued expansion into new eligibility categories. The endorsements in this chapter are categorized in six groups to reflect each endorsement's intended purpose. The endorsement groups are Additional Insureds, Exclusion/Limitation, Additional Coverage, General, Professional Liability, and Terrorism. The descriptions are brief summaries only. For complete information, refer to the actual endorsement. Please note that state-specific endorsements are not included in this summary.

Additional Insured Endorsements

These endorsements add individuals and/or organizations as insureds to the named insured's policy. When this occurs, the additional insured is granted coverage as specified on the additional insured endorsement. The 2006 edition included minor editorial revisions in many of the additional insured endorsements (which have no impact on coverage) and substantive revisions in a number of the additional insured endorsements (which have an impact on coverage). The substantive change centered on the phrase "arising out of," which was deleted in the 2006 versions. The reason for the elimination of this phrase was due to some courts extending coverage for an additional insured's sole negligence. This was never the intent of the additional insured endorsements. Their purpose was to cover only vicarious liability arising out of the named insured's negligent acts and not the additional insured's sole negligence. This was a reduction in coverage in states in which named insureds are permitted to contractually hold harmless an additional insured for the additional insured's negligence, and courts have enabled coverage for the sole negligence of the additional insured.

The 2010 edition adds several additional insured endorsements addressing building owners, grantors of franchises, and owners, lessees or contractors--completed operations. The introduction of these endorsements represents the continued expansion of the Businessowners Policy Program.

Additional Insured--Building Owner (BP 12 31)--This endorsement adds a building owner as an additional insured but only with respect to the property coverage provided by this insurance for direct physical loss or damage to the building(s) described in the schedule. This is a new endorsement under the 2010 program.

Additional Insured--Co-owner Of Insured Premises (BP 04 11)--This endorsement adds a person or organization as an additional insured for liability as co-owner of the insured premises.

Additional Insured--Controlling Interest (BP 04 06)--This endorsement adds a person or organization as an additional insured for liability arising out of its financial control of the named insured for ownership, maintenance, or control of the premises.

Additional Insured--Engineers, Architects, Or Surveyors (BP 04 13)--This endorsement adds engineers, architects, or surveyors as additional insureds when they are engaged by the insured for premises and operations liability. Professional liability is excluded.

Additional Insured--Grantor Of Franchise (BP 14 05)--This endorsement adds a person or organization shown in the schedule but only with respect to their liability as a grantor of a franchise. This is a new endorsement under the 2010 program.

Additional Insured--Lessor Of Leased Equipment (BP 04 16)--This endorsement adds an equipment lessor as an additional insured for damages arising from the leasing of its equipment to the named insured. The liability must involve at least contributory negligence by the lessee and must arise out of an occurrence that takes place during the term of the lease. A separate endorsement should be attached for each such lessor added as an additional insured.

Additional Insured--Owners Or Other Interests From Whom Land Has Been Leased (BP 04 10)--This endorsement adds owners or lessors of land leased to the insured for liability coverage. Construction, alterations, and postlease occurrences are excluded.

Additional Insured--Owners, Lessees Or Contractors--Completed Operations (BP 14 02)--This endorsement adds a person or organization shown in the schedule but only with respect to liability for bodily injury or property damage caused, in whole or in part, by the named insured's work at the location designated and described in the schedule of this endorsement. The work must be performed by that additional insured and included in the products-completed operations hazard. This is a new endorsement under the 2010 program.

Additional Insured--Managers Or Lessors Of Premises (BP 04 02)--This endorsement includes as additional insureds designated persons or organizations for their liability as owners of designated premises leased to the named insured.

Additional Insured--Mortgagee, Assignee, Or Receiver (BP 04 09)--This endorsement adds mortgagees, assignees, or receivers as additional insureds on policies covering owners or general lessees. Construction and alterations are excluded.

Additional Insured--State Or Political Subdivisions--Permits Relating To Premises (BP 04 07)--This endorsement provides liability coverage for certain premises hazards for governmental organizations issuing permits to owners or lessors.

Additional Insured--Townhouse Associations (BP 04 08)--This endorsement covers individual townhouse owners for liability arising from membership in townhouse associations.

Additional Insured--Vendors (BP 04 47)--This endorsement may be added to policies insuring distributors. It includes as an additional insured a vendor shown in the endorsement's schedule, but only with respect to liability arising out of the vendor's sale or distribution of the named insured's products.

Exclusionary/Limitation Endorsements

These endorsements exclude and/or limit certain exposures that may fall within the coverage of the policy. They may be requested by the insured or required by the insurer for underwriting purposes.

Abuse Or Molestation Exclusion (BP 04 39)--This endorsement amends the businessowners liability coverage form by excluding abuse or molestation by anyone of any person while in the care, custody, or control of any insured.

Abuse Or Molestation Exclusion--Specified Services (BP 14 11)--This endorsement amends the businessowners liability coverage form with respect to any services described in the schedule. It excludes abuse or molestation by anyone of any person while in the care, custody, or control of any insured. It also excludes claims arising from negligent employment, supervision, investigation, and other monitoring of individuals whose conduct is excluded by the endorsement. This eliminates coverage for the vicarious liability that a business owner might have for employing individuals who abuse or molest others while engaged in the services described in the endorsement. This is a new endorsement under the 2010 program.

Amendment--Liquor Liability Exclusion--Exception For Scheduled Activities (BP 04 19)--There are three endorsements that address liquor liability issues under the businessowners policy. Two endorsements add coverage and are addressed in the additional coverage endorsement section of this chapter. This endorsement replaces the policy's liquor liability exclusion with a more restrictive one. Specifically, it excludes coverage if the insured (a) manufactures, sells, or distributes alcoholic beverages; (b) serves or furnishes alcoholic beverages for a charge (e.g., periodic fundraising event); or (c) serves or furnishes alcoholic beverages without a charge if a liquor license is required. By exception, coverage is provided if the insured sells, serves, or furnishes alcoholic beverages at activities described in the endorsement.

Coverage For Injury To Leased Workers (BP 04 40)--This endorsement amends the businessowners liability coverage with respect to the employer's liability exclusion. It provides that the definition of employee does not include leased employees.

Comprehensive Business Liability Exclusion (All Hazards In Connection With Designated Premises Or Operations) (BP 04 01)--This endorsement excludes specific projects, location hazards, operations, or equipment. The specific project, location hazard, operations, or equipment must be clearly separable and definable.

Employment-Related Practices Exclusion (BP 04 17)--This endorsement amends the businessowners liability coverage by excluding bodily injury and personal and advertising injury arising out of employment-related practices. Examples of excluded practices include refusal to employ, termination of employment, coercion, demotion, evaluation, discipline, defamation, harassment, humiliation, discrimination, or malicious prosecution. The 2010 revision adds malicious prosecution to reinforce original intent of not covering any injury caused by the malicious prosecution of a person. Depending upon the state of jurisdiction, this may be a reduction in coverage.

Exclusion--Damage To Work Performed By Subcontractors On Your Behalf (BP 14 19)--This endorsement amends the businessowners liability coverage by excluding property damage to your work performed on your behalf by any subcontractor at any site or operation. This is a new endorsement under the 2010 program.

Exclusion--Damage To Work Performed By Subcontractors On Your Behalf--Designated Sites Or Operations (BP 14 20)--This endorsement amends the businessowners liability coverage by excluding property damage to your work performed on your behalf by any subcontractor at a designated site or operation as shown in the endorsement schedule. This is a new endorsement under the 2010 program.

Exclusion--Designated Products Endorsement (BP 14 23)--This endorsement amends the businessowners liability coverage by excluding bodily injury or property damage included in the products-completed operations hazard that arises out the named insured's products as described in the endorsement schedule. This is a new endorsement under the 2010 program.

Exclusion--Designated Work (BP 14 21)--This endorsement amends the businessowners liability coverage by excluding bodily injury or property damage included in the products-completed operations hazard that arises out of the insured's work as described in the endorsement schedule. This is a new endorsement under the 2010 program.

Exclusion--Erroneous Delivery Of Mixture And Resulting Failure Of Seed To Germinate--Seed Merchants (BP 14 12)--This endorsement amends the businessowners liability coverage by excluding property damage arising out of the erroneous delivery of seed including the failure to deliver seed, delivery of wrong seed, or delivery of seed at the wrong time or season. It also excludes error in mechanical mixture of seed and the failure of seed to germinate. This is a new endorsement under the 2010 program.

Exclusion--Exterior Insulation And Finishing Systems (BP 14 08)--This endorsement amends the businessowners liability coverage by excluding bodily injury, property damage, personal injury, or advertising injury arising out of, caused by, or attributed to the design, manufacture, construction, sale, or servicing of any exterior insulation and finishing system that is affixed to a structure. This is a new endorsement under the 2010 program.

Exclusion Of War, Military Action, And Terrorism (BP 05 11)--This endorsement replaces the businessowners property coverage war and military action exclusion. Its purpose is to eliminate coverage for loss caused by war, military action, and terrorism, and adds an additional paragraph that supersedes the nuclear hazard exclusion. The endorsement not only excludes war, military action, and terrorism, but it also excludes following fire coverage previously found in the nuclear hazard exclusion. This endorsement is used in states that do not have a statute that requires property policies to provide coverage that is at least equal to the New York Standard Fire Policy. It includes a $25 million dollar threshold that is applicable to all acts of terrorism except those involving nuclear, biological, or chemical materials. The terrorism portion of the exclusion is not applicable until damage arising from a terrorism incident exceeds $25 million.

Exclusion Of Terrorism (With Limited Exception) And Exclusion Of War And Military Action (BP 05 12)--This endorsement is the same as (BP 05 11), except it is used in states that do have a statute that requires property policies to provide coverage that is at least equal to the New York Standard Fire Policy.

Exclusion--Products-Completed Operations Hazard (BP 14 22)--This endorsement amends the businessowners liability coverage by excluding bodily injury and property damage within the products-completed operations hazard. This is a new endorsement under the 2010 program.

War Or Terrorism Exclusion (BP 05 13)--Excludes coverage for bodily injury, property damage, personal or advertising injury, or medical expenses payments arising from war or terrorism. The terrorism portion is activated when total insured damages arising from a terrorism incident exceeds $25 million or when fifty or more people die or are seriously injured. Terrorism losses involving nuclear, biological, or chemical materials also are excluded.

Exclusion--Silica Or Silica-Related Dust (BP 05 17)--This endorsement excludes liability for bodily injury, property damage, and personal and advertising injury arising out of silica or silica related dust. This endorsement was introduced in the 2006 program.

Fungi Or Bacteria Exclusion (Liability) (BP 05 77)--This endorsement amends the businessowners coverage by excluding bodily injury, property damage, and personal and advertising injury that would not have occurred in whole or in part but for the actual, alleged, or threatened inhalation or exposure to fungi or bacteria.

Limitation Of Coverage To Designated Premises Or Project (BP 04 12)--This endorsement limits coverage for bodily injury, property damage, personal and advertising injury, and medical expenses payments to designated premises or projects.

Limited Exclusion--Personal And Advertising Injury--Lawyers (BP 14 15)--This endorsement amends the businessowners liability coverage by not applying to personal and advertising injury arising out of the rendering of or failure to render professional services as a lawyer. This is a new endorsement under the 2010 program.

Medical Expenses--Exclusion (BP 04 38)--This endorsement amends the businessowners liability coverage form by excluding medical payments coverage. Use is mandatory when the exposure includes swimming facilities.

Exclusion--Personal And Advertising Injury (BP 04 37)--This endorsement amends the businessowners liability coverage form by excluding all coverage for personal and advertising injury liability. It is mandatory for private detective or investigative agencies, employment agencies, labor union offices, lawyers' offices, political campaign headquarters or offices, and security and patrol agencies.

Total Pollution Exclusion (BP 04 92)--This endorsement modifies the businessowners form to eliminate virtually all coverage for pollution incidents. Insurers typically require it when the business owner is involved in certain high-risk activities that may lead to a pollution incident.

Total Pollution Exclusion With A Building Heating Equipment Exception And A Hostile Fire Exception (BP 04 93)--This endorsement modifies the form's pollution exclusion to exclude virtually all coverage for pollution incidents except for bodily injury arising out of smoke, fumes, vapor, or soot from building equipment and bodily injury or property damage arising out of smoke or fumes from a hostile fire. Effective with the 2006 edition, this endorsement broadened an exception to the exclusion by adding cooling or dehumidifying equipment that is used to heat water.

Additional Coverage Endorsements

These endorsements add or extend coverage that is limited under the unendorsed form.

Broadened Coverage For Damage To Premises Rented To You (BP 04 55)--This endorsement expands coverage under the damage to premises rented to you limit (previously known as fire legal liability) from only fire to broader tenant's liability coverage for property damage to the premises. This was introduced as Business Liability Coverage--Tenants Liability in the 2002 edition and renamed in the 2006 edition.

Business Income, Extra Expense And Related Coverages Limit of Insurance (BP 14 06)--This endorsement amends the businessowners property additional coverages business income, extra expense, civil authority, business income from dependent properties, and interruption of computer operations to the limit of insurance shown in the endorsement schedule. This is a new endorsement under the 2010 program.

Business Income and Extra Expense--Revised Period of Indemnity (BP 14 07)--This endorsement amends the businessowners property additional coverages business income and extra expense to the number of consecutive days indicated in the endorsement schedule. This is a new endorsement under the 2010 program.

Business Income Changes--Time Period (BP 04 41)--This endorsement eliminates the seventy-two-hour waiting period on business income, civil authority, and business income from dependent property losses. This endorsement was introduced as Business Income Changes- Increased Period Of Restoration (No Waiting Period) in the 2002 edition and renamed in the 2006 edition. The 2010 edition revises the endorsement to track with Additional Coverage--Civil Authority by extending the period of coverage from three to four weeks.

Changes--Limited Fungi Coverage (BP 05 76)--This endorsement may be used to change the policy's $15,000 limit of insurance as set forth in the additional coverages. It also enables the insured to modify the application of the dollar limit and increase the number of days of business income and extra expense coverage. The 2010 edition deletes the word bacteria from the endorsement to reinforce its intention of not covering claims involving bacterium or other microorganism that may induce physical distress, illness, or disease.

Computer Fraud And Funds Transfer Fraud (BP 05 47)--This endorsement provides coverage for loss to money, securities, and other property resulting directly from the use of any computer to fraudulently cause a transfer of that property from inside the premises or banking premises to a person (other than a messenger) outside those premises or to a place outside those premises. It also provides coverage for loss of money and securities resulting from fraudulent instructions (without the insured's knowledge and consent) directing a financial institution to transfer or deliver money and securities from the insured's transfer account. Coverage under this endorsement is subject to a limit selected on the endorsement. This endorsement was introduced under the 2006 program. The 2010 edition eliminates the limitation related to loss of or damage to property that has been transferred to a person outside the described premises on the basis of unauthorized instructions and revises the false pretense exclusion. These changes are a broadening of coverage. The new revision also introduces an exclusion eliminating coverage for loss or damage caused or resulting from the use or alleged use of credit, debit, charge, access, convenience, identification, stored value, or other cards or the information contained on such cards. The addition of this exclusion is a reduction of coverage.

Condominium Commercial Unit-Owners Optional Coverages (BP 17 03)--Provides coverage for condominium unit-owners in two situations. Loss assessment coverage applies to assessments charged to the unit-owners by the condominium association as a result of direct physical loss of or damage to property in which each unit-owner has an undivided interest. If the assessment results from a deductible in the association's insurance, the company will not pay more than $1,000 regardless of the limit of insurance. A $500 deductible applies to each unit under this coverage. Miscellaneous real property coverage applies to condominium property that pertains only to the unit-owner's unit or that the unit-owner must insure according to the condominium association agreement.

Contractors' Installation, Tools And Equipment Coverage (BP 07 01)--This endorsement may be used to cover contractors' installations, contractors' tools and equipment, nonowned tools and equipment, and employees' tools. The 2010 edition has been revised into four coverages. Contractors' Installation Coverage (Coverage 1) permits a scheduled amount for property at each covered job site (note ISO manual indicates a $3,000 limit of insurance) and introduces a $5,000 limit of insurance for property in transit and a $5,000 limit of insurance for property at a temporary storage location. Contractors Tools and Equipment (Coverage 2) permits a blanket amount limit subject to a selected per item maximum, or as an alternative, a scheduled per item limit of insurance. Nonowned Tools and Equipment Coverage (Coverage 3) permits a blanket limit to cover select nonowned tools and equipment. Employees' Tools Coverage (Coverage 4) permits a blanket limit subject to a per item limit of $100 per tool and $500 per employee. Note that loss caused by theft or building glass breakage does not apply to Coverages 3 and 4.

Coverage For Injury To Leased Workers (BP 04 40)--This endorsement is needed in the minority of jurisdictions that do not recognize the business owner of the leased worker as the employer of the leased worker.

Debris Removal Additional Insurance (BP 14 09)--This endorsement amends the businessowners property additional coverage debris removal to the amount indicated in the endorsement schedule. This is a new endorsement under the 2010 program.

Earthquake (BP 10 03)--This endorsement extends coverage to loss by earthquake or tsunami.

Earthquake And Volcanic Eruption (Sub-Limit) (BP 10 11)--This endorsement extends coverage to loss by earthquake and volcanic eruption as shown in the schedule of the endorsement. This is a new endorsement under the 2010 program.

Electronic Commerce (E-Commerce) (BP 05 94)--This endorsement provides coverage for insureds who use the Internet to conduct business. Coverage applies to the replacing and/or restoring of electronic data that has been destroyed or corrupted by a covered peril as set forth in the endorsement. Coverage also applies for loss of business income and extra expense caused by a covered peril set forth in the endorsement when e-commerce activity is disrupted (up to ninety days), or an interruption in computer network service (up to two weeks). Coverage is limited to a single limit of insurance in the endorsement schedule. A dollar deductible applies to property damage, and an eight-hour waiting period applies to business income and expense. This endorsement was introduced under the 2006 program.

Electronic Data Liability--Limited Coverage (BP 05 95)--This endorsement provides property damage liability coverage for loss of electronic data arising out of an occurrence. It is limited in coverage because it only applies to liability for loss of data that results from physical injury to tangible property. This endorsement would cover an insured that negligently causes a power failure (severs computer cables) that leads to a computer malfunction and loss of data. This endorsement was introduced under the 2006 program.

Electronic Data Liability--Broad Coverage (BP 05 96)--This endorsement provides property damage liability coverage for loss of electronic data arising out of an incident. Unlike, the Electronic Data Liability--Limited Coverage (BP 05 95) discussed previously, the broad coverage version does not require physical injury to tangible property in order to trigger coverage. This endorsement would cover an insured that negligently causes data to be lost or corrupted (transfers a computer virus). Coverage is provided on a claims-made basis subject to an annual aggregate limit of insurance. This endorsement was introduced under the 2006 program. The 2010 edition introduces trusts as an insured category.

Extended Reporting Period For Electronic Data Liability--Broad Coverage (BP 05 97)--This endorsement extends the reporting period related to claims covered under the Electronic Data Liability--Broad Coverage (BP 05 96) endorsement.

Employee Benefits Liability Coverage (BP 04 98)--This endorsement provides coverage for sums that the insured may become legally obligated to pay because of its error or omission in the administration of the named insured's employee benefit program. Coverage is provided on a claims-made basis. This endorsement was introduced in the 2002 program. The 2010 edition eliminates liability arising out of the failure of performance of a contract by any insurer. In other words, liability coverage is not extended to a business owners' health insurer that fails to perform in accordance with a contract.

Extended Reporting Period For Employee Benefits Liability Coverage (BP 04 99)--This endorsement extends the reporting period related to claims covered under the Employee Benefits Liability Coverage (BP 04 98) endorsement.

Employment-Related Practices Liability (BP 05 89)--This endorsement provides coverage for businesses for liability arising out of claims for wrongful acts to which the insurance applies. A wrongful act includes wrongful demotion, failure to promote, negative evaluation, reassignment, discipline, or wrongful refusal to employ; wrongful termination, wrongful denial of training, wrongful deprivation of career opportunity, or breach of employment contract; negligent hiring or supervision that results in any wrongful act; retaliatory action against an employee; coercion; harassment; libel, slander, invasion of privacy, defamation, or humiliation; and verbal, physical, mental, or emotional abuse arising out of discrimination. See the actual endorsement for a complete definition. This is a claims-made endorsement covering claims made on or after the retroactive date and during the policy period or any applicable extended reporting period. Defense expenses and damages are within the annual aggregate limits of insurance listed in the schedule endorsement. This endorsement was introduced under the 2006 program and revised in 2010, introducing the definition wrongful act and retiring the definition injury to better define the coverage.

Flood Coverage (BP 10 79)--This endorsement amends the businessowners property coverage when a flood limit of insurance is shown in the declarations or in the flood coverage schedule. It covers loss to covered property caused by flood subject to a seventy-two hour time deductible. The limit of insurance is written on an occurrence basis subject to an annual aggregate. This coverage is excess over the maximum limit of coverage for which the property is eligible under the National Flood Insurance Program. This provision may be eliminated if the declarations or the flood coverage schedule indicates that the Underwriting Insurance Waiver applies. In other words, coverage can be written on a first dollar basis. This is a new endorsement under the 2010 program.

Hired Auto And Non-Owned Auto Liability (BP 04 04)--This endorsement provides either (or both) nonowned or hired auto coverage. The nonowned auto liability portion provides coverage for any auto that is not owned, borrowed, or hired by the insured, such as an employee using her personal auto to run an errand on behalf of the business owner. The business owner would qualify for liability coverage for such a nonowned auto exposure, although the employee would have to rely on her own auto insurance for liability coverage. Hired auto liability provides coverage for autos leased, hired, or borrowed by the named insured. An example is a business owner who rents a car while traveling on company business. This endorsement protects the business and provides only liability coverage.

The 2002 edition was revised to extend the nonowned liability coverage to the named insured. The 2006 edition revised the endorsement to include an insured's employee as an insured while using a nonowned auto in the insured's business. It also expanded the definition of hired auto to include an "auto that you rent" and expanded the definition of nonowned auto to cover members of a partnership for their vicarious liability resulting from another partner's use of his own auto. This represents a broadening of coverage over the 2002 program. The 2010 edition adds an Other Insurance provision making explicit that liability coverage provided by the endorsement for autos that are hired autos or nonowned autos is excess over the primary insurance covering such autos.

Identity Fraud Expense Coverage (BP 14 01)--This endorsement amends the businessowners property additional coverage by adding an identity fraud expense limit of $25,000 as an annual aggregate. Advertising expense to restore the business owners' reputation is limited to $5,000. A $250 per day limit subject to a $10,000 maximum sub-limit applies to loss of income. This is a new endorsement under the 2010 program.

Limited Fungi Or Bacteria Coverage (Liability) (BP 05 78)--This endorsement modifies the businessowners liability exclusion section to cover bodily injury or property damage arising out of a fungi or bacteria incident. A separate fungi and bacteria liability aggregate limit is indicated in the endorsement schedule. Building owners and/or contractors may use this endorsement to cover bodily injury or property damage arising from a fungi or bacteria incident, which is defined on the endorsement.

Limited Pollution Liability Extension (BP 04 94)--This endorsement modifies the pollution exclusion to cover pollution releases from locations on which the insured is performing nonenvironmental operations. A pollution release from a storage tank, ducts, or piping that is below surface is not covered, and neither are clean-up costs mandated by environmental laws.

Liquor Liability (BP 04 88)--This endorsement amends the liquor liability exclusion to provide liquor liability coverage subject to the policy's liability and medical payments limits. This endorsement was introduced in the 2002 program.

Liquor Liability Coverage (BP 04 89)--This endorsement is similar to BP 04 88. It is written subject to two limits (an aggregate and a common cause limit). In addition, no coverage applies to bodily injury or property damage arising out of any alcoholic beverage sold or furnished while any required license is not in effect. The 2002 edition covered situations such as when an insured never obtained a required liquor license or when a license was suspended, expired, cancelled, or revoked. The 2006 revision, by inserted the phrases not in effect, resulted in a reduction of coverage that was carried forward into the 2010 edition.

Newly Acquired Organizations (BP 04 54)--This endorsement amends the liability coverage to provide limited coverage for newly acquired or formed organizations.

Ordinance Or Law Coverage (BP 04 46)--The ordinance or law exclusion eliminates coverage for any additional costs associated with repairing a structure in order to comply with a building ordinance or law (e.g., ADA or demolition requirements). This endorsement provides coverage for those types of occurrences.

Pollution Exclusion--Limited Exception For A Short-Term Pollution Event (BP 04 90)--This endorsement modifies the pollution exclusion to cover a short-term pollution event. Coverage applies if the escape of pollutants (a) begins at an identifiable time and place; (b) ends no later than fortyeight hours after it begins; and (c) is reported to the insurer as soon as practicable, but no later than fourteen days after the end of the incident. Other requirements for coverage also apply. The 2006 edition of this endorsement provided a broadening of an exception to an exclusion by adding cooling or dehumidifying equipment that is used to heat water.

Pollution Exclusion--Limited Exception For Designated Pollutant(s) (BP 04 91)--This endorsement modifies the pollution exclusion to cover the escape, release, or migration of the designated pollutant(s) listed in the endorsement.

Residential Cleaning Services (BP 07 81)--This endorsement amends the businessowners property and liability coverage. Under the property additional coverage, $5,000 is provided as a reward payment for individuals who provide information leading to the arrest and conviction or return of stolen property. Coverage also applies to key and lock replacement for a client in the event residential cleaning services lose the client's keys or if the keys are stolen. Finally under the property coverage, if the employee dishonesty optional coverage is shown in the declarations, the endorsement covers theft of clients' property (money, securities, other property) resulting directly from theft committed by any of the cleaning services' employees acting alone or in collusion with others. Under the liability coverage, the insurer will reimburse the cleaning service up to $5,000 for any one occurrence and $10,000 as an annual aggregate for property damage claims arising from the work performed by the cleaning service. This is a new endorsement under the 2010 program.

Seed Merchants--Coverage For Erroneous Delivery Or Mixture And Resulting Failure of Seed To Germinate (BP 14 14)--This endorsement amends the businesowners liability coverage covering damages arising out of the erroneous delivery of seed, including the failure to deliver seed, delivery of wrong seed, or delivery of seed at the wrong time or season. It also covers error in mechanical mixture of seed and the failure of seed to germinate if the failure is caused by the delivery of wrong seed, delivery at the wrong time, or an error in mechanical mixture. This insurance does not apply to property damage arising out of the failure of seed to germinate. This is a new endorsement under the 2010 program.

Seed Merchants--Coverage For Erroneous Delivery Or Mixture (Resulting Failure of Seed To Germinate Not Included) (BP 14 13)--This endorsement amends the businesowners liability coverage covering damages arising out of the erroneous delivery of seed including the failure to deliver seed, delivery of wrong seed, or delivery of seed at the wrong time or season; and error in mechanical mixture of seed. This is a new endorsement under the 2010 program.

Snow Plow Products--Completed Operations Hazard Coverage (BP 14 16)--This endorsement amends the businessowners liability coverage to provide bodily injury and property damage arising out of the use of any auto for snow or ice removal operations. This is a new endorsement under the 2010 program.

Spoilage Coverage (BP 04 15)--This endorsement is designed for businesses that process, store, or sell perishable stock (e.g., food, medicine, or flowers). Coverage may be purchased to cover breakdown or contamination and/or power outage. The option is indicated by a declarations entry.

Theft Of Clients' Property Coverage (BP 14 03)--This endorsement amends the businessowners property coverage if employee dishonesty optional coverage is shown in the declarations. The endorsement covers theft of clients' property (money, securities, other property) resulting directly from theft committed by any of the business owners' employees acting alone or in collusion with others. A limit of $5,000 applies unless another amount is indicated on the endorsement. This is a new endorsement under the 2010 program.

Utility Services--Direct Damage (BP 04 56)--Property damage coverage may be extended to cover loss of or damage to covered property described in the schedule that is caused by direct physical loss or damage to off-premises properties providing water, communication, and power supply services. The coverage may either include or exclude overhead transmission lines.

Utility Services--Time Element (BP 04 57)--Through use of this endorsement, time element coverage may be extended to cover loss at the described premises resulting from the failure of utility property located outside the covered building, regardless of whether such property is located on or off-premises.

Water Back-Up And Sump Overflow (BP 04 53)--This endorsement provides coverage for water back-up and sump overflow. Unless a higher limit is indicated in the schedule endorsement, $5,000 applies per location. The 2010 edition introduces the option to insure the loss of business income and extra expense that results from a water back-up or sump overflow loss. Like the property limit, $5,000 applies per location unless a higher limit is indicated in the scheduled endorsement. The limits chosen are on an annual aggregate basis.

General Endorsements

Brands And Labels (BP 04 10)--This endorsement amends the businessowners property coverage and pays the insured the reasonable costs the business owner incurs to stamp the word salvage on merchandise or containers or remove the brands and labels if doing so will not damage the merchandise after it is damaged by a covered cause of loss. The insurer will then take the property for salvage. This is a new endorsement under the 2010 program.

Designated Location(s) General Aggregate Limit (BP 14 17)--This endorsement amends the businessowners liability coverage by providing an aggregate limit on a location basis for business risks. The aggregate applies to each location that is designated in the endorsement schedule. This is a new endorsement under the 2010 program.

Designated Construction Project(s) General Aggregate Limit Endorsement (BP 14 18)--This endorsement amends the businessowners liability coverage by providing that a separate designated construction project general aggregate limit applies to specific designated construction projects as indicated in the endorsement schedule. This is a new endorsement under the 2010 program.

Discretionary Payroll Expense Endorsement (BP 14 30)--This endorsement amends the businessowners property additional coverage for business income. It modifies ordinary payroll expenses (sixty days under the policy) to the number of days indicated in the endorsement schedule. The job classifications and/or employees must also be listed in the endorsement schedule. This is a new endorsement under the 2010 program.

Fire Department Service Contract (BP 12 02)--This endorsement is used when maintenance of a service contract with a privately owned fire department is required in order for the underwriter to apply a public protection classification.

Functional Business Personal Property Valuation (BP 04 85)--This endorsement is used to insure business personal property on a functional replacement cost basis rather than on a like kind and quality or actual cash value basis. This endorsement was introduced in the 2002 program.

Functional Building Valuation (BP 04 84)--This endorsement is commonly used to insure older buildings that have wide disparities between their replacement cost and market value and/or current use. When this endorsement is used, the insured building is rebuilt on a functional replacement cost basis rather than on a like kind and quality or actual cash value basis. This endorsement was introduced in the 2002 program and revised in the 2006 edition to add an optional coverage for business income and expense insurance.

Loss Payable Clause (BP 12 03)--Provides for naming a loss payee, lender's loss payee, loss payee under a contract-of-sale arrangement, and, under the 2010 edition, adds a building owner as loss payee. Payment of claims for loss or damage are paid jointly to the insured and loss payee as their interests may appear.

Protective Safeguards (BP 04 30)--The insurer frequently requires this endorsement if the business owner is receiving a protective safeguards credit on its property rate. It requires the business owner to maintain the protective safeguards (e.g., sprinkler system or burglar alarm) indicated in the endorsements. The business owner must maintain the system and must notify the insurer within forty-eight hours if the system is not functioning.

Removal Of Insurance-To-Value Provision (BP 04 83)--This endorsement amends the loss payment provision and eliminates the insured's requirement to carry insurance equal to 80 percent of the property's replacement value. This endorsement was introduced in the 2002 program.

Vacancy Changes (BP 04 86)--This endorsement amends the vacancy property loss condition that permits the 31 percent square footage occupancy requirement to be replaced by the percentage specified in the endorsement. This endorsement was introduced in the 2002 program.

Vacancy Permit (BP 04 87)--This endorsement modifies the vacancy property loss condition. Under the unendorsed policy, no coverage applies to the perils of vandalism and sprinkler leakage if the insured building is vacant over sixty consecutive days. This endorsement may be used to delete the sixty-day vacancy limitation.

Waiver Of Transfer Of Rights Of Recovery Against Others To Us (BP 04 97)--The form states that, if an insured has a right of recovery (i.e., subrogation) against a third party, those rights are transferred to the insurer. This endorsement, which must be activated before a loss occurs, waives the insurer's rights to subrogate against the negligent third party. It is typically used to assure the named insured and third party that no legal action will be brought against the third party. This endorsement is frequently used when the named insured has a close business relationship with the third party that is listed.

Windstorm Or Hail Percentage Deductibles (BP 03 12)--This endorsement offers the insured the option of percentage deductibles for windstorm or hail coverage. The deductible amount can be 1, 2, or 5 percent of the limit(s) of insurance applicable to the covered property that has sustained loss or damage directly or indirectly by windstorm or hail, regardless of any other cause contributing to the loss. The deductible applies separately to each building, if two or more buildings sustain damage; to building and personal property in that building, if both sustain damage; to personal property in each building; and to personal property in the open. This replaces the flat deductible amounts, such as $250, $500, $1,000, or $2,500.

Windstorm Or Hail Losses To Roof Surfacing--Actual Cash Value Loss Settlement (BP 14 04)--This endorsement amends the businessowners property loss conditions providing for an actual cash value settlement for windstorm or hail losses to roof surfaces. This is a new endorsement under the 2010 program.

Professional Liability Endorsements

These endorsements add professional liability coverage for certain named professions.

Beauty Salons Professional Liability (BP 08 09)--This endorsement provides professional liability coverage for bodily injury, property damage, and personal and advertising injury arising out of the rendering of or failure to render salon services. Salon services means hair cutting, styling, dyeing, shaving, conditioning, and shampooing, including advice or instruction related to these services. It also means any additional services described in the endorsement schedule. Any service not falling with the definition of salon services or described as an additional service in the endorsement schedule is excluded. This endorsement is new under the 2010 program.

Barber Shops And Hair Salons Professional Liability (BP 08 01)--This endorsement provides professional liability coverage for bodily injury, property damage, and personal and advertising injury arising out of the rendering of or failure to render barber shop and hair salon services. Barber shop or hair salon services means hair cutting, styling, dyeing, shaving, conditioning, and shampooing, including advice or instruction related to these services. It does not include removal of hair by electrolysis, hair implanting or transplanting, or the use of any dye or coloring to eyelashes except mascara or eyebrow pencils. This endorsement was revised under the 2010 program and represents a reduction in coverage. Coverage for a wider range of beauty, barber, and hair salon activities are available under the Beauty Salons and Professional Liability (BP 08 09) endorsement.

Condominium, Co-Ops, Associations--Directors And Officers Liability Endorsement (BP 17 24)--This endorsement amends the businessowners liability coverage to provide directors and officers liability coverage in the following three areas. Management liability coverage to insure the wrongful acts of directors and officers in their capacity as directors and officers. Association reimbursement coverage to pay on behalf of the association for any loss the association has indemnified an insured person. Association liability coverage which makes payment on behalf of the association for loss which the association is legally obligated to pay as a result of wrongful acts committed by the association. Coverage is written on a claims-made basis. This is a new endorsement under the 2010 program.

Funeral Directors Professional Liability (BP 08 02)--This endorsement provides professional liability coverage for bodily injury, property damage, personal and advertising injury, or other injury arising out of the rendering or failure to render professional services as a funeral director.

Optical And Hearing Aid Establishments (BP 08 03)--This endorsement provides professional liability coverage for bodily injury, property damage, and personal and advertising injury arising out of the rendering of or failure to render professional services by certified/licensed opticians or hearing aid specialists at the designated premises.

Pharmacists--Broad Coverage (BP 08 06)--This endorsement provides professional liability coverage for bodily injury, property damage, personal and advertising injury, or other injury arising out of the rendering or failure to render professional services as a pharmacist. This endorsement was introduced in the 2002 program and was revised in the 2006 edition to cover the expanded roles of traditional pharmacists (limited to filling prescriptions and consulting on use of medication) to include other services such as administering injections, initiating or adjusting drug regimes, and performing or interpreting blood tests.

Pharmacists (BP 08 07)--This endorsement provides professional liability coverage for bodily injury, property damage, personal and advertising injury, or other injury arising out of the rendering or failure to render professional services of a traditional role of a pharmacist (limited to filling prescriptions and consulting on use of medication). This endorsement was introduced in the 2006 program.

Printer's Errors and Omissions Liability (BP 08 04)--This endorsement provides liability coverage for the insured's negligent acts, errors, or omissions in providing printing services. It does not apply to claims resulting from publishing functions.

Veterinarians Professional Liability (BP 08 05)--This endorsement is used to provide professional liability coverage for bodily injury, property damage, and personal and advertising injury arising out of the rendering or failure to render professional services as a veterinarian. Eligible veterinarians are those specializing in the treatment of house pets. Specialist veterinarians (e.g., zookeepers, breeders, or show animal handlers) are not eligible.

Terrorism Endorsements

Terrorism endorsements were introduced after enactment of the Terrorism Risk Insurance Act (TRIA) that was signed into law on November 26, 2002. One of the purposes of TRIA is to ensure that coverage is available for certain terrorism losses (both property damage and bodily injury) and, at the same time, provide insurers with some degree of protection in the event of catastrophic certified acts of terrorism. A certified act of terrorism is an act certified by the secretary of the treasury, in concurrence with the secretary of state and the U.S. attorney general.

TRIA has been revised several times since its introduction, the most important of which has been the elimination of the requirement that an act of terrorism be committed by someone acting on behalf of a foreign person or foreign interest in order to be certified as an act of terrorism. Insurers are also required to provide clear and conspicuous disclosure of the $100 billion cap on insured terrorism losses. TRIA has been extended through December 31, 2014.

We have grouped the endorsements into general, and liability categories. Since the endorsements are complex and far reaching, they should be read in their entirety for a comprehensive understanding.

General Terrorism Endorsements

Applicable to Property and Liability Coverages

Cap On Losses From Certified Acts Of Terrorism (BP 05 23)--This endorsement adds a provision to cap payment of both property and liability losses to amounts outlined in TRIA.

Coverage For Certified Acts Of Terrorism; Cap On Losses (BP 05 21)--This endorsement amends any terrorism exclusion found elsewhere on the policy to permit coverage for a "certified act of terrorism." It also caps payments to amounts delineated in TRIA.

Disclosure Pursuant To Terrorism Risk Insurance Act (BP 05 15)--This endorsement is used to disclose the amount of premium being charged for coverage for certified acts of terrorism as defined in TRIA. It also provides notice that the federal government is sharing in the payment of such terrorism losses.

Exclusion Of Certified Acts Of Terrorism; Coverage For Certain Fire Losses (BP 05 24)--This endorsement excludes coverage for loss or damage caused directly or indirectly by a "certified act of terrorism" except for ensuing fire loss in following fire states.

Exclusion Of Certified Acts Of Terrorism Involving Nuclear, Biological, Chemical Or Radiological Terrorism: Cap On Covered Certified Acts Losses (BP 05 26)--This endorsement excludes coverage for loss from a "certified act of terrorism" carried out by means of dispersal or application of nuclear, biological, chemical or radiological material, except for ensuing fire loss in following fire states. It also caps payments to amounts delineated in TRIA.

Limitations Of Coverage For Certified Acts Of Terrorism (BP 05 27)--This endorsement permits the scheduling of property and liability limits of insurance for loss caused by certified acts of terrorism including following fire.

Removal Of Exclusion Of Acts Of Terrorism; Cap On Certain Losses (BP 05 22)--This endorsement removes any terrorism exclusion attached to any section of the policy. It also caps coverage for damages or injury arising from a "certified act of terrorism" to that delineated in TRIA.

Liability Endorsements

Exclusion Of Other Acts Of Terrorism Committed Outside The United States: Cap On Losses From Certified Acts Of Terrorism (BP 05 38)--This endorsement (1) excludes loss arising from an "other act of terrorism" committed outside the United States if the total insured damage exceeds $25,000,000, fifty or more persons sustain death or serious injury, the terrorism involves the use of nuclear materials, the terrorism is carried out by means of the dispersal or application of pathogenic or poisonous biological or chemical materials, or if pathogenic or poisonous biological or chemical materials are released; and (2) caps loss payment as delineated in TRIA arising from a "certified act of terrorism."

Exclusion Of Certified Acts Of Terrorism And Exclusion Of Other Acts Of Terrorism Committed Outside the United States (BP 05 41)--This endorsement (1) excludes injury or damage arising from a "certified act of terrorism" and (2) excludes injury or damage arising from an "other act of terrorism" committed outside the United States if the total insured damage exceeds $25,000,000, fifty or more persons sustain death or serious injury, the terrorism involves the use of nuclear materials, the terrorism is carried out by means of the dispersal or application of pathogenic or poisonous biological or chemical materials, or the terrorism involves the release of pathogenic or poisonous biological or chemical materials.

Exclusion of Punitive Damages Related to a Certified Act of Terrorism (BP 05 42)--This endorsement excludes coverage for punitive damages that arise directly or indirectly from a "certified act of terrorism."
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Author:Krauss, George E.
Publication:Businessowners Policy Coverage Guide, 4th ed.
Date:Jun 1, 2010
Words:7923
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