ISO (“Insurance Services Office – development of standardized insurance policy language” Wikipedia) has a new commercial property filing. The 2012 filing changes both policy forms and endorsements. The forms have an edition date of October 2012. Since the changes include both broadening and reduction of coverage, every commercial building owner and landlord should be aware of the changes to his insurance coverage.
In the Commercial Property program, there are 16 major policy form changes, and 27 endorsement changes (including new and revised endorsements). The Insurance Services Office (ISO) filed the Commercial Property revisions for a target adoption date countrywide of April 1, 2013. Many states have already approved the filing. Regardless of the adoption date for each state, the forms will have an edition date of “10 12.” [Example: CP 00 10 10 12]
We will only list a few of the main changes that we feel are important for building owners and landlords. Feel free to download a complete list of all the changes at the end of this article.
Extended Business Income, Extended Period of Indemnity
The business income forms are revised to increase the number of days for extended business income at the end of the “period of restoration” from 30 to 60 days. Any additional days provided by the Extended Period of Indemnity Option will begin after the automatic 60 day extension. This is a broadening of coverage.
Water Damage Exclusion
In response to claims from Hurricane Katrina, the Water Damage exclusion was revised in 2007 by adding a mandatory CP 10 31 Water Damage Exclusion endorsement. Now the wording is incorporated into the policy. Because of the change, the CP 10 32 is withdrawn. This represents no change in coverage.
Electronic Data in Building Equipment
The current form limits coverage for electronic data to a $2,500 annual aggregate. This limitation is being removed with respect to loss or damage to electronic data which is integrated in and operates the building’s elevator, lighting, heating, ventilation, air conditioning or security system. There is also a revision in the time element forms so the limitation does not apply to these items. The Additional Coverage does not apply to stock of prepackaged software. This is a broadening of coverage.
Ordinance or Law Exclusion
The current ordinance or law exclusion applies to requirements to comply with building codes, whether the ordinance or law is enforced in absence of a physical loss or following a physical loss. Building code enforcement, which incorporates code compliance as a necessary element is typically handled through the permit process in course of construction, repair or renovation. The wording is being revised so that the exclusion applies to enforcement of or compliance with any ordinance or law. Also revised are the “Additional Coverage” of Increased Cost of Construction, the Loss Payment and Valuation Conditions and the Replacement Cost optional coverage and “Period of Restoration” in the time element forms. There is no change in coverage.
Covered Causes of Loss
The Special Cause of Loss form provides “open perils” coverage subject to exclusions and limitations. In the current form, covered causes of loss are described as “Risks of Direct Physical Loss”. Since the term “risks of” can broaden coverage beyond just a direct physical loss, the phrase is being deleted. There is no change in coverage.
There are many more important endorsement changes. We encourage everyone to download and read the complete list.
Complete list of commercial property insurance policy changes