Celebrating Our 88th Year
Success stories of the 2021 MAIC Conference
CR21-01 – Item Submitted by Tim Wahl/Missouri: Termination as to Any Employee
The Crime Policy’s Employee Theft insuring agreement provides an exclusion for any employee when the insured, partners, LLC members or managers, officers, directors or trustees learn of a theft or any other dishonest act the employee committed before or after becoming employed by the insured. This language is extremely broad and if an employee expressed taking a pack of gum when they were young, it could void coverage for that employee. The request to narrow the scope of “any other dishonest act” was presented. ISO is filing extensive changes to the Crime And Fidelity Program for commercial and governmental entities and is introducing endorsement CR 20 37 – WAIVE ACTS COMMITTED BY EMPLOYEES BELOW AN AMOUNT.
CU19-01 – Item Submitted by Chris Boggs/Kent Anthony/Kansas: Contractual order of Response Endorsement (CORE)
Construction contracts requiring coverage, provided to and for the benefit of the additional insured, be granted on a “primary and noncontributory” basis with upper tier contractors seeking vertical exhaustion of limit prior to any horizontal contracts being impacted. This emerging demand is recognized by ISO and Commercial Liability Umbrella and General Liability options will be included in future multistate filings creating greater clarity to address the contractual order of response.
BP19-01 – Item Submitted by John Putnam/Colorado: Business Income Time Limits
The BOP has the advantage of the automatic actual loss sustained coverage (ALC) for business income for one year following a covered loss. Many jurisdictions have had issues with engineering approvals, inspections and many times the current time limits on business income may be exhausted. ISO currently has the BP 14 07 as an option to extend time period up to 18 months. In the next multistate revision, they plan to provide an option via BP 14 07 to increase the actual loss sustained period of indemnity applicable to the Business Income and Extra Expense Additional Coverages to 24-months.
BP17-01 & BP19-02 – Item Submitted by John Putnam/Colorado: Ordinance or Law Limits and Definitions
The current BOP Ordinance or Law Endorsement BP 04 46 07 13 is for construction codes AT the time of loss. This is of particular issue when a catastrophic claim hits the areas and the city/county decides to update their construction codes AFTER the loss leaving insured to pay for any changes in construction code after the loss. ISO is updating to provide the post loss changes under endorsement BP 04 46. This will be available in the next Businessowners multistate forms revision.
HO19-05 – Item Submitted by Derek Richardson/Missouri: Liability Arising from Operation of Electronic Bicycles or Scooters
The current homeowners/tenant policies include personal liability coverage for the off premises operation of limited, non-licensed “motor vehicles”. A variety of toy vehicles, electronic bicycles and new technologies are not clearly addressed in current ISO homeowners forms. Personal liability protection for the operation of these vehicles is lacking. ISO is addressing this item in the 2022 Homeowners Program general revision.
HO19-10 – Item Submitted by Tim Wahl/Missouri: Availability Coverage
There is an emergence of people living remotely. These “mobile individuals” do not sign a year lease or live in one place, they travel, house sit, dog sit, work on an oil rig, work on a cruise ship, etc. Mobile people still have a need for personal property and liability coverage but are unable to obtain the coverage that follows them. ISO is addressing many of these exposures in their Homeowners program in 2022 including HO 00 14 – CONTENTS COMPREHENSIVE FORM that could help. It will require an address to be listed, but the ISO rules manual provides for a policy to be issued to the tenant of a dwelling or an apartment situated in any building as long as the residence premises occupied by the insured is used exclusively for residential purposes.
HO17-04 – Item Submitted by Terry Friedman/Iowa: Replacement Cost Coverage for Other Structures
Oftentimes, there are other structures, that warrant replacement cost coverage but cannot be added. Examples of such structures include expensive fences, playground equipment, detached decks, above ground swimming pools, boat lifts and docks and elaborate outdoor kitchens. ISO is addressing this item partially with the 2022 Homeowners program revision by revising HO 04 43 (REPLACEMENT COST LOSS SETTLEMENT FOR CERTAIN NON-BUILDING STRUCTURES ON THE RESIDENCE PREMISES) to provide replacement cost loss settlement to permanent, built-in outdoor kitchens and cooking facilities. Also, as an update to the Success stories 2013 and 2014 meeting notes below (see HOMEOWNERS – “OTHER STRUCTURES ENDORSEMENT”), the 2022 Homeowners program revision introduced HO 06 91 (COVERAGE B – OTHER STRUCTURES AWAY FROM THE RESIDENCE PREMISES REPLACEMENT COST LOSS SETTLEMENT FOR BUILDINGS), and HO 06 92 (SPECIFIC STRUCTURES AWAY FROM THE RESIDENCE PREMISES – REPLACEMENT COST LOSS SETTLEMENT FOR BUILDINGS).
HO17-05 – Item Submitted by Karen Corrigan/Missouri: Additional Loss Assessment Coverage
The unendorsed Homeowners form includes $1,000 Loss Assessment coverage under the Property and Liability sections. $1,000 is not practical amount for today’s most basic assessments. Master policies often have Wind and Hail deductibles of 1% or 2% which result in higher assessments to owners. Although we sought higher limits, ISO is having the limit increased to $2,000 in the HO 2022 edition.
HO17-07 – Item Submitted by Sam Bennett / Bill Wilson / Missouri: “Insured Location” Definition
The Homeowners 3 – Special Form HO 00 03 05 11 is a very broadly written coverage form for owner-occupied dwellings and personal liability exposures. This policy has a Liability coverage exclusion that proves problematic in E (4) “Insured’s” Premises Not an “Insured Location” and the issue emerges when an insured purchase land for their future use. The property may have no buildings and the owner may not yet be living there, leaving the property owner to consider it vacant. This creates issues when a court deems it as not vacant due to having a fence or some sort of land improvement. A request to be able to provide great clarity for properties such as this was request. The ISO Homeowners 2022 revision will offer the opportunity to schedule these locations via HO 24 02 – OTHER INSURED LOCATION(S).
PP17-01 – Item Submitted by Tim Dodge/New York: Physical damage Coverage and Ride Sharing
Ride sharing continues to expand and endorsements PP2341 1015 and PP2345 1015 make exceptions to the ‘public or livery conveyance’ exclusion in Part D for a scheduled vehicle while it is being used during any period of time a person is logged into the transportation network platform, but only if a passenger is not occupying it. Although many ride sharing companies may offer contingent comprehensive and collision coverage, there is still a issue for the owner/driver to pay the deductible of the ride sharing companies policy as well as any gap that may exist with lienholder requirements. ISO is developing a coverage option to address some of the “gap” coverage differences between the insured’s Personal Auto Policy and the transportation network company’s physical damage deductible during all phases of participation with a transportation network company. PP 43 32 – TRANSPORTATION NETWORK DRIVER PHYSICAL DAMAGE DEDUCTIBLE COVERAGE will become an optional form in an upcoming multistate revision.
Success stories of the 2019 MAIC Conference
CP 17-04 (Item submitted by Kent Anthony / Kansas) – Additions and Extensions of Coverage Amounts
With rising costs and inflation, it would be relevant to increase Commercial Property Extensions and Additional limits in current property forms to provide increased limits of coverage.
ISO anticipates development and filing of new endorsements for the Commercial Property product as an enhancement to modify the various limits of insurance, or other terms, provided in the major CP coverage forms for various additional coverages and coverage extensions. We anticipate these revisions will be in our next CP major multistate filing.
CP 16-03 (Item submitted by Tim Wahl / Missouri) – Building and Personal Property Coverage Form – CP 00 01
Most insurance carriers have enhancements or allow coverage in their commercial property policy’s forms to increase the standard 100 feet off the premises to 1,000 feet of the premises. Can this be included in ISO’s policies?
To bring the commercial property coverage forms into alignment with what is very prevalent in the marketplace and in response to this item, ISO is planning to amend the various distance requirements within the forms from 100 feet to 1,000 feet during the next CP major multistate filing.
CP 15-02 (Item submitted by Tim Wahl / Missouri) – Ordinance Or Law – Business Income and Extra Expense Coverage
ISO’s Business Owner’s Policy’s form BP 04 46 automatically has the option to select Business Income and Extra Expense for Ordinance or Law-Increased Period of Restoration. Commercial Property forms do not have this option. Is it possible offer the same feature on Commercial Property forms?
A draft optional endorsement is expected, which would effectively combine into a third option, the CP 04 05, Ordinance Or Law endorsement with the CP 15 31, Ordinance Or Law – Increased Period of Restoration endorsement. We anticipate this revision will be in our next CP major multistate filing.
GL 18-01 (Item submitted by Greg D. / Kentucky) – EIFS Exclusion – Coverage for the New Drainable EIFS
Since the 1980’s EFIS claims have come to issue with improper installation causing water intrusion. Over the years the industry has developed drainable
EFIS processes with proper installation. EFIS coverages of this type of process need to be reviewed.
ISO will work on development of an optional endorsement to address drainable EIFS.
GL 16-01 (Item submitted by John Putnam / Colorado) – Crisis Response Additional Coverage
Over the years with the increase in active shooters and related criminal instances
of bombing and other perils of terrorism, Policies do not address many of the costs relating to crisis management in property and liability forms.
ISO plans to include an enhancement in a future filing that would provide ability to offer coverage with respect to crafting a public response or recovering from a financial setback arising from a human-made crisis at a premises insured under a Commercial Property policy.
PP 15-01 (Item submitted by Michigan) – Liability Exclusion
With exposures today, the ISO Personal Auto Policies (PAP) need to address the coverages and exclusions associated with joint custody issues and exclusions a for family members.
ISO plans to develop a coverage option, as part of a future multistate revision, addressing an insured’s potential exposure with respect to a family member’s use of a vehicle owned by another family member. Such coverage option will address this potential coverage need in the personal auto insurance market.
Success stories of the 2018 MAIC Conference
GL 18-03 (Item submitted by New York) – Automatic Additional Insured Coverage for Building Owners
Many building owners will not permit a contractor or delivery person to enter the premises unless the business carries liability insurance that covers the building owner as an additional insured. ISO plans to file Additional Insured endorsement options, extending automatic status for designated operations and when required in a written contract or agreement.
CA 16-02 (Item submitted by Iowa) – Volunteer Hired Auto
Volunteers renting vehicles in their own name on behalf of organizations like churches and some non-profits may not be covered by the charitable organization’s Hired Auto Coverage.
ISO plans to create an endorsement, similar to CA 20 54, that would generally address covered autos liability coverage for volunteers’ use of autos the named insured does not own, hire or borrow in connection with the named insured’s volunteering activities.
CU 16-01 (Item submitted by Arkansas) – Per Project Aggregate Limits
Insured contractors are being required in contracts to provide proof of insurance that includes a “per project aggregate” on both the underlying and excess liability coverages. There is currently no endorsement that specifically addresses this issue.
ISO plans to file two optional endorsements, Designated Project(s) Aggregate Limit and Designated Location(s) Aggregate Limit, for use with the ISO Commercial Liability Umbrella Coverage Part.
GL 16-01 (Item submitted by New York) – Additional Insured – Vendors
Endorsement CG 20 15 Additional Insured – Vendors, includes as an additional insured the organization shown in the schedule, but only with respect to bodily injury or property damage arising out of the named insured’s products listed on the endorsement schedule. It is unclear as to the effect on coverage if the “Your Products” field is left blank.
ISO plans to introduce a new optional endorsement, Additional Insured – Vendors – Automatic Status When Required In Agreement, to generally provide coverage to all “vendors” for all products.
HO 17-06 (Item submitted by Missouri) – Trees, Shrubs and Other Plants
Under the HO-03 policy, there is a maximum coverage limit of $500 for trees, shrubs and other plants. Insureds have informed us that a maximum limit of $500 is outdated and should be increased.
ISO advises that, as part of the next homeowners multistate revision it intends to review all special limits and will be making several changes, including increasing the limit for trees, shrubs and other plants.
HO 16-06 (Item submitted by Missouri) – Unit-Owners Sections I and II –
Conditions, F. Subrogation
The policy uses “person or organization” throughout the form, except in the subrogation section where it simply uses “person.”
As part of the next homeowners multistate revision, ISO will review the policy language related to the use of “person” or “organization” and make updates where necessary.
Success stories of the 2017 MAIC Conference
CR 17-01 (Item submitted by Missouri) – Excess Endorsement Allowing Policy Number
When building crime coverage limits using multiple crime policies, it is necessary to confirm the primary and excess layers respond as expected and intended. The excess carrier is to list the primary carrier’s policy number on or in the excess policy that it sits over. If the policy number of the intended primary crime policy is not specifically listed on the excess crime policy, then the expected primary crime coverage reverts to excess. Currently there is no allowance for listing the intended primary carrier’s policy number in or on the ISO policy intended to respond as excess. Suggested Solution: Create an endorsement to use when other crime policies require notation of their policy number allowing the ISO excess carrier to provide the excess coverage they thought they were providing. ISO plans to introduce an excess endorsement to address the situation described above with the next Crime multistate filing.
BP 15-01 (Item submitted by Georgia) – Underground Property
Currently the underground property endorsement only applies to a property policy, so we would like an endorsement to the BOP. Hydrostatic pressure coverage – broken pipe in yard causes water pressure which then seeps through wall into basement. It is not water backup. Suggested Solution: Applying the Commercial Property endorsement to the BOP. ISO plans to include a revision similar to the change communicated below in item CP 14-03 with the next multistate Businessowners forms filing.
CP 15-01 (Item submitted by Colorado) – Contingent Business Income
Traditionally, business income claims are dependent upon a direct loss to trigger them or upon a direct loss at a contributing, recipient, manufacturing, magnet or dependent location. However in some catastrophes, there is not direct damage that would trigger such a claim but local businesses suffer business income losses. From an agency and consumer standpoint, it is very difficult to predict either the need or the impact of this exposure but appears to be a growing impact due to increased extreme weather incidents especially in high tourist areas but certainly other areas would suffer similar losses post local disasters. Suggested Solution: Change the CP and the BOP form trigger for business income claims to consider any business income claims caused by a declared catastrophe within 25 miles of an insured location. ISO has agreed to revise the manual rule at the next general multi state filing to recognize that the dependent property endorsements can accommodate a wide range of dependent properties, provided that the intended dependencies are scheduled.
HO 16-07 (Item submitted by New York) – Underground Utility Line Coverage
A regional insurer that does not use ISO forms offers an endorsement to Homeowners to cover underground utility lines. The endorsement provides a separate per occurrence limit of insurance and deductible for an additional premium. It covers piping electrical power, heating, natural gas, waste disposal, compressed air, water, steam, internet access, telecommunications services, wide area networks or data transmission services to the insured’s premises. Covered causes of loss include wear and tear, rust, corrosion, decay, deterioration, collapse, electrical, mechanical, pressure systems breakdown and freezing. Coverage extends to Loss of Use and to “Green” environmental, safety and efficiency improvements. Suggested Solution: Develop a competing endorsement for ISO subscribers to offer. ISO will include this optional coverage as part of a future multistate revision.
HO 11-01 (Item submitted by Missouri) – Theft Coverage for Dwelling Under Homeowners
Under the HO 2000 program Section I.A. 2.c.(3) there is an exclusion for the theft in or to a dwelling under construction, or of materials and supplies for use in the construction until the dwelling is finished and occupied. In HO00030511, Section I – Perils Insured Against excludes: Theft in or to a dwelling under construction, or of materials and supplies for use in the construction until the dwelling is finished and occupied. This exclusion applies even if the construction is a result of a covered loss. Suggested Solution: Amend the Homeowners or make an endorsement available adding coverage for theft in or to a dwelling under construction, or materials and supplies for use in the construction, if such construction is required because of a covered loss. ISO will introduce an endorsement that will provide coverage for theft of materials used in rebuilding a dwelling that is under construction.
Success stories of the 2016 MAIC Conference
GL 16-06 (Item submitted by Iowa)
The CG 24 04 Waiver of Transfer of Rights of Recovery Against Others endorsement generally allows the insured to waive the rights of subrogation against a designated person or organization for injury or damage “arising out of your ongoing operations” or “your work” done under a contract with that designated person or organization. Often times there are several upstream parties who also wish to be protected but do not have a specific contract with the subcontractor. One example could be the owner of the property with whom the named insured subcontractor has not directly contracted with in order to perform the related operations. ISO plans to consider the introduction of an endorsement to generally address such upstream waiver of subrogation need.
CP 14-03 (Item submitted by Wisconsin) – Damage to Paved Surfaces from a water main break.
Over the past several years, ISO has addressed coverage for a water main break, via Special Form CP 10 30 that explicitly addresses coverage for water main breaks due to wear and tear. Many times a water main break can create damage to not just a building but also paved surfaces. Agents may use the property form CP 14 10 to provide coverage for paved surfaces, however, after reviewing, an agent from Wisconsin presented a claim where there needed to be greater clarity on what is a water main break, with regard to where the on-premises water system ends and the municipal water system begins. ISO has addressed this issue in a revision filed in December 2016, which is currently anticipated to become effective in at least 30 states on September 1, 2017. Other states will follow as filing approval/acknowledgment is achieved.
CP 12-02 (Item submitted by Wisconsin) – Improvements and Betterments
The definition of business personal property in CP 00 10 addresses use interest in Improvements and Betterments as well as leased personal property for which you are contractually responsible. Tenant contracts can all speak differently to improvements and betterments made by the tenant and often times do not address improvements made by the previous tenant. These previous improvements may be critical to the operations of the new tenant and not contemplated by the building owner’s insurance program. An example claim was presented in which the tenant who acquired space that had been improved by the prior tenant who had installed a walk-in cooler. The cooler was an improvement but not one in which the named insured acquired or made the improvement, leaving a gap in coverage between the tenant’s insurance program and the building owner’s program. ISO developed two endorsements which enable covering certain building property under a tenant’s policy on a scheduled or unscheduled basis. The endorsements have been currently APPROVED in at least 30 states, with an anticipated effective date of September 1, 2017. Other states will follow as filing approval/acknowledgment is achieved.
GL 15-02 (Item submitted by New York) –
Upstream Parties (Additional Insured) on General Liability
The MAIC item presented by the state of NY has resulted in action from ISO. A coverage question revolving around the wording under the CG 20 37 (Additional Insured ) involving coverage for upstream parties who may not have a direct written contract with the contractor performing the work has resulted in the early development of a new automatic status additional insured endorsement. The key language involved is the provision requiring the written contract with that party when in many cases the building owner, General Contractor or other upstream parties are seeking additional insured status from all parties at the job site, but in many cases they do not have contracts with parties who may be removed downstream. The revision will result in language similar to the CG 20 38 (applicable to ongoing operations), providing additional insured status to upstream parties with respect to completed operations. This was a very good issue brought to MAIC from NY that is designed to offer greater clarity for all upstream parties.
GL 15-05 (Item submitted by Kansas) – Automatic coverage for newly acquired LLC’s
The current CGL policy, does not include as an insured, a newly acquired or newly formed Partnership, Joint Venture, or limited liability company. LLC’s are more closely regulated and must have an operating agreement filed with the state, just like a corporation. It was the belief of Kansas agents as well as the Mid America Technical Committee that automatically providing insured status to a newly formed Limited Liability Corporation would be appropriate. Thus allowing the automatic coverage for newly acquired or formed LLC’s for 90 days or until policy expiration. ISO has agreed to consider the introduction of an optional endorsement addressing this subject as part of a future multistate filing.
HO 15-03 (Item submitted by Missouri) –
Earthquake deductibles as they relate to homeowners coverage can be a percentage of Coverage A,B & C’s total value. In the ISO Homeowners Program, Earthquake deductibles are not calculated as a percentage of Coverage A, B and C’s total value. Instead they are calculated by applying the percentage amount to the Coverage A or C limit of liability, whichever is greater. This leads to insured’s often being confused at time of claim. Often times people believe it is a percentage of the actual claim amount or simply do not understand it is applied to the total of Coverage A + B + C. This issue presented to the Mid America Technical Committee resulted in ISO considering a revision to the homeowners earthquake endorsement allowing carriers to alternatively display the applicable deductible percentage as a dollar amount. This would allow great clarity to the homeowner.
CA 14-01 (Item Submitted by Iowa) – Newly Acquired Leased Autos
It is common for a business owner to lease an auto long-term in lieu of purchasing the vehicle. Symbols 2,3,4,5,6 and 7 refer to “owned” autos. This very narrow interpretation does not speak to vehicles that are leased. Leasing a new vehicle after the policy begins could present a coverage issue as the newly acquired auto terminology applies to “owned” autos. ISO is developing a revision to the Business Auto Owned Autos you Acquire after Policy Begins (OAYA) provision to generally address coverage for vehicles leased or rented to the named insured under a written agreement for a period of at least 6 months, subject to certain conditions.
GL 13-03 (Item submitted by Kansas) –
Additional Insured – Blanketed Completed Operations
Over the years there have been many changes to the Additional Insured Forms. ISO has offered the CG 20 10 04 13 (Additional insured – Owners, Lessees Or Contractors – Scheduled Person Or Organization), the CG 20 37 04 13 (Additional Insured – Owners, Lessees or Contractors – Completed Operations), and Additional Insured endorsements that generally provide automatic additional insured status to certain parties with respect to certain operations, subject to the respective conditions therein. However, each of these forms did not offer the opportunity to provide Automatic Completed Operations coverage where required by written contract. ISO has decided to consider the introduction of an endorsement as part of a future multistate filing addressing this subject.
HO 14-01 (Item submitted by Wisconsin) –
Employment Practices Liability for Household Employees
With home health care, housekeeper, a caregiver for the elderly, there are more and more people being employed by a home owner. The homeowner may employ a service and at other times employ someone directly.
Currently the homeowner’s policy does not provide coverage for employment practices liability should that employee contend discrimination, harassment, etc.
The MAIC has requested the development of an endorsement which would allow a homeowner to secure coverage for employment practices. ISO is considering developing an endorsement for the Homeowners policy to address liability coverage for an insured related to the described employment practices.
Success stories from 2015 meeting
Commercial Property – Ordinance or Law Coverage (CP 04 05)
Situations have arisen, especially following large natural disasters (eg Joplin, MO tornado) where local authorities find it necessary to freeze construction permits, review and potentially revise building codes as relating to repairs for the catastrophe before allowing reconstruction to proceed.
– Current coverage under CP 04 05 has been subject to the building ordinances & laws in effect “at the time of the loss.” With these laws & ordinances being changed ‘after the loss’ but before re-building / repairs are allowed – then additional cost of re-construction may not be covered (as the form is written.)
Solution: In the future revisions ISO will revise CP 04 05 to expand coverage to address post-lost changes to building codes.
Homeowners – Additional Insured – Property Damage Liability Insureds frequently rent halls & other venues for various personal events and activities. Many venue landlords request to be provided evidence of insurance. The ACORD Commercial Certificate of Liability Insurance certainly does not work for these personal activity situations and the HO policy limits the property damage liability to a rented premises for losses resulting from only ‘fire; smoke; or explosions.’
Solution: ISO is developing a ‘Designated Insured’ endorsement which will more specifically address premises liability coverage for a specific event (location).
Homeowners – Residence Premises Definition (with expansion) Continuous concerns for agents as to inconsistent interpretation of the ‘where you reside’ language of the Homeowners policy has led ISO to present filing and rule addendums to reinforce the scope of the definition of the “residence premises.” These clarifications were made in the fall of 2015. – HO 06 48 – Residence Premises Definition Endorsement and similar Unit-Owners (HO 17-48) and mobile-homeowners, for determining coverage applicability, is satisfied as long as the insured resided at the described premises ‘on’ the inception date of the current policy term.
In addition, endorsements HO 06 49 – Broadened Residence Premises Definition Endorsement and similar Unit-Owners endorsement HO 17 47 have been introduced to allow insurers to temporarily remove the ‘residency requirement,’ for acceptable situations, by designation a starting date and a termination date (‘from and to’). Example of this need are (but not limited to): home is still under construction and the insured is unable to ‘reside’ on the inception date of the policy. (2). Sale of house is executed (‘closed’) and new owner (insured) is ‘renting’ the residence to the former owner for a specific period of time, allowing coverage for new owners while parties are ‘moving’.
Personal Auto – Ride Sharing (Transportation Network Companies) in 2014 the Mid-America Insurance Conference identified the emergence of various concerns with these income producing transportation situations. For clarification of the ‘public or livery conveyance’ exclusion of the PAP ISO is introducing specific endorsements and related rule revisions which are intended to reinforce the current exclusion to explicitly address transportation network services and introduce TNC’s insurance coverage options for the transportation network drivers (depending on the ‘phase’ of the individual insured’s operation of the vehicle – and, it’s use subject to the smart phone’s TNC app.
These coverage endorsements will vary in numbering – due to some state specific differences but they will be titled: “Transportation Network Drivers Coverage (No passengers)” and “Limited Transportation Drivers Coverage (No Passengers).”
Success stories 2013 and 2014 meeting
COMMERCIAL AUTOMOBILE – WAIVER OF SUBROGATION – CONSTRUCTION AGREEMENTS More and more often, contractors are being required in construction agreements to have their Business Auto policy endorsed to waive subrogation rights in favor of the owner and general contractor. This can be accomplished on a case by case basis by adding CA 04 44. ISO plans to introduce a blanket waiver of subrogation endorsement in a future multistate filing that will abrogate the need for agencies or companies to add form CA 04 44 each time an insured may enter into such an agreement.
GENERAL LIABILITY – ADDITIONAL INSURED Endorsement CG 20 38 is used for owners or lessees, or contractors who have signed a contract or agreement that requires them, or any other party or organization, to be added as an additional insured on a policy covering a contractor or a subcontractor, with respect to liability arising out of the named insured’s ongoing operations performed for that additional insured. Agents have seen carriers deny coverage to an additional insured because the named insured was NOT performing work for that particular additional insured. The provisions with respect to a party being granted additional insured status under paragraph A.2. do not expressly require that any direct work be performed with respect to such an upstream party. ISO intends to file revisions to CG 20 38 to reinforce that the additional insured status is provided to both parties as specified in A.1 and A.2. of the endorsement .
COMMERCIAL AUTOMOBILE – TRAILERS – LOAD CAPACITY The current definition of a covered auto includes: “Trailers” with a load capacity of 2,000 pounds or less designed primarily for travel on public roads. However, load capacity is often misunderstood and neither trailer manufacturers nor state licensing authorities refer to, list, or consider, the cargo weight capacity of vehicles. Instead, Gross Vehicle Weight Rating (GVWR) is commonly used. ISO intends to replace the current 2,000 pound load capacity reference with a definition based on GVWR. With respect to liability coverage, “Covered Autos” will include registered trailers with GVWR of 3,000 pounds or less designed primarily for travel on public roads.
GENERAL LIABILITY – HORIZONTAL EXHAUSTION OF LIMITS (UMBRELLA) Commercial Umbrella policies commonly contain an Other Insurance condition providing that the policy’s coverage will not apply unless and until all applicable primary policies have been exhausted. The non-contributory clause of CU 00 01 has been interpreted to mean that if two or more underlying CGL policies apply to a loss, the Commercial Umbrella policy will not apply until all primary policy limits have been exhausted. ISO plans to introduce a Noncontributory – Other Insurance Condition endorsement for use with the CU Coverage Part with the next general multistate revision to the CU program.
HOMEOWNERS – “OTHER STRUCTURES ENDORSEMENT” There are two endorsements that can be added to the homeowner’s policy to provide coverage for structures away from the residence premises: HO 04 91 provides coverage on a blanket basis, and HO 04 92 provides coverage on a specific basis. However, both endorsements cover the structure on an Actual Cash Value basis. There is currently no provision or endorsement to provide coverage on a replacement cost basis. ISO intends to introduce optional endorsements to provide coverage for other structures away from the residence premises on a replacement cost basis.
NEW ACORD FORM 611 A new form is now available to request loss runs. The ACORD form 611 will be a ‘Loss Run Request’ form to provide loss runs direct to another Agency. This form is now available to use July 2015.
ACORD Certificate Forms To avoid conflict as to the applicable ‘Limits of Insurance’ listed by the various certificates ACORD is revising the form to now read….”As used here, the limit listed as whole dollar amount, AS GOVERNED BY THE POLICY” (vs the former: “as found on the policy declaration page”)
Success Stories 2012 Meeting
BUSINESSOWNERS POLICY – RIGHTS OF RECOVERY UNDER EMPLOYEE DISHONESTY ISO BOP rules allow employee dishonesty limits of $5,000, $10,000, $25,000, $50,000 and $100,000. The problem with high employee dishonesty limits on the BOP is all rights of recovery go to the insurance carrier first instead of the insured for payment of their uninsured loss. The insurance carrier is first in line for repayment (restitution) before the insured can recover their uninsured loss.
ISO Employee Theft & Forgery Policies (CR 00 29 and CR 00 28) as well as most Employee Dishonesty Bonds/Policies in the marketplace have an exception allowing the insured to recover their uninsured loss before the insurance carrier can recover the insured amount. Add an Employee Dishonesty Recovery Exception to the BP 00 03 similar to the exception in the CR 00 29 and CR 00 28
BUSINESS AUTO POLICY – “BUSINESS INCOME” There is no available coverage for businesses that sustain a loss of income and/or extra expense arising out of the loss of use a commercial vehicle. This differs greatly from the Rental Reimbursement endorsement currently available. Today, there are numerous specialized vehicles developed to make tasks easier and less labor intensive. Vehicles such as: concrete pumper trucks, double decker laundry units, “blown in” insulation trucks, mobile shredding units, fire trucks, septic tank pumping services, carpet cleaners, refrigerated trucks, the list is virtually endless. More and more equipment previous insured as mobile equipment is now truck mounted and insured on the Business Auto Policy.
These sorts of vehicles are not easily replaced nor can they be delivered to the end user quickly. Develop an endorsement to either the Business Auto Policy or expand the scope of coverage on the Commercial Property (where Business Income resides) to include loss of use of commercial vehicles. This new coverage could include the rental reimbursement extension already available to avoid “double dipping.” Consider including a replacement cost option at additional premium.
COMMERCIAL AUTOMOBILE – MOBILE EQUIPMENT With the changes in the GL and CA forms relative to “mobile equipment” in 2004, ISO and agents technical affairs forums have worked to eliminate the possibility of uncertainty of coverage for what may have previously been mobile equipment but at some point became an “auto” through legislative of judicial action beyond the control of the insured or the insurance industry for that matter. ISO, by establishing Symbol 19 in the Commercial Auto form (currently CA 00 01 03 06) moved in the right direction to solve part of the problem.
CP 12 19 06 07 COMMERCIAL PROPERTY – ADDITIONAL INSURED-BUILDING OWNER, ENDORSEMENT CP 12 19 06 07
This endorsement actually makes the Building Owner a Named Insured. The endorsement reads:
The building owner identified in this endorsement is a Named Insured, but only with respect to the coverage provided under this Coverage Part or Policy for direct physical loss or damage to the buildings(s) described in the Schedule.
Agents, company personnel and the public alike already confuse the differences between what is a “Named Insured” and what is an “Additional Insured.” It’s imperative to be clear when dealing with these descriptions lest the public and plaintiff attorneys get even more confused by ISO’s own description, which could be used to open up the litigation that merges the two. The endorsement should be renamed.
GENERAL LIABILITY – WAIVER OF TRANSFER OF RIGHTS OF RECOVERY More often than not, contractors are being required in construction agreements to have their Commercial General Liability policy endorsed to waive subrogation rights in favor of the owner and general contractor. Develop an endorsement that provides “automatic status” for waiver of transfer rights of recovery against others to us when required in a written construction agreement, such endorsement providing automatic status when a contractor is required to waive subrogation rights by virtue of a written construction contract will save time and expense.
GENERAL LIABILITY – ADDITIONAL INSURED – OWNERS, LESSEES, OR CONTRACTORS – AUTOMATIC STATUS WHEN REQUIRED IN CONSTRUCTION AGREEMENT WITH YOU The CG 20 33 is titled Additional Insured – Owners, Lessees, or Contractors- Automatic Status When Required in Construction Agreement with You, and starts out by reading:
A. Section II – Who Is An Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement….
The purpose of this endorsement when introduced by ISO is to allow owners, lessees, contractors and subcontractors to add persons or organizations as additional insured without being required to name such parties on the policy via endorsement. The title and the language in the endorsement are leading to problems for agents, insurance companies and insurance customers. It’s not uncommon that this endorsement is erroneously referred to as a “Blanket Additional Insured Endorsement.”
The endorsement requires the insured to have a written contract or agreement that such person or organization be added as an additional insured on the policy, while the title makes no mention of a requirement for a written contract but rather refers to any construction agreement. Clarification is needed.
HOMEOWNERS – JET SKIS The watercraft horsepower limitations have not changed since the HO-76 program, which means it is hard to follow the logic in situations where an insured who rents a jet ski (inboard watercraft) has no coverage, but if s/he rents a power boat with two or even three 200 hp outboard engines, it is covered. The rental of jet skis is so common today that we believe the policy language should be revised to grant coverage just as coverage is provided for rented outboard watercraft
PERSONAL AUTO-PUBLIC OR LIVERY EXCLUSION There seems to be confusion or even disagreement among carriers if this exclusion applies in a number of situations when an insured transports individuals as a volunteer or an incidental part of his or her job, and is only reimbursed for expenses. In most circumstances, the insured is reimbursed so Exclusion A.5 in the personal auto policy excludes “For that ‘insured’s’ liability arising out of the ownership of a vehicle while it is being used a public or livery conveyance, the exclusion (A.5) does not apply to a share-the-expense car pool.” much per mile or the cost of gasoline.
PERSONAL AUTO-LOSS OF EARNINGS The Homeowners policy will reimburse the policyholder up to $250 for loss of earnings incurred at the insurer’s request, while the Personal Auto policy will reimburse up to $200. This inconsistency seems confusing. Please increase the PA limit to $250.
Success Stories 2011 Meeting
BUSINESS AUTO POLICY – AGGREGATE DEDUCTIBLES Insurance company underwriters are demanding higher deductibles on Comprehensive and on Specified Causes of Loss coverages. This is creating a catastrophic exposure for those insured’s with larger fleets where the vehicles are kept at one location overnight and/or on weekends. ISO needs to provide an aggregate occurrence deductible option similar to the garage open-lot deductible.
SOLUTION: ISO has decided to move forward with the creation of aggregate OTC deductibles. ISO is in the development phase of such deductibles for inclusion in a future multistate filing.
INCREASED DEBRIS REMOVAL EXPENSE FOR CATASTROPHES Many times debris removal coverage is not adequate, especially on total losses. Also, different regions have higher debris removal costs than others. Currently debris removal is 25% of the loss but is not considered additional insurance. There is then $10,000 coverage as additional insurance but that is not adequate most of the time.
SOLUTION: The additional limit for debris removal coverage is being increased to $25,000. Debris removal will continue to be limited to 25% of the loss, with the additional limit available in instances where the 25% limitation is exceeded or the physical loss plus debris removal exceeds the property limit. In part, this arrangement is designed to assure that basic debris removal coverage stays in reasonable proportion to the physical loss, which is particularly important on blanket policies. Limits in excess of $25,000 can be endorsed subjet to the appropriate additional premium. This will be part of ISO’s next general multistate revision, which they plan to file in the 4th quarter of 2011 for a late 2012 effective date.
THEFT EXCLUSION CLARIFICATION SOLUTION: The revised edition of the Theft Exclusion Endorsement CP 10 33 will be included in ISO’s last general multistate revision, which was filed in the 4th quarter of 2011 for a late 2012 effective date.
OTHER INSURANCE CLAUSE – General Liability SOLUTION: ISO revised the Other Insurance condition to eliminate the requirement that it be attached by endorsement in the general multistate revision of the first quarter of 2012.
BACKUP OF SEWER AND DRAINS – Homeowners and Commercial Property HO/CP 03-03 SOLUTION: ISO included this revision in the 2011 Homeowners Multistate Program revision. A Commercial Property endorsement enabling optional coverage for backup of sewers and drains was filed as part of the Commercial Property general multistate revision, which was filed in the 4th quarter of 2011 for a late 2012 effective date.
DISASTER LIMITS – Commercial Property CP06-02 SOLUTION: The optional endorsement, enabling coverage for increased costs following disaster, was included in ISO’s general multistate revision, which was filed in he 4th quarter of 2011 for a late 2012 effective date.
LOSS OF EARNINGS – Personal Auto PA 03-03 SOLUTION: ISO plans to revise the maximum daily supplementary payment for loss of earnings limit under Part A – Liability Coverage of the Personal Auto Policy from $200 a day to $250 a day with the next Personal Auto Program Multistate Revision. This revision will be filed in 2012.
Success Stories 2010 Meeting
DEFINITION OF PREMISES The Building and Personal Property Coverage Form CP 00 10 gives coverage for personal property within 100 feet of the described premises. This isn’t a problem when the business occupies the entire building but it can be problem if they only occupy a part of the building like the 9th floor. In those situations it is possible that any property outside would not be covered because it was more than 100 feet from the 9th floor. ISO is going to address the problem for multiple-occupancy buildings in the next general multistate revision
MVR AUTHORIZATION FORM ACORD has agreed to provide agents an MVR authorization form that can be used to obtain permission from prospects and clients to check MVR’s.
CAUSES OF LOSS – LIMITATION The problem has been covering theft for building materials under the Building and Personal Property Coverage Form. ISO is considering two approaches; (1) Leaving the current limitation in place and providing an optional endorsement for covering theft of building materials and also (2) considering revising the policy’s limitation so that it would preclude coverage only for building materials and supplies in the open, and provide an optional endorsement to cover the in-the-open exposure. It should be part of their next general multistate revision with an effective date in early 2012.
SNOWPLOWING COMPLETED OPERATIONS CG 22 92 ISO has agreed to a revision to generally introduce an exception for providing products/completed operations coverage arising out of snowplow operations under the General Liability Policy.
PUBLIC OR LIVERY EXCLUSION The personal auto policy excludes “For that ‘insured’s’ liability arising out of the ownership of a vehicle while it is being used as a public or livery conveyance. The exclusion does not apply to a share-the-expense car pool. The problem was this was unclear about using your vehicle for volunteer or charitable purposes. ISO has agreed to add in the exclusions that it does not apply to the ownership or operations of a vehicle while it is being used for volunteer or charitable purposes.
FLOOD COVERAGE ENDOREMENT CP 10 65 06 07 The flood endorsement states that “We will not pay for any loss or damage caused by or resulting from any flood that begins before or within 72 hours after the inception date of this endorsement”. The problem was on renewal and when moving from one carrier to another it appeared that the insured would have a new 72 hour waiting period. ISO has agreed to clarify and the new endorsement will be effective in early 2012.
Success Stories 2009 Meeting
BUSINESS OWNER’S OUTDOOR PROPERTY Claim problems have occurred as the Businessowner’s policy language has been more restrictive than that under the Commercial Property form, CP00 10, particularly for classifications such as hardware stores and grocery stores that sell plants, shrubs, small trees, and vinyl fencing. SOLUTION: The Insurance Services Office has agreed to broaden the coverage extension under the Businessowner’s policy to more closely reflect that of the Commercial Property form.
INCREASED DEBRIS REMOVAL EXPENSE FOR CATASTROPHES A filing is pending that will allow purchase of additional coverage to be replaced by a percentage of the value of the building.
GENERAL LIABILITY – ADDITIONAL INSUREDS U.S. GOVERNMENT This Endorsement is needed when insured enters into agreement with an agency of the U.S. government and is required to name the agency as an Additional Insured.
SOLUTION: CG20 12 has a new edition 05/09 which addresses this situation.
WAIVER OF SUBROGATION CLAUSE CA00 01 allows recovery of damages from permissive drivers of a vehicle insured. The MATC requested an option for the form being revised to have the same wording as the Personal Auto policy form, which does not permit subrogation against a permissive driver.
SOLUTION: A new Endorsement CA04 44 option is now available, which addresses this concern.
CP06 04 TENANT DAMAGE Building owners are subject to losses from damage done by tenants of a property. Some of these losses would be covered under vandalism, except for the special cause of loss exclusion 2H, which states, “Will not pay for loss or damage caused by or resulting from dishonest or criminal acts by anyone to whom you entrust the property for any purposes.”
SOLUTION: ISO is creating an Endorsement with a maximum limit that can be negotiated with the insurer, and a separate deductible to cover these losses.
COMMERCIAL IDENTITY THEFT This would provide coverage when an employee of the insured takes information from a customer of an insured and that customer comes back to the insured because of the employee’s cause of loss.
SOLUTION: This exposure has been addressed in the e-commerce insurance program.
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