BETTER THAN GARLIC ENCHANTED ENDORSEMENTS AND POLICY ENHANCEMENTS TO KEEP THE E & O VAMPIRE AWAY...

BETTER THAN GARLIC

ENCHANTED ENDORSEMENTS AND POLICY ENHANCEMENTS TO KEEP THE E & O VAMPIRE AWAY FROM YOUR DOOR

Presented by: Cheryl Koch, CPCU, CIC, ARM, AAI, AAM, AIM, AIS, ARP, API, AINS, AFIS, ACSR

Agency Management Resource Group

Lincoln, California

Commercial Property Endorsements

• Exclusion on the CP form eliminates coverage for loss due to the operation of ordinances or laws

• Ordinance or Law Coverage CP 04 05 closes this gap• Coverage A—Undamaged Portion of Building• Coverage B—Demolition of Undamaged Portion• Coverage C—Increased Cost of Construction

• Both damaged and undamaged• Covers excavations, foundations.

pilings and underground pipes

Commercial Property Endorsements• Coverage A is included in the Building limit and carries

the same coinsurance %• Coverages B&C have no coinsurance• Coverage C applies ONLY to minimum requirements of

the ordinance or law• Coverage C applies if the restored property is intended

for similar occupancy (unless the ordinance does not permit it)

• No coverage for non-compliance that preceded damage to the Building

• Proportional payment allowed for covered and uncovered causes of loss (e.g., wind and flood)


• Pollutant Clean Up and Removal—Additional Aggregate Limit of Insurance CP 04 07– Commercial Property Form gives $10,000 in the aggregate to

“EXTRACT” pollutants from land or water– This endorsement increases the amount of coverage on the CP

form• Per premises• Annual aggregate• For Covered Cause of Loss• That occurs during the policy period• Loss must be reported within 180 days

– Various companies may give more but usually an annual aggregate


• Debris Removal Additional Insurance CP 04 15– Commercial Property Form gives 25% of gross loss plus

$10,000 in certain circumstances– See example– This endorsement replaces the $10,000 and substitutes

the limit in the endorsement– Can be useful when the Building contains subtances that

require special and expensive handling of debris

DEBRIS REMOVAL

Amount for Removal: 25% of (paid loss plus deductible)

Example: Loss $80,000

Deductible - $1,000

Paid Loss $79,000

Amount Available for Debris Removal:

= 25% of ($79,000 + $1,000)

= 25% of ($80,000) = $20,000 Available

Loss Less than Policy Limits=25% of [amount paid plus the deductible] PLUS $10,000, if needed (for actual expense incurred)

Loss at Policy Limits=$10,000 maximum limit paid, if needed


• Functional Building Valuation CP 04 38– Replaces the valuation clause in the CP policy– In the event of a total loss, agrees to replace the

damaged Building with a less costly one that is functionally equivalent

– In the event of a partial loss, endorsement agrees to pay cost to repair or replace with less costly material

– Includes Ordinance or Law (included in limit)– No coinsurance– Similar endorsement available for

Personal Property


• Loss Adjustment Endorsement CP 12 60– Add to Property Policy to facilitate claims handling

on property and Equipment Breakdown Policy– Equipment Breakdown must have its own version– No need if both coverages on same policy

• Additional Covered Property CP 14 10• Certain property is not covered under the BPP,

such as paved surfaces, excavations, foundations, etc.

• Adding contents into building definition• Takes building rate



• Additional Property Not Covered– Items considered to be covered can be removed

• Pools, TIBs, items in vaults, items in open yards


• Leased Property Endorsement CP 14 60– Allows leased property to be written on a valued basis– Value of the lease vs. RC


• Business Income From Dependent Properties Broad Form CP 15 08– Used when damage to an off-premises location could

result in a “suspension” of “operations”– Contributing locations—provide raw materials to the

insured’s manufacturing operation OR a manufacturer or distributor who provides products to the Insured

– Recipient location—the Insured depends on them to distribute their products

– Manufacturing location—other entities manufacture products under the Insured’s name

– Leader location—attract customers to the Insured’s location

– Miscellaneous location (limited coverage)


Dependent Property

Recipient Contributor

Car Manufacturer Outsourced enginemanufacturer

Leader Dependent Property

Grocery Cleaners next door


Drop Your Pants Here


Dependent Property

Manufacturer

Rainbow Midwest Manufacturing RepresentativeThe EXCLUSIVE supplier of Rainbow Products


• Ordinance or Law Increased Period of Restoration CP 15 31– Extends definition of “period of restoration” to

include time required to meet building ordinances

– Should be used whenever

Ordinance or Law coverage is

provided for Direct Loss


• Civil Authority Change(s) CP 15 32 – First introduced in 2007– CP Additional Coverage is limited to 4 weeks

and a 1 mile radius from the damaged property– Endorsement allows for selection of Coverage

Period and Radius (in miles)


• Radio or Television Antennas—Business Interruption or Extra Expense CP 15 50– Exclusion in the BI/EE form– Includes satellite dishes– Endorsement removes the

exclusion


• Manufacturers Selling Price CP 99 30– Policy automatically has Selling Price for “Sold

but not delivered”.– This allows selling price on all finished stock


• Leasehold Interest Coverage Form– Coverage will include:

• Tenants' lease interest

• Bonus payments

• Improvements and betterments

• Pre-paid rent


• Off Premises Services (formerly Power Failure)- Direct Damage– Recovery if communications, power or water source off

premises sustains damage and then damages insured’s property– Can include overhead transmission lines

• Off Premises – Time Element CP 15 45 (changed to Utility Services with 2007 edition)– Recovery for lost income resulting

from above


• Limitation on Loss Settlement—Blanket Insurance (Margin Clause) CP 12 32– Rather than having the entire blanket limit

available to a loss to any one building, the loss is LIMITED to

– The selected margin clause % times the value of the building shown on the SOV


• EXAMPLE:– Blanket limit of $4,500,000 for Buildings 1, 2, 3– W/O Margin Clause, total available for a loss to

Building 1 would be $4,500,000– W/ Margin Clause, total available for a loss to

Building 1 is $1,000,000 (shown on SOV) x 120% (example), or $1,200,000

NEW in 2013

• Secondary dependencies (time element)• Food contamination• Equipment breakdown option• Discharge from sewer, drain or sump• Increase in rebuilding cost following disaster• Interruption in wastewater removal service• Production and processing operations (rental

properties)

Business Auto Coverage Form Endorsements

• Fellow Employee Coverage CA 20 55– Deletes the Fellow Employee exclusion in the

Business Auto Coverage Form– Why is this necessary?

• Employee Hired Auto CA 20 54

– Designed to provide broader protection to employees who rent cars in their own name, for their employer's business

– Previously only “Named Insured” was covered for Hired Autos



• Drive Other Car Coverage CA 99 10 – Most frequently needed endorsements for BAP – Used for liability, medical payments, uninsured/underinsured

motorists, physical damage coverage for specifically named individuals while using a nonowned auto for personal use

– Endorsement is needed when the individual's company auto is the only vehicle regularly available for individual's use. Note, however, that prior to the 2010 edition, only the named individual's spouse, and not family members, has coverage under this endorsement for bodily injury liability or physical damage.

– The 2007 version let’s you name an individual and coverage extends to their family members


• Individual Named Insured Endorsement CA 99 17 – When a commercial auto policy covers an individually owned

auto (i.e., at least one named insured is an individual), endorsement must be attached.

– Provides family drive other car coverage for the named insured, spouse, and family members at no charge. It also deletes the fellow employee exclusion as it relates to the named insured and family members. In other words, if the named insured or a family member causes injury to a fellow employee, the fellow employee exclusion will not preclude coverage for any resulting liability.


• Stated Amount Coverage CA 99 28– When an auto is insured for physical damage coverage,

the limit of insurance in most cases is the actual cash value (ACV) less a deductible.

– Endorsement imposes a cap on the amount of coverage provided for described vehicles. The stated amount basis does not actually replace actual cash value.

– Instead, the insurer will pay the least of ACV, the cost to repair or replace, or the stated amount.


• Employees as Insureds CA 99 33– This endorsement is used to extend nonowner

liability coverage to cover the individual liability of employees while they are using their own autos in the employer's business

– Without endorsement, the auto coverage forms specifically exclude coverage for the liability of an employee if the covered auto from which the accident arises is owned by that employee or a member of his or her household


• Pollution Liability Broadened Coverage CA 99 48– This endorsement deletes that portion of the

pollution exclusion that relates to discharges of pollutants that are in or upon, being transported or towed by, being loaded onto, or being unloaded from a covered auto. However, the extension of coverage does not apply to liability assumed under any contract or agreement.


• Covered Auto Designated Symbol CA 99 54– The various auto coverage forms display symbols to

describe covered autos for each of the coverages available

– The symbols in the coverage forms cover descriptions and range from symbol 1 (any auto) in the business auto policy to symbol 71 (nonowned autos only) in the motor carrier policy

– This endorsement allows for any designation that is agreeable between the insured and insurer and may be used to include or exclude any category type of owned autos for any coverage

NEW in 2013

• Withdrawal of Garage Form• Introduction of Auto Dealers form

Workers Comp and Employer’s Liability Endorsements

• Alternate Employer Endorsement WC 00 03 01 A– This endorsement applies only with respect to bodily injury

to your employees while in the course of special or temporary employment by an alternate employer in the state named in Item 2 of the Schedule.

– Part One (Workers Compensation Insurance) and Part Two (Employers Liability Insurance) will apply as though the alternate employer is insured.


• Joint Venture as Insured WC 00 03 05 – This endorsement is used to add coverage for members

of a joint venture when the insured is a joint venture– In the absence of this endorsement, if the insured is a

joint venture, its members are not covered as separate entities

– This endorsement makes it clear that coverage does not extend to the separate operations of the joint venture members


• Voluntary Compensation and Employers Liability Endorsement WC 00 03 11– This endorsement provides voluntary coverage for the

workers compensation benefits of a given jurisdiction to employees who are not covered by state workers compensation law

– Exempt employees who are not eligible for workers compensation benefits can sue the employer for damages in the event of an on-the-job injury resulting from employer negligence


• Voluntary Compensation and Employers Liability Endorsement WC 00 03 11– Employees who may not be covered under the workers

compensation law of a given state include the following• Domestic workers • Agricultural workers • Volunteers • Employees injured while temporarily outside of the United

States or Canada • Employees injured while on indefinite assignment outside of

the United States or Canada


• Employee Leasing Client Exclusion Endorsement WC 00 33 22– This endorsement is designed for attachment to the client's

workers compensation policy when it is the responsibility of the employee leasing company to provide WC on employees leased to the client

– It excludes under the client's policy any liability for bodily injury to employees leased from the employee leasing company named in the endorsement

– Attach Alternate Employer Endorsement to Leasing Company Policy


• Employers Liability Coverage for Corporate Officers– This endorsement is used to provide coverage

for the individuals named or described in the endorsement who have elected to be subject to the workers compensation law of the state shown in the endorsement, as permitted by that law


• Stop Gap Endorsement – Contractors with operations in monopolistic states (North

Dakota, Ohio, Washington, and Wyoming) must purchase workers compensation insurance from the state fund.

– Coverage purchased through these funds only applies to statutory benefits payable under the WC law; there is no separate employers liability coverage for liabilities arising out of the employment that fall outside the workers compensation statute.

– Contractors with operations in monopolistic states have an employers liability coverage gap with respect to these states.

– The employers liability coverage endorsement (WC 00 03 03) eliminates this coverage gap in the monopolistic states

Other Workers Comp Endorsements

• USL&H• Amendment to Coverage B—Maritime

(Jones Act)

Commercial General Liability Endorsements

• The need for AI status• CG 20 10

– Evolution– Current status– CG 20 37– What, you mean there are other AI endorsements?


• Coverage for Injury to Leased Workers CG 04 24– CGL excludes coverage for such injuries because of

definition of “employee”– This endorsement creates an exception to the

exclusion:– “Employee” does not include a “leased worker” or

“temporary worker”


• Employee Benefits Liability Coverage CG 04 35– Applies to acts, errors or omissions in the

administration of an employee benefit program– Not to be confused with EPLI or Fiduciary Liability– Can be included in an EPLI or Fiduciary Liability

policy…BUT


• Limited Product Withdrawal Expense CG 04 36– Aggregate limit– Deductible applies per withdrawal– Participation % included– “Cut off date” AKA: Retroactive Date– Separate coverage agreement

NEW in 2013

• New AI endorsements• Primary and non-contributory option• Change to liquor liability for BYO

QUESTIONS?

BETTER THAN GARLIC ENCHANTED ENDORSEMENTS AND POLICY ENHANCEMENTS TO KEEP THE E & O VAMPIRE AWAY...

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