The following discussion focuses on the conditions and definitions applicable to the property coverages. Remember that not all insurers immediately adopt new ISO forms; many use earlier editions. Therefore, check carefully in making any coverage determinations.
Limits of insurance
Deductibles
Property loss conditions
Loss payment conditions
Additional loss conditions
Property general conditions
Property definitions

Limits of Insurance

C.     Limits Of Insurance

1.     The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance of Section I – Property shown in the Declarations.

2.     The most we will pay for loss of or damage to outdoor signs attached to buildings is $1,000 per sign in any one occurrence.

3.     The limits applicable to the Coverage Extensions and the Fire Department Service Charge and Pollutant Clean Up and Removal Additional Coverages are in addition to the Limits of Insurance of Section I – Property.

4.     Building Limit – Automatic Increase

a.     The Limit of Insurance for Buildings will automatically increase by the annual percentage shown in the Declarations.

b.     The amount of increase will be:

(1)     The Building limit that applied on the most recent of the policy inception date, the policy anniversary date, or any other policy change amending the Building limit, times

(2)     The percentage of annual increase shown in the Declarations, expressed as a decimal (example: 8 percent is .08), times

(3)     The number of days since the beginning of the current policy year of the effective date of the most recent policy change amending the Building limit, divided by 365.

     Example:

     If: The applicable Building limit is $100,000. The annual percentage increase is 8 percent. The number of days since the beginning of the policy year (or last policy change) is 146.

     The amount of increase is

     $100,000 x .08 x 146 divided by 365 = $3,200.

5.     Business Personal Property Limit – Seasonal Increase

a.     The Limit of Insurance for Business Personal Property will automatically increase by 25 percent to provide for seasonal variations.

b.     This increase will apply only if the Limit of Insurance shown for Business Personal Property in the Declarations is at least 100 percent of your average monthly values during the lesser of:

(1)     The twelve months immediately preceding the date the loss or damage occurs; or

(2)     The period of time you have been in business as of the date the loss or damage occurs.

Analysis

This portion of the policy makes it clear that the limits of coverage applicable to the coverage extensions are additional amounts of insurance. The fire department service charge and pollutant clean up and removal additional coverages also are in addition to, and not included in, the limits of insurance. However, the additional coverage for debris removal is capped by the limit of insurance, except for an additional $10,000 per location that may be paid if the total of direct property loss and debris removal costs exceed the limit of insurance or if the debris removal expense is more than 25 percent of the sum of the deductible plus the amount paid for the direct physical loss.

Note that the businessowners form contains provisions for an automatic inflation increase, and for a seasonal business personal property increase in event of a covered loss at that time. The insured must maintain a business personal property limit of at least 100 percent of the average monthly values during the lesser of the twelve months immediately preceding the loss or the period of time the insured has been in business as of the date of loss.

Note also the limited coverage for outdoor signs. This coverage may be increased by purchasing the optional outdoor sign coverage.