Endorsement MS RS 01 modifies the CGL form, the commercial property form, and the causes of loss – special form. The modifications tailor these forms to the needs of the restaurant risk. The endorsement adds property and crime coverages and modifies the premium audit section of the CGL form. Endorsements are available to add mechanical breakdown coverage, hired and non-owned auto, and legal liability coverage for damage to customers' cars. These endorsements are discussed later in this treatment.

The commercial property form (CP 00 10 04 02) covers the building and business personal property of the insured and property of others that the insured has in his care. The MS RS 01 adds a fourth category of covered property, fine arts. The endorsement gives the following as examples of fine arts: antiques, paintings, etchings, drawings, tapestries, sculptures, and tangible property such as porcelains, china, and marble. These items, which may belong to the insured or someone else, are covered for up to $25,000 at each premises.

The CP 00 10 also specifies several items as property not covered. One category of property not covered in the CP 00 10 is accounts, bills, deeds, evidences of debt, money, notes, and securities. The MS RS 01 adds an exception to that category by providing some money and securities coverage.

The restaurant form adds a category of property not covered. It removes coverage for certain types of property outside of buildings:

1.     Grain, hay, straw, or other crops; and

2.     Fences, signs. antennas, trees, shrubs, and plants. The form does make an exception for the stock of trees, shrubs, and plants. It also provides some coverage for the other items.

It also specifies that property in storage or on exhibition away from the premises is not covered. The form makes an addition to this type of property not covered: while “at fair grounds or on the premises of any national or international exposition.”

The MS RS 01 modifies the debris removal coverage, as well. While the CP 00 10 provides an added amount of $10,000, an additional amount of $25,000 is available on the restaurant form.

The MS RS 01 adds coverage for loss of money and securities, but emphasizes that the insurer will cover only theft, disappearance, or destruction of such property. It also adds $5,000 for fire department service charge.

The MS RS 01 provides additional coverage (up to $5,000) under fire extinguisher systems expense. Like the CP 00 10, it pays the cost of recharging such systems if they are discharged on the premises. The MS RS 01 also pays for damage done by such a discharge to covered property – something not covered by the CP 00 10. However, the restaurant endorsement adds the caveat that no coverage applies if the discharge occurs while the system is being installed or tested.

A reward payment of up to $5,000 is insured for information that leads to the conviction of anyone damaging covered property. The restaurant endorsement adds the following additional coverages:

1.     Money orders and counterfeit paper currency in the amount of $1,500.

2.     $2,500 coverage for forgery or alteration of checks, drafts, etc.

3.     $5,000 for damage to outdoor signs.

4.     $25,000 for employee dishonesty.

5.     $25,000 to remove brands and labels from damaged merchandise.

6.     Covered equipment will be repaired or replaced if subject to an ordinance or law, including the cost to reclaim refrigerant, the cost to retrofit equipment so that it can use the newer refrigerants, and the cost to recharge the system.

7.     $5,000 for replacement of locks, due to loss or theft of keys. A $100 deductible applies.

8.     Damage to computers caused by artificially generated electrical current.

9.     $50,000 for spoilage of perishable stock.

10.     Loss to computers caused by artificially generated electric current. The cause of the problem must be within 1000 feet of the described premises.

11.     Business income and extra expense coverage for twelve months following a loss.

12.     Business income from dependent properties. A dependent property is one upon whom the insured depends to do things like deliver supplies or services; accept the insured's products or services; or to attract customers to the insured's business.

13.     $10,000 for business income and $10,000 for extra expense incurred as a result of food contamination.

The MS RS 01 provides the following coverage extensions:

1.     $5,000 for personal effects of others ($2,500 in the CP 00 10).

2.     Valuable papers and records – $10,000 on premises and $5,000 off-premises. This coverage is limited to the specified perils, as defined on the CP 10 30 04 02: Fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice  or  sleet; water damage.

3.     Property off premises is extended to cover computers for up to ninety days.

4.     $5,000 for outdoor property, including fences and retaining walls not part of a building; outdoor antennas; and trees, shrubs, and plants.

5.     $5,000 for accounts receivable.

6.     Newly acquired art objects are covered for thirty days for up to $10,000.

Since the MS RS 01 gives coverage for ordinance or law, spoilage, and mechanical breakdown of computers, the endorsement removes these exclusions from the CP 10 30. It also adds the following exclusions that apply only to computers:

1.     Errors and omissions in the processing of data. It does give back coverage for direct loss from fire or explosion.

2.     Electrical disturbance, but the endorsement does specify that damage caused by lightning is covered.

3.     Computer-related losses, which includes “failure, malfunction, or inadequacy” of  hardware, software, operating systems, networks, chips, etc.

4.     Computer consultation. Any efforts to test for or repair computer-related losses described above are also not covered.

The MS RS 01 adds two liability coverage agreements: delivery errors and omissions and merchandise withdrawal expenses. Delivery E&O covers the insured in the event that the insured or any employee fails to deliver an item or misdelivers such item. The policy agrees to pay any damages the insured is obligated to pay as a result of such misdelivery. Also insured for this coverage is any concessionaire who is trading under the insured's name. The agreement allows the insurer to investigate and settle any claim at its discretion. This coverage is subject to an annual aggregate limit of $10,000 and a per occurrence deductible of $250.

Three exclusions apply to the delivery E&O coverage:

1.     Intentional error or misdelivery.

2.     BI, PD, or PI. Apparently the only damages the coverage responds to are economic damages.

3.     Discrimination.     

Sometimes a restaurant owner faces a merchandise withdrawal, such as the withdrawal of contaminated food. Even though there is no coverage for the actual merchandise that has to be withdrawn, the MS RS 01 does cover the insured's expenses that result from the withdrawal.

The product must be withdrawn because it has a known or suspected defect. Or, it must be withdrawn because it has already caused (or is expected to cause) injury or damage. The withdrawal may be initiated either by the insured or by government order. This coverage has a per occurrence limit of $25,000 and a $250 deductible.

Merchandise withdrawal expense coverage is subject to the following exclusions:

1.     Failure of the product to accomplish its intended purpose. This includes breach of warranty. However, the exclusion does not apply if the product has caused (or may cause) injury or damage.

2.     Infringement of intellectual property rights.

3.     If the product just transforms chemically. But this exclusion does not apply in the event of an error in the manufacture, design, etc. of the product nor if the product has been tampered with.

4.     If the shelf-life of a product has been exceeded.

5.     Withdrawal due to any known defect.

6.     Recall expenses for any product that is otherwise excluded.

7.     Recall expenses for any product that has been banned from the market.

8.     Any suit against the insured for withdrawal expense.

The definition of insured for liability is changed, as well. The restaurant form gives insured status to someone if the liability arises out of that person's financial control of the insured or premises the insured leases from that person.

The endorsement goes on to detail the insured's duties in the event of loss under either one of the added coverages. Both require the insured to notify the insurer; to record the names of witnesses; and to cooperate with and assist the insurer.

The MS RS 01 adds the following definitions:

1.     Computer: programmable electronic equipment that the insured uses to store, process, or retrieve data. It includes other equipment used with the computer, but does not include data or media.

2.     Counterfeit: an imitation of a valid original.

3.     Defect: includes dangerous condition.

4.     Employee: includes employees furnished temporarily to the named insured. A furnished employee must be intended to substitute for a permanent employee or to meet seasonal demand. However, the definition of employee does not include agents or brokers, or anyone leased to the named insured by an employee leasing firm. A furnished employee is one who comes to the insured's company for a short-term assignment, while a leased employee is one who will, theoretically, have a longer relationship with the insured.

5.     Forgery: signing the name of another person. It does not include signing one's own name with or without authority.

6.     Manager: a director for a limited liability company.

7.     Merchandise withdrawal: recall of items held for sale by the insured. The recall must be due to a known or suspected defect. If the withdrawal is due to product tampering, the definition of “merchandise withdrawal” is limited to just those products which the insured knows (or suspects) have been tampered with.

8.     Merchandise withdrawal expenses: includes the following eight items:

a.     Costs of notification.

b.     Costs of stationery, envelopes, production of announcements and postage or facsimiles.

c.     Costs of overtime paid to the insureds employees.

d.     Costs of computer time.

e.     Costs of hiring independent contractors and other temporary employees.

f.     Costs of transportation, shipping or packaging.

g.     Costs of warehouse or storage space.

h.     Costs of proper disposal of items held by the insured for sale or products that cannot be reused.

9.     Money.

10.     Perishable stock: stock that might suffer a loss if controlled conditions change.

11.     Securities: includes food stamps, redeemed lottery tickets, evidences of debt, etc.

The restaurant program offers the insured the opportunity to purchase mechanical breakdown coverage on form MS RS 02. This endorsement reads like boiler and machinery coverage in that it covers an “accident to an object.” Covered objects include boiler and pressure vessels and air conditioning and refrigeration units. An accident is a sudden and accidental “breakdown of the object.” For more on boiler and machinery, please refer to the Boiler and Machinery tab in the Fire and Marine volume.

Endorsement MS RS DS is a supplemental schedule, where the insured may indicate any number of changes in limits; add hired and nonowned auto coverage; or add coverage for loss to customers' cars while on the premises.