American Association of Insurance Services (AAIS) is a national advisory rating organization and statistical agent that provides loss costs, rules, forms, and statistical reporting to property/casualty insurers nationwide. Among the policies offered by AAIS is the artisans policy for “small contractors” which offers commercial liability coverages and insures buildings and business personal property on premises on a risks not excluded (open perils) basis.

2. CONTACT AAIS 1745 S. Naperville Rd. Wheaton  IL  60187 (630) 681-8347 FAX (630) 681-8356 http://www.aais.org

3. UNDERWRITING GUIDELINES

Eligible firms must employ ten or fewer people. The gross annual receipts cannot exceed $3 million and annual payroll must be under $500,000. Maximum building square footage is 15,000.

Firms that rent or lease equipment to others are not eligible, nor are general contractors. Demolition contractors or those involved in moving buildings do not meet the guidelines for this program. Contractors that are joint ventures must be referred to the company.

4. AVAILABILITY OF COVERAGE

This program is available in all states where AAIS is filed.

5. LIMITS AVAILABLE/DEDUCTIBLES

The following are the minimum limits for each of the five liability coverages:

A.     Bodily injury/property damage—$300,000 per occurrence.

B.     Medical payments—$5,000 per person.

C.     Products/completed work—$300,000 per occurrence.

D.     Fire legal liability—$50,000 per occurrence.

E.     Personal/advertising injury liability—$300,000 per occurrence.

The maximum limits available will vary according to each company's underwriting philosophy.

Eligible buildings must be written at full replacement cost or at full actual cash value. The minimum deductible is $250 and may, as an option, be applied to loss of income coverage.

6. INSURING AGREEMENT

In exchange for payment of the premium, the insurer agrees to provide the coverages described.

7. DEFINITIONS

The policy lists seven terms that apply to all sections of the policy:

A.     You and Your.

B.     We, Us, and Our.

C.      Basic Territory .

D.     Declarations.

E.     Limit.

F.     Pollutants.

G.     Terms.

While six of the definitions are as found in other insurance policies, the definition of pollutants goes beyond the norm by including electromagnetic (visible or invisible) or sound emission pollutants.

The following are defined for the liability section:

A.     Advertising injury means oral or written libelous or slanderous remarks; and remarks disparaging of another's “goods, products, or services.” Violation of the right of privacy falls into this category, as do misappropriation of advertising ideas and infringement of copyright, title, etc.

B.     Auto means vehicles designed for use on public roads and includes machinery and equipment attached to the auto.

C.     Bodily injury is defined as harm, sickness, or disease and resulting death. Also included are required care and loss of services. Note that the definition of bodily injury does not include mental or emotional injury, suffering, or distress that does not result from physical injury.

D.     Coverage territory (different than basic territory, which is only the United States, Canada, and Puerto Rico) includes the basic territory and international waters/airspace, if the injury or damage occurs “in the course of travel to or from the basic territory.” The territory is expanded to include the entire world, if the injury or damage arises out of: 1) products the insured “made or sold in the basic territory;” or 2) the activities of someone who normally resides in the basic territory, but “is away for a short time” on the insured's business. In order for “anywhere in the world” to be included as part of the coverage territory, the suit must be brought in the basic territory or the insurer must have agreed to a settlement.

E.     Damages. Money payable to an injured person as compensation.

F.     Employee. The definition includes leased, but not temporary workers.

G.     Impaired property, coverage for which is excluded by the “work performed exclusion” is property whose value has been decreased, but can be restored. Such property includes the insured's product or work that is defective, deficient, or dangerous. The decrease in value can also be due to the insured's failure to carry out the terms of a contract.

H.     Leased Worker is one leased by the insured from a labor leasing firm. A temporary worker is not a leased worker.

I.     Loading and unloading of property begins when the property is removed from the spot where it is accepted for transit, continues while the property is on the vehicle, and ends when the property reaches its intended destination.

J.     Occurrence is both an accident and “repeated exposure to similar conditions.”

K.     Personal injury must arise out of oral or written libelous or slanderous remarks; and remarks disparaging of another's “goods, products, or services.” Violation of the right of privacy is defined as personal injury. Finally, also included are the perils of: false arrest, detention, imprisonment, malicious prosecution; and the “wrongful entry into or eviction of a person from” any premises occupied by that person. Any personal injury committed by the insured while “advertising, publishing, broadcasting, or telecasting” is excluded.

L.     Products/completed work hazard covers bodily injury and property damage arising out of either the insured's product or work — after the product has left the insured's possession, or after the work has been completed.

     Excluded from the definition of “products/completed work hazard” are the transportation of property and the presence of any of the following: tools, uninstalled equipment, or abandoned or unused materials.

M.     Products are goods and products that the insured manufactures, sells, handles, distributes, or disposes. Included within the definition of “products” are “warranties or representations” made about the products. Such warranties or representations may be oral or written. Also included in the definition of “product” is “containers, materials, parts, or equipment” that are furnished with the products. The final category is warnings or instructions provided (or not provided ) with the product.

     Excluded from the definition are vending machines; property “rented to or placed for the use of others;” and real property.

N.     Property Damage includes both physical injury to property and loss of use.

O.     Your work is “work or operations” performed by the named insured or on behalf of the named insured. As with products, the insured work includes “materials, parts, and equipment” supplied by the named insured in connection with the operations. “Warranties and representations” made about the insured's work are included, but such warranties and representations must be written. As with products, this definition includes warnings and instructions provided (or not provided) by the insured.

These terms are defined in the property section:

A.     Money.

B.     Restoration period is the length of time it takes (or that it should take) for the insured to resume operations after a loss.

C.     Securities are instruments that represent money or other property.

D.     Falling objects does not include damage to personal property in the open, inside a building, or damage to the interior of a building, unless the falling object first damages the exterior of the building.

E.     Sinkhole collapse occurs when the “earth supporting the covered property” settles or collapses into “subterranean voids created by the action of water on a limestone or similar rock formation.” Excluded from the definition are the “value of the land” and the cost to fill the sinkhole.

F.     Specified perils are the following: aircraft; civil commotion; explosion; falling objects; fire; hail; leakage from fire extinguishing equipment; lightning; riot; sinkhole collapse; smoke; sonic boom; vandalism; vehicles; volcanic action; water damage; weight of ice, snow, or sleet; and windstorm. “Specified perils” is listed as a cause of loss elsewhere in the policy to cover an otherwise-excluded loss.

G.     Valuable papers and records includes the following: abstracts, account books, bills, blue prints, card index systems, data processing media and programs, deeds, designs, drawings, evidences of debt, manuscripts, plans, specifications, and other records.

H.     Volcanic action incorporates the perils associated with the eruption of a volcano: airborne volcanic blast or shock waves; ash, dust, or particulate matter; or lava flow. The cost to remove ash, dust, or particulate matter that “does not cause direct physical loss to the covered property” is not included in the definition.

8. WHO IS INSURED

If the declarations page indicates that the policyholder is an “individual,” the named insured's spouse is included; however, only for a business of which the named insured is the sole owner.

If the business is indicated as a “partnership,” the partners or members and their spouses are included, with “respect to the conduct of the business.” If the indication is “organization,” the definition of insured includes all “executive officers and directors” while acting “within the scope of their duties.” It also includes stockholders, but “only for their liability as such.”

Also insured for the operation of mobile equipment is anyone else to whom the named insured has given permission for such operation. However, this coverage applies only “if there is no other insurance covering the liability” of such other person.

Under the coverage for “products/completed work,” the policy covers others “trading under” the insured's name and any “person or organization whose business or assets” have been acquired by the named insured.

Employees are insureds for “acts within the scope of their employment” by the named insured. There is no coverage for injury to a fellow employee, or for damage to property belonging to, rented to, or loaned to other employees, or other insureds. If an employee of the named insured is operating mobile equipment with the permission of the named insured, that employee is covered.

If the named insured has a majority interest in a newly formed or newly acquired organization, such organization is an insured if it is other than a joint venture, partnership, or LLC. This automatic coverage is good only for ninety days and does not apply when other insurance is available. It also does not apply to injury or damage occurring “prior to the acquisition or formation.”

9. WHAT IS INSURED

The overall name for the liability section is “commercial liability coverage”. Within this section are five principal and three supplemental liability coverages. The principal coverages are:

A.     Bodily injury and property damage.

B.     Medical payments that are incurred and reported within one year of an accident.

C.     Products/completed work (see liability definition “L” above).

D.     Fire legal liability will pay for fire damage to buildings that the insured rents, if the insured is legally liable. The only exclusions that apply to this coverage are: if the liability for the damages was assumed under contract; if the property damage was “expected, directed, or intended by an insured;” or if the liability arose out of the rendering or failure to render professional services.

E.     Personal and advertising injury liability covers damages the insured is legally obligated to pay (see liability definitions “A” and “K” above).

The supplemental liability coverages are:

A.      Broad form contractual coverage applies to contractual liability and expands the definition of incidental contract to include any oral or written contract or agreement relating to the conduct of the named insured's business.

B.     Incidental medical malpractice injury covers injuries arising out of the “rendering or failure to render” certain medical services. In addition to medical, surgical, dental, x-ray, and nursing services, also covered is the “furnishing of food or beverages in connection” with those services. The other covered area is the “furnishing or dispensing of drugs or medical, dental, or surgical supplies or appliances.”

C.     Mobile equipment liability insurance covers damages the insured incurs as a result of the operation of mobile equipment. Eligible types of equipment include those that:

     1. are used only on premises owned by or rented to the insured;

     2. are designed primarily for off-road use;

     3. travel on crawler treads;

     4. are “self-propelled and designed or used only to afford mobility” to certain types of equipment, such as power cranes, loaders, concrete mixers, graders, rollers, and other road construction equipment;

     5. are not self-propelled, but are used to afford mobility to certain types of equipment, such as air compressors, pumps, generators, geophysical exploration equipment, and cherry pickers.

There are exclusions to the incidental liability coverages, that will be discussed in section 11.

Defense coverage is spelled out in a separate section. Defense costs are outside the limit of liability.

The commercial property section contains three primary coverages — A, buildings; B, business personal property; and C, loss of income, collapse coverage, plus several additional coverages and extensions of coverage.

     Coverage A—buildings. In addition to buildings and structures, additions, and outdoor fixtures are covered. Fixtures and other permanent improvements to the bridling fall into this category. Also insured are items “used to provide building services.” Such items include “fixtures, machinery, and equipment” that are a permanent part of the building. Personal property used to maintain and service the described premises is covered as a building item. Such property includes air conditioning and fire extinguishing equipment; carpet and other floor coverings; and appliances used for refrigeration, cooking, laundering, and dish washing. Building materials are considered part of coverage A, as are buildings that are “auxiliary to the buildings described on the declarations.” Any addition or alteration under construction and not insured elsewhere is insured under coverage A. Finally, the insured's personal property in an apartment leased by the insured is covered.

     Coverage B—business personal property. These items are covered in the described buildings and within 100 feet of the described premises. The insured's interest in the personal property of others is covered to the extent of his or her “labor, material, and services.” Any improvements made to the building by the insured are covered as business personal property, if they were made at the insured's expense and cannot be legally removed when the lease is finished. The final category is property that the insured leases from others.

     Coverage C—loss of income. Both loss of earnings and extra expense incurred within twelve consecutive months of the date of direct physical loss or damage to property are covered. Income loss is covered for the time it “should reasonably take to resume” the business. It is incumbent upon the insured to do all in his or her power to reduce the loss. If he or she does not do this, the insurer is not obligated to cover “any increase in loss.” When deciding upon an amount to pay under this coverage, the insurer will “consider the experience” before the loss and “the probable experience, had no loss occurred.” Extra expenses incurred to “continue [operations] as nearly as practical” the insured's business, are covered. There is a maximum limit for the income coverages, but this can be changed to actual loss sustained.

Loss caused by collapse of a building is added as an additional coverage, if the collapse is caused by one of more of the following:

A.     The specified perils (see property definition F, above).

B.     Hidden decay, insect, or vermin damage.

C.     Weight of people or business personal property.

D.     Weight of rain on the roof.

E.     Use of defective building materials/methods if the collapse resulting from such use occurs while the building is being constructed, remodeled, or renovated.

The various incidental property coverages apply only at the described premises and represent additional amounts of insurance, unless otherwise stated. These five additional coverages apply to coverage A, buildings, or B, personal property:

A.     Antennas, fences, and signs—up to $2,500.

B.     Debris removal is covered for 25 percent of the amount paid for direct damage. The limit for debris removal is within the limit of liability for coverage A or B. The policy provides an additional $10,000 of debris removal coverage if the debris removal expense exceed 25 percent of the direct loss; or if the total of direct loss and debris removal expense exceeds the limit of liability.

C.     Fire department service charge is covered up to $1,000. The liability for such a charge must be assumed by “contract or agreement prior to the loss.”

D.     Increased costs, ordinance or law. The policy provides $5,000 to meet such costs.

E.     Pollutant clean-up and removal. The policy provides an annual aggregate of $10,000 for this coverage.

F.     Removed property is covered, up to thirty days after a loss, while removed or being removed from the endangered premises. This coverage expires at the same time as the policy.

G.     If the property is damaged by water, other liquids, powder, or molten material, the policy covers the cost to tear out and replace part of the building. The limit for this coverage is included within the limit of liability.

These two extensions of coverage apply to coverage A, buildings:

A.     Up to 25 percent of the limit of coverage A (maximum $250,000) is available for newly acquired buildings. The coverage lasts for thirty days, but not beyond the expiration date of the policy.

B.     Up to $1,000 is available to cover outdoor trees, shrubs, and plants. These items are covered only for the perils of aircraft, civil commotion, explosion, fire, lightning, or riot. A $250 limit applies to any one tree, shrub, or plant and includes debris removal.

These five extensions apply to coverage B, personal property:

A.     $20,000 may be applied to property at newly acquired locations. The time limit on this coverage is thirty days, but not beyond the policy expiration.

B.     Unless a higher limit is chosen, $2,500 may be applied to personal property at locations that the insured does not own, rent, control, or lease.

C.     $2,500 may be applied to cover the personal property of others in the care of the insured. This coverage, however, is “only for the benefit of the owners of the personal property.”

D.     $500 for the coverage of personal effects other than business personal property.

E.     $1,000 for the cost of research to restore or replace valuable papers and records.

The following four supplemental coverages apply to coverage C, loss of income:

A.     Loss of use of existing buildings, buildings under construction, and additions and alterations under construction is covered, beginning from the time business would have begun in the absence of a loss.

B.     If property “other than the described premises” is damaged and the insured is denied access to his or her property by order of a civil authority, the policy will pay for the insured's loss of use, up to three consecutive weeks.

C.     $100,000 of coverage is offered for loss of income caused by damage to newly acquired locations, for up to thirty days after the location is acquired.

D.     Business income coverage is extended for up to thirty days beyond the time the “insured could reasonably resume” his or her normal business. This extension gives the insured time to “get up and running” after a loss.

The following items are specified as not covered, although some items may be given limited coverage in the coverage extensions:

A.     Antennas, fences, and signs.

B.     Buillion.

C.     Contraband, including property being illegally transported.

D.     Land, growing crops, or lawns.

E.     Lottery tickets.

F.     Money or securities.

G.     Trees, shrubs, and plants.

H.     Vehicles, aircraft, and watercraft.

10. PERILS

Liability is covered for bodily injury and property damage, personal injury, advertising injury, fire legal liability, products and completed work, and medical payments arising from any cause unless excluded.

Property is covered on an open perils basis. However, some property is covered for loss only from the “specified perils” discussed under property definitions.

11. EXCLUSIONS

All liability coverages are subject to the following exclusions (some coverage may be provided in the incidental coverages):

A.     Injuries or damages that are expected or intended by an insured, other than the “use of reasonable force” for the protection of people or property. This exclusion applies to all liability coverages, including personal injury.

B.     Rendering or failure to render professional services, other than as provided by incidental medical malpractice coverage.

C.     Ownership, operation, maintenance, use, occupancy, renting, loaning, entrusting, supervision, loading or unloading of: aircraft, autos, watercraft, and mobile equipment.

D.     Liability due to causing the intoxication of another person.

E.     War.

F.     Liability arising out of completed work, other than as described.

G.     Pollution.

H.     Bodily injury to an employee and consequential injuries to the employee's relatives.

I.     Benefits required to be paid under workers compensation, disability, etc. laws.

J.     Employment practices.

K.     Liability assumed under contract, other than an incidental contract or damages that would be payable even in the absence of a contract (however contractual liability coverage may be purchased).

There are additional exclusions that apply only to property damage liability:

A.     Damage to the insured's property and property of others in the insured's care, custody, and control.

B.     Damage to premises the insured sells, gives away, or abandons (other than a premises that constitutes the insured's work and that the insured did not occupy, rent, or hold for rental).

C.     Damage to the specific part of property where the insured is performing his or her work.

D.     Damage caused by faulty workmanship.

E.     Damage to the insured's product.

F.     Damage to the insured's work, unless the work was performed by a subcontractor.

G.     Damage to property that has not been physically injured.

H.     Expense incurred arising out of loss of use, disposal, withdrawal, or recall of the insured's products, work, or impaired property; even when the losses were due to a known or suspected defect, deficiency, or unsafe condition.

The following additional exclusions apply only to medical payments:

A.     Medical benefits are not payable to the insured, nor to the insured's employees and tenants.

B.     For anyone “taking part in athletic activities.”

C.     If the bodily injury is included in the products/completed work hazard.

D.     If benefits are provided under a workers' compensation or similar statute.

E.     Medical benefits are not payable to the “guest of a hotel or motel;” students or campers at an insured's facility; or to patients or inmates being treated at the insured's facility.

These additional exclusions apply to personal and advertising injury liability:

A.     Injury arising out of the “willful violation” of a law.

B.     Injury arising out of oral or written publication, if the insured knew the publication was false or if the publication was prior to the policy period.

C.     Liability assumed under contract.

D.     Breach of contract, other than “misappropriation of advertising ideas under an implied contract.”

E.     Failure of goods or services to “conform with advertised quality or performance.“

F.     Wrong description of the price of a product or service.

G.     Committed by an insured in the business of advertising, broadcasting, publishing, or telecasting.

There is no coverage for any injury or damage if the insured is an insured under any of the nuclear energy pools. There is also no coverage for loss resulting from the hazardous properties of nuclear material, the operation of a nuclear facility, or the furnishing of services, parts, etc. to any nuclear facility.

Buildings and business personal property are covered on an open perils basis, subject to the following exclusions:

A.     Order of civil authority.

B.     Earth movement and volcanic eruption (other than sinkhole collapse).

C.     Nuclear hazard.

D.     Building ordinance or law.

E.     Utility failure.

F.     Water, including on and beneath the surface of the ground and water that backs up through sewers or drains.

G.     War.

H.     Weather.

I.     Animals, but resulting losses caused by one of the specified perils are covered.

J.     Collapse (other than as provided in the collapse coverage).

K.     Contamination or Deterioration, including corrosion, decay, fungus, mildew, mold, etc.

L.     Criminal, fraudulent, or dishonest acts by the named insured; others with an interest in the property; those to whom the property has been entrusted; the insured's partners, officers, directors, trustees, and joint adventurers; and employees of any of the preceding.

M.     Defects, errors, or omissions relating to land use, design of property, planning, zoning, etc..

N.     Electrical currents, but an ensuing fire is covered.

O.     Explosion of water boilers, steam boilers, or steam engines, other than explosion of fuel in the firebox and loss to boilers caused by internal combustion.

P.     Freezing of plumbing, heating, air-conditioning systems or appliances, while the building is vacant or unoccupied, unless a reasonable attempt is made to maintain heat in the building or drain the pipes.

Q.     Mechanical breakdown.

R. Pollutants, but any resulting loss caused by a specified peril is covered.

S.     Seepage from a plumbing, heating, or air conditioning system or domestic appliance.

T.     Settling, cracking, shrinking, bulging, or expanding, but any resulting loss caused by a specified peril is covered.

U.     Smog, smoke, vapor, or gas.

V.     Changes in temperature or humidity.

W.     Testing of covered property.

X.     Voluntary parting with title or possession of property.

Y.     Wear and tear, etc., but any resulting loss caused by a specified peril is covered.

The following exclusions apply only to loss of income coverage:

A.     Damage to electronic media, programs, or records.

B.     Expenses to put out a fire.

C.     Increase in loss due to the “suspension, lapse, or cancellation of leases, licenses, contracts, or orders.“

12. CONDITIONS

The conditions in the AAIS artisans' package are similar to those found in other commercial packages:

A.     Assignment

B.     Cancellation

C.     Change

D.     Conformity With Statute

E.     Cooperation

F.     Examination of Books and Records

G.     Inspections

H.     Liberalization

I.     Misrepresentation, Concealment, or Fraud

However, there are some differences. The insured may elect (at the time the policy is written) to have buildings covered for either actual cash value or replacement cost. If replacement cost is chosen, it does not apply to carpeting; objects of art, rarity, or antiquity; or property of others. Also, the form contains no co-insurance requirement.

13. OTHER COMMENTS

Endorsements available include:

A.     Property Damage Liability Deductible

B.     Money and Securities Coverage

C.     Glass Coverage

D.     Outdoor Sign Coverage

E.     Employee Dishonesty Coverage

F.     Artisans Property Additional Coverage Endorsement

G.     Calendar Date or Time Failure Exclusion

H.     loss of Income Coverage 72-hour Waiting Period – Property Coverages

I.     Employment Related Practices Liability Coverage – Claims Made Basis

J.     Employment Related Practices Liability Coverage – Extended Reporting Period

K.     Voluntary Property Damage Coverage

L.     Contractors' Equipment

M.     Contractors' Equipment Schedule

N.     Contractors' Tools

O.     Installation Floater

P.     Additional Insured – Lessor of Leased Equipment

Q.     Additional Insured – Owner or Lessor of Leased Land

R.     Liability Coverage – Designated Premises or Project

S.     Accounts Receivable Coverage

T.     Ordinance Or Law Extension

U.     Computer Coverage

V.     Valuable Papers and Records Coverage

W.     Water Damage Coverage – Back Up of Sewers and Drains

X.     Protective Devices

Y.     Earthquake Coverage

Z.     Non-Owned Auto Liability Coverage/Hired Auto Liability Coverage

AA.     Premium Payments

BB.     Theft Exclusion

CC.     Condominium Unit-Owners Coverage

DD.     Additional Insured – Grantor of Franchise

EE.     Expanded Non-Owned Auto Liability Coverage/Hired Auto, Liability Coverage

FF.     Loss Payable Options

GG.     Resident Agent Countersignature

HH.     Additional Insureds

II.     Additional Insured (State or Political Subdivisions – Premises Permits)

JJ.     Additional Insured – Owners, Lessees, or Contractors

KK.     Additional Insured – Engineers, Architects, or Surveyors

LL.     Amendment – Aggregate Limits of Insurance (Per Project)

MM.     Liability Exclusion

NN.     Exclusion – Explosion, Collapse, Underground Property Damage Hazard

OO.     Supplemental Liability Coverage – Care, Custody, or Control Exception

PP.     Additional Insured – Designated Party

QQ.     Additional Insured – Lessors

RR.     Lead Liability Exclusion

SS.     Pesticide or Herbicide Applicator Coverage

TT.     Coverage E – Employee Benefits Liability Coverage

UU.     Employee Benefits Liability Coverage – Supplemental Extended Reporting Period

VV.     Punitive Damages Exclusion

WW.     Employee Redefined

XX.     Cross Liability Exclusion

YY.     Contractual Liability Coverage Limitation (Incidental Contractual Liability)

ZZ.     Exclusion – Coverage P – Personal and Advertising Injury Liability

AAA.     Employee Benefits Liability Coverage – Calendar Date or Time Failure Exclusion