December 2005 Intro Page

No. 919

December 1, 2005

Dec Page

The question of the month deals with the terrorism threat and how to mitigate its potential destructiveness. Trying to manage the terrorism risk causes many questions to be raised. For example, what is terrorism? Is the insured's business a target for terrorism?

What specific exposures are there to face? How does the insured go about protecting its personnel and property? For the answers to these questions and for some suggestions as to how to risk manage the terrorism cause of loss, link onto the designated article in the FC&S Bulletins.

The court cases noted in the Dec Page discuss various topics: additional insured coverage; faulty workmanship; violation of consent-to-settle provision in uninsured motorists insurance policy; and proper policy cancellation procedures. The cases are from the Supreme Courts of Oregon, South Carolina, and New Mexico, and from an appellate court in Ohio .

The Dec Page also notes what several states are doing with regard to nonrenewal and cancellation notice requirements. Connecticut, Montana, New Jersey, Oregon, Rhode Island, Virginia, and Wyoming have all amended the requirements.

Finally, information pertaining to a new service offered by the FC&S editors—expert witness service—is presented. This service is offered as a complement to the policy analysis and coverage interpretation services that FC&S now provides.

Questions and Answers

It is generally held by the courts that the mortgagee clause operates as a separate contract between insurer and mortgagee. What happens if the policy excludes coverage for vandalism when the home is vacant? See Mortgagee's Claim Covered?. The ISO homeowners forms exclude loss by rain, snow, sand, or sleet to personal property contained in a building unless wind creates an opening. What about personal property in the open? See Wind Loss to Personal Property.

How does the commercial property exclusion for faulty or inadequate design or specifications comport with the coverage for collapse caused by hidden decay? See Collapse of Ceiling Covered?.

An extensive fire loss results in damage to trees, shrubs, and lawns. How extensive is the coverage? See Trees, Lawns, and Shrubs. An insured's office condo building has an electrical substation breakdown. Is there any coverage for business income since the computer system failed? See Business Income and Computer Failure.

Also, we answer a subscriber's question about the scope of the backup of sewer or drain endorsement on a homeowners form. See Sewer or Drain Backup.

ISO Installation Coverage Form

ISO has developed form IH 00 73 08 02 which may be used to insure property intended for permanent installation in a project. Building owners, tenants, or contractors who require broad coverage for the supplies and materials used in renovating, remodeling, or upgrading buildings will find the form particularly useful. For an analysis of the form, see Installation Coverage Form.

Processors Coverage Form

The Insurance Services Office has developed a series of non-filed inland marine coverage forms. One of these is the processors coverage form, IH 00 93 08 02. This form deals with coverage for those who receive the property of others in order to perform some work on that property. Some examples of processors are: a restoration business; an auto customizing shop; and a clothes repair shop.

This article offers an analysis of IH 00 93 08 02 and discusses the coverages, exclusions, conditions, and definitions that make up the form: Processors Coverage Form.

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