Ordinary Payroll Limitation Described

March 12, 2012

In the typical ISO business income form under ordinary payroll limitation it states in part, “Ordinary payroll is limited to a specified number of days. The number of days may be used in two separate periods during the 'period of restoration'.” What does the last sentence really mean?

Is this sentence there to clarify that the days do not have to be consecutive? I cannot think of a good example of where this is really in play other than if the period of restoration is broken up into two parts and the ordinary payroll from the same occurrence is somehow broken up into two parts that the two separate periods during the period of restoration could apply that way.

Thoughts? Do you have a good example of how this wording is applied or why it is included here?

Texas Subscriber

The current ISO form no longer contains an ordinary payroll limitation. An ordinary payroll limitation or exclusion endorsement can be added via CP 15 10. That form specifically states, “The number of days need not be consecutive but must fall within the 'period of restoration.'” So, the implication is that the wording you quote means that the days do not need to be consecutive but with the restriction that the ordinary payroll can be broken into only two separate periods (as opposed to any number of periods that the CP 15 10 allows).

An example of when this provision may come into play is if, during the period of restoration, workers are needed a few days at a time to get things back up and running, but they are still not on the job full time. So, perhaps warehouse workers are brought in to take inventory one week, then a few weeks later IT personnel are called in to set up computer equipment. The ordinary payroll for those periods could be covered by the ordinary payroll limitation.

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