ISO Commercial Property Program

Summary: The Standard Property Policy (CP 00 99 10 12) of the Insurance Services Office (ISO) is designed for use when coverage under the other forms of the commercial program is too broad. It may be thought of as a scaled-down version of the Building and Personal Property form CP 00 10 10 12. Following is a discussion of the form, with differences between the Building and Personal Property Form and the Standard Property Policy highlighted.

Topics covered:

Introduction

Covered property

Property not covered

Causes of loss

Additional coverages

Coverage extensions

Exclusions

Limits of insurance and deductible

Common policy and commercial property conditions

Loss conditions

Vacancy provision

Endorsements

Introduction

 The Standard Property Policy, CP 00 99 10 12, uses a different format from the rest of ISO’s commercial property program in that the policy is a self-contained unit that includes causes of loss and applicable conditions. The Building and Personal Property Coverage form, CP 00 10 10 12, is a modular form to which causes of loss and conditions forms must be added. The CP 00 99 therefore provides a simpler, less costly vehicle for insuring those risks for which coverage under the other forms of the commercial property program is too broad, or is unavailable

 The CP 00 99 may also be used in conjunction with the CP 17 99 10 12—Condominium Association Coverage endorsement—for a condominium association, or with the CP 17 98 10 12—Condominium Commercial Unit-Owners Changes—to provide coverage for commercial unit owners. It may also be used with the CP 11 99 10 12—Builders Risk Changes—to insure buildings under construction. Any state endorsements that normally apply to CP 00 10 may also be used with the CP 00 99.

 Covered Property

 The CP 00 99 insuring agreement for building and personal property reads the same as the CP 00 10. Covered property includes the building or structure described in the declarations, personal property used to service or maintain the building, business personal property, and personal property of others that is in the care, custody, or control of the named insured and located in or on the described building.

 b.Your Business Personal Property consists of the following property located in or on the building or structure described in the Declarations or in the open (or in a vehicle) within 100 feet of the building or structure or within 100 feet of the premises described in the Declarations, whichever distance is greater:

 The 2012 edition of the form revised the coverage radius for business personal property. Coverage extends to business personal property that is within 100 feet of the building or structure or within 100 feet of the described premises, whichever is farther.

 For an analysis of the CP 00 10 see Building and Personal Property Coverage Form.

 Fixtures, including outdoor fixtures, are covered property, whether or not they are “permanently installed.” Machinery and equipment, however, must still be permanently installed to fall under the coverage for the building or structure described in the declarations.

 Property Not Covered

 The list of property not covered is the same as that of the CP 00 10. It is important to note that property more specifically described and covered under another coverage form is not included as covered property. But, in event of a loss, the Standard Property Policy responds on an excess basis whether the amount of the loss is collectible or not from the primary insurer.

 In the 2012 edition, lawns that are part of a vegetated roof are not considered property not covered.

 Causes of Loss

 The Standard Property Policy provides coverage for fire, lightning, and explosion losses. The following additional causes of loss may be purchased: windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, sinkhole collapse, and volcanic action. The perils of vandalism and sprinkler leakage may also be purchased to round out the list of perils. If all the causes of loss options are purchased, coverage is similar to that provided by the Causes of Loss—Basic form, CP 10 10 10 12. See Causes of Loss Forms.

 Additional Coverages

 The standard property policy provides six additional coverages. These are the same as those of the building and personal property coverage form. The first of these is debris removal, which is limited to an amount equal to 25 percent of the amount paid for direct physical loss or damage plus the deductible. The form specifies that the amount spent for debris removal is included within the limit of liability that applies to the covered property.

 The 2012 edition of the form expanded debris removal coverage by providing coverage for not only debris of covered property but also other debris that is on the described premises if caused by or resulting from a covered cause of loss. The limit also increased from $10,000 to $25,000.

 The second additional coverage is preservation of property. If it becomes necessary to move covered property to protect it from a covered cause of loss, any subsequent loss is covered. The current form allows coverage for loss or damage that occurs within thirty days after the property is first moved.

 The third additional coverage provides up to $1,000 for the insured’s liability for a fire department service charge. The 2012 form added that the $1,000 limit is applied to each premises, regardless of the number of responding fire departments or fire units and of the number or type of services performed.

 The fourth provides up to $10,000 for pollutant clean up and removal.

 The fifth additional coverage, electronic data, pays up to $2,500 to replace or restore electronic data that is destroyed or corrupted by a covered cause of loss. Electronic data is described on the form, and in 2012, ISO added language stating, “This Additional Coverage does not apply to your ‘stock’ of prepackaged software, or to electronic data which is integrated in and operates or controls the building’s elevator, lighting, heating, ventilation, air conditioning or security system.”

 The sixth additional coverage is for fungus, wet or dry rot, or bacteria. The coverage provides up to $15,000 for loss or damage caused by fungus, wet or dry rot, or bacteria. “Fungus” is a defined term on the form.

 Coverage Extensions

 The policy covers newly acquired or constructed buildings for $250,000. Newly acquired personal property is covered for up to $100,000, other than property at fairs, trade shows, or exhibitions. The 2012 form reduced coverage in this provision by excluding personal property located at the described premises.

 Personal property and effects of others owned by the insured, or the insured’s officers, partners, members, managers, and employees, as well as personal property of others in the insured’s care, custody, or control, is covered for up to $2,500.

 The cost to replace or restore valuable records or papers (other than electronic data) is $2,500 at each described premises unless a higher limit is shown in the declarations.

 Property off-premises that is temporarily at a location the insured does not own, lease, or operate, that is in storage at a location the insured leases—if the lease was executed after the beginning of the policy period—or is at any fair, tradeshow, or exhibition, is covered for up to $10,000. The extension does not apply to property in the care, custody, or control of salespersons or that is in or on a vehicle.

 Outdoor property is covered up to $1,000, but only $250 for any one shrub, plant, or tree. This property is covered only for loss or damage caused by or resulting from fire, lightning, explosion, riot or civil commotion, or aircraft. This coverage also extends to the removal from the described premises of debris of trees, shrubs, or plants that the property of others, unless the insured is a tenant and the property is owned by the landlord of the described premises.

 The CP 00 99 provides up to $5,000 for nonowned detached trailers on the insured’s premises. The trailer must be used in the insured’s business, must be in the insured’s care, custody, or control at the described premises, and the insured must have a contractual responsibility to pay for loss or damage to the trailer.

 The 2012 form added a coverage extension for business personal property temporarily in portable storage units. The unit must be within 100 feet of the building or structure described in the declarations or within 100 feet of the premises, whichever distance is greater. The coverage ends within ninety days of the property being placed in the unit unless the storage unit has been at the premises for more than ninety days. The limit is $10,000. The storage unit itself is not covered.

 The extensions are additional amounts of coverage. The coinsurance condition is not applicable to the extensions of coverage; however, a coinsurance percentage of at least 80 percent of the value reporting symbol must be shown in the declarations for the insured to avail him or herself of the coverages.

 Exclusions

 The exclusions differ from those of the CP 10 10 10 12, Causes of Loss—Basic form, so they are reproduced in their entirety.

 1.We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

a.Ordinance or Law 

The enforcement of or compliance with any ordinance or law:

(1)Regulating the construction, use or repair of any property; or

(2)Requiring the tearing down of any property, including the cost of removing its debris.

This exclusion, Ordinance or Law, applies whether the loss results from:

(1)An ordinance or law that is enforced even if the property has not been damaged; or

(2)The increased costs incurred to comply with an ordinance or law in the course of construction, repair, renovation, remodeling or demolition of property, or removal of its debris, following a physical loss to that property.

b.Earth Movement

(1)Earthquake, including tremors and aftershocks and any earth sinking, rising or shifting related to such event;

(2)Landslide, including any earth sinking, rising or shifting related to such event;

(3)Mine subsidence, meaning subsidence of a man-made mine, whether or not mining activity has ceased;

(4)Earth sinking (other than sinkhole collapse, if sinkhole collapse is a Covered Cause of Loss), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.

     But if Earth Movement, as described in b.(1) through (4) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.

(5)Volcanic eruption, explosion or effusion. But if volcanic eruption, explosion or effusion results in fire or Volcanic Action, we will pay for the loss or damage caused by that fire or Volcanic Action (if Volcanic Action is a Covered Cause of Loss).

This exclusion applies regardless of whether any of the above, in Paragraphs

(1) through (5), is caused by an act of nature or is otherwise caused.

c.Governmental Action

     Seizure or destruction of property by order of governmental authority.

But we will pay for loss or damage caused by or resulting from acts of destruction ordered by governmental authority and taken at the time of a fire to prevent its spread, if the fire would be covered under this policy.

d.Nuclear Hazard

    Nuclear reaction or radiation, or radioactive contamination, however caused.

     But if nuclear reaction or radiation, or radioactive contamination, results in fire, we will pay for the loss or damage caused by that fire.

e.Utility Services

    The failure of power, communication, water or other utility service supplied to the described premises, however caused, if the failure:

(1)Originates away from the described premises; or

(2)Originates at the described premises, but only if such failure involves equipment used to supply the utility service to the described premises from a source away from the described premises.

Failure of any utility service includes lack of sufficient capacity and reduction in supply.

Loss or damage caused by a surge of power is also excluded, if the surge would not have occurred but for an event causing a failure of power.

But if the failure or surge of power, or the failure of communication, water or other utility service, results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.

Communication services include but are not limited to service relating to Internet access or access to any electronic, cellular or satellite network.

f.War and Military Action

(1)War, including undeclared or civil war;

(2)Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or

(3)Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.

g.Water

(1)Flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge);

(2)Mudslide or mudflow;

(3)Water that backs up or overflows or is otherwise discharged from a sewer,drain, sump, sump pump or related equipment;

(4)Water under the ground surface pressing on, or flowing or seeping through:

(a)Foundations, walls, floors or paved surfaces;

(b)Basements, whether paved or not; or

(c)Doors, windows or other openings; or

(5)Waterborne material carried or otherwise moved by any of the water referred to in Paragraph (1), (3) or (4), or material carried or otherwise moved by mudslide or mudflow.

This exclusion applies regardless of whether any of the above, in Paragraphs (1) through (5), is caused by an act of nature or is otherwise caused. An example of a situation to which this exclusion applies is the situation where a dam, levee, seawall or other boundary or containment system fails in whole or in part, for any reason, to contain the water.

But if any of the above, in Paragraphs (1) through (5), results in fire, explosion or sprinkler leakage, we will pay for the loss or damage caused by that fire, explosion or sprinkler leakage (if sprinkler leakage is a Covered Cause of Loss).

h.”Fungus”, Wet Rot, Dry Rot And Bacteria

Presence, growth, proliferation, spread or any activity of “fungus”, wet or dry rot or bacteria.

But if “fungus”, wet or dry rot or bacteria results in a Covered Cause of Loss, we will pay for the loss or damaged caused by that Covered Cause of Loss.

This exclusion does not apply:

(1)When “fungus”, wet or dry rot or bacteria results from fire or lightning; or

(2)To the extent that coverage is provided in the Additional Coverage – Limited Coverage For “Fungus”, Wet Rot, Dry Rot And Bacteria with respect to loss or damage by a cause of loss other than fire or lightning.

     Exclusions B.1.a. through B.1.h. apply whether or not the loss event results in widespread damage or affects a substantial area.

2.We will not pay for loss or damage caused by or resulting from:

a. Artificially generated electrical, magnetic or electromagnetic energy that damages, disturbs, disrupts or otherwise interferes with any:

(1)Electrical or electronic wire, device, appliance, system or network; or

(2)Device, appliance, system or network utilizing cellular or satellite technology.

For the purpose of this exclusion, electrical, magnetic or electromagnetic energy includes but is not limited to:

(a)Electrical current, including arcing;

(b)Electrical charge produced or conducted by a magnetic or electromagnetic field;

(c)Pulse of electromagnetic energy; or

(d)Electromagnetic waves or microwaves.

But if fire results, we will pay for the loss or damage caused by that fire.

b.Rupture or bursting of water pipes (other than Automatic Sprinkler Systems if sprinkler leakage is a Covered Cause of Loss) unless caused by a Covered Cause of Loss.

c.Leakage or discharge of water or steam from any part of a system or appliance containing water or steam (other than an Automatic Sprinkler System if sprinkler leakage is a Covered Cause of Loss), unless the leakage or discharge occurs because the system or appliance was damaged by a Covered Cause of Loss. But we will not pay for loss or damage caused by or resulting from continuous or repeated seepage or leakage of water, or the presence or condensation of humidity, moisture or vapor, that occurs over a period of 14 days or more.

d.Explosion of steam boilers, steam pipes, steam engines or steam turbines owned or leased by you, or operated under your control.

    But if explosion of steam boilers, steam pipes, steam engines or steam turbines results in fire or combustion explosion, we will pay for the loss or damage caused by that fire or combustion explosion.

e.Mechanical breakdown, including rupture or bursting caused by centrifugal force.

     But if mechanical breakdown results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.

f.Neglect of an insured to use all reasonable means to save and preserve property from further damage at and after the time of loss.

 Analysis

 The 2012 edition of the form added tremors and aftershocks as being excluded under the earth movement exclusion. A statement that the exclusion applies whether the earth movement is caused by an act of nature or otherwise caused was also added.

 The language from the separate water exclusion endorsement that ISO introduced in 2008 is now included as the water exclusion in the 2012 edition. The endorsement was previously attached to all policies, so there is no change in coverage. Changes from the previous water exclusion include the inclusion of storm surge in the description of flood and surface water; the addition of “or is otherwise discharged” in the backup or overflow section, and a new section stating that waterborne material carried by or moved by the water is also excluded. The exclusion applies whether caused by an act of nature or otherwise.

 Limits of Insurance and Deductible

The wording of the limits of insurance and deductible sections is the same as in the building and personal property coverage form. For a more detailed discussion, see Building and Personal Property Coverage Form.

 Common Policy and Commercial Property Conditions

 All of the common policy conditions from form IL 00 17 11 98 are incorporated into the Standard Property Policy. Of these, only the inspections and surveys condition is revised. While the insurer may make such a survey, it has no obligation to do so. The condition also emphasizes that such a survey is not a warranty that the building is safe. The form adds a caveat that this provision does not apply if the insurer is inspecting under a state ordinance or regulation. For a discussion, see Common Policy Conditions.The commercial property conditions from form CP 00 90 (see Commercial Property Conditions for a discussion) also appear in the Standard Property Policy.

 Loss Conditions

 The loss settlement conditions are nearly identical to those of the Building and Personal Property Coverage form, CP 00 10. There is, however, a notable difference. The valuation clause of the CP 00 10 states that, if the limit of insurance for building satisfies the coinsurance condition, and if the cost to repair or replace the damaged building is $2,500 or less, the insurer will pay to repair or replace. There is no similar clause in the standard property policy.

 Vacancy Provision

 In keeping with the limited coverage afforded by the Standard Property Policy is the provision that if a building has been vacant or unoccupied for more than thirty consecutive days, there is no coverage for loss caused by vandalism. This is contingent, of course, on the insured having purchased coverage for this cause of loss. There is no coverage for any other cause of loss after sixty days if a building is vacant or unoccupied.

 Endorsements

 Condominium Association Coverage—Standard Property Policy endorsement, CP 17 99 10 12, is used to adapt the coverage of the Standard Property Policy to the unique needs of a condominium association. It contains the coverage provisions for building, business personal property, and the conditions for loss payment, unit-owner’s insurance, and waiver of rights of recovery as found on condominium association coverage form CP 00 17; see Condominium Association Coverage Form.

 In a similar fashion, Condominium Commercial Unit-Owners Changes—Standard Property Policy, CP 17 98 10 12, adapts the Standard Property Policy to the needs of commercial condominium owners. This is accomplished by the incorporation of the provisions regarding business personal property, property not covered, newly acquired property, vacancy, and condominium association insurance from condominium commercial unit-owners coverage form CP 00 18, see Condominium Commercial Unit Owners Coverage. Additionally, the endorsement deletes certain building-related provisions from the standard property policy since the subject of coverage is the personal property of condominium commercial unit-owners.

 The Builders Risk Changes—Standard Property Policy, CP 11 99 10 12, is attached to the Standard Property Policy when it is used to insure buildings under construction. It includes the following provisions from the Builders Risk Coverage form, CP 00 20 10 12: covered property, property not covered, coverage extension, valuation, need for adequate insurance, and when coverage ceases. See Builders Risk Insurance for discussions of these provisions.

 Any individual state endorsements that would apply to Building and Personal Property Coverage form, CP 00 10, also apply to the Standard Property Policy. Additionally, many of the property endorsements available for use under the commercial property program see Commercial Property Endorsements may also be used with the standard property policy.