September 19, 2016

Summary: The Insurance Services Office (ISO) has developed a form—part of the overall program designed for specialized market segments—to provide coverage for janitorial services. The bases of coverage are the Commercial General Liability Form, the Building and Personal Property Coverage Form, and the Causes of Loss – Special form. The Janitorial Services Form, MS JS 01 07 13, is then attached to provide wrap-around coverage by modifying many of the provisions and coverages of the underlying forms.

This article provides information on MS JS 01. For more information and analyses of the underlying coverage forms: see CGL Coverage Form—Coverage A; see CGL Coverage Form—Coverage B; see Commercial General Liability Form Medical Payments Coverage; see General Provisions of the CGL; see Building and Personal Property Coverage Form; and see Causes of Loss Forms.

Topics covered: Introduction Changes to the commercial property form Additional coverages Coverage extensions Changes to the causes of loss form Changes to the CGL form Definitions Endorsements

Introduction

MS JS 01 is an endorsement that modifies the Commercial General Liability Form, the Building and Personal Property Coverage Form, and the Causes of Loss – Special form; the provisions of these forms apply to the risk except as otherwise provided under MS JS 01. The endorsement enhances the coverages provided by the standard forms by offering additional property coverages, some crime coverages, and changes to the general liability coverages.

Also offered through this market segments program is coverage for equipment breakdown protection using endorsement MS JS 02 03 05.

Changes to the Commercial Property Form

The Building and Personal property coverage form, CP 00 10 10 12, considers vehicles or self-propelled machines as property not covered. There are exceptions to this category on CP 00 10, and MS JS 01 modifies the exceptions by adding the following: self-propelled machines used for janitorial services that are operated primarily at a client's premises. In other words, if the insured brings something like a buffer or automated waste collector or some other janitorial service machine to the client's premises to use in performing the janitorial services, that particular machine will be considered covered property. If such machines are damaged by a covered cause of loss, there will be no dispute over whether the machines are covered property.

MS JS 01 also increases the fire department service charge to $5,000. This is for the insured's liability for fire department service charges when the fire department is called to save or protect covered property from a covered cause of loss.

Additional Coverages

CP 00 10 offers several additional coverages. MS JS 01 adds more coverages to this particular category.

Money and Securities. MS JS 01 will pay for loss of money and securities (both defined terms) used in the named insured's business. The coverage is there while the money and securities are at a bank or savings institution, within the living quarters of the named insured or any employee having use and custody of the property, at the described premises, or in transit between any of these places. The insured has, in effect, crime coverage both inside and outside the premises described in the declarations. The covered causes of loss are theft, disappearance, or destruction; excluded cause of loss are accounting or arithmetical errors, loss due to giving property in any exchange or purchase, and loss of property contained in any money-operated device.

Unless different limits are shown in the declarations, the most paid under this additional coverage is $5,000 while the money and securities are in a bank or in the described premises and $2,500 for loss while the money and securities are anywhere else. All loss cause by one or more persons and involving a single act or series of related acts is considered one occurrence; this is important since the loss is covered on a per occurrence basis.

Finally, the insured must keep records of all money and securities so the insurer can verify the amount of any loss or damage.

Fire Extinguisher Systems Expense. This endorsement will pay for the cost of recharging or replacing—whichever is less—the fire extinguishers and extinguishing systems if they are discharged in or on the building described in the declarations or within 100 feet of the building or premises described in the declarations, whichever distance is greater. This language was updated in the 2013 revision to accommodate insureds who may be located in a multi-occupancy buildings so that they will have coverage 100 feet from their premises or from the building. Also covered is loss or damage to covered property as a result of an accidental discharge. The most that will be paid under this coverage is $2,500 in any one occurrence and no deductible applies.

Reward Payment. The named insured will be reimbursed up to $5,000 for rewards paid to an eligible person for information leading to the arrest and conviction of any person committing a crime resulting in loss to covered property from a covered cause of loss. Up to $5,000 is also paid for a reward paid to an eligible person for the return of stolen property when the loss is caused by theft. (The amounts paid are up to $5,000 since the insurer declares that it will pay no more than the lesser of the actual cash value of the covered property at the time of loss or the amount determined by the loss settlement procedure applicable to the covered property under the loss payment condition.)

An eligible person is that person designated by a law enforcement agency as being the first to voluntarily provide the information leading to the arrest and conviction or return of the stolen covered property. The following persons cannot be eligible persons: the named insured and family members, the named insured's employees and family members, an employee of a law enforcement agency, an employee of a business engaged in property protection, any person who had custody of the covered property at the time the theft was committed, or any person involved in the crime.

No reward will be reimbursed unless and until the person committing the crime is convicted (no word on how appeals affect this requirement) or the covered property is returned.

Money Orders and Counterfeit Money. The insurer will pay for loss resulting directly from the named insured's having accepted in good faith money orders not paid upon presentation or counterfeit paper currency that is acquired during the regular course of business. The most that will be paid for any loss under this additional coverage is $1,500 unless a different limit is shown in the declarations.

Forgery or Alteration. The insurer promises to pay for loss resulting from forgery (a defined term) or alteration of checks, drafts, promissory notes, or similar written promises to pay a sum certain in money. The most to be paid is $2,500 in any one occurrence unless a different limit is shown in the declarations. This amount includes legal expenses for defense of the insured in case the insured is sued for refusing to pay the forged or altered instrument on the basis that it has been forged or altered.

Note that mechanically reproduced facsimile signatures are treated the same as handwritten signatures.

Outdoor Signs. The insurer promises to pay for direct physical loss of or damage to all outdoor signs at the described premises that is owned by the named insured or owned by others but in the care, custody, or control of the named insured. The most to be paid in any one occurrence is $2,500 unless a different limit for outdoor signs is shown in the declarations.

Employee Dishonesty. MS JS 01 will pay for direct loss of or damage to the named insured's business personal property, money, and securities resulting from dishonest acts committed by any of the named insured's employees. The employees must have the manifest intent to cause the named insured to sustain loss and to obtain financial benefit. The loss suffered by the insured will be paid up to $5,000 in any one occurrence. All loss or damage caused by one or more employees and involving a single act or series of related acts is considered one occurrence.

There are several limitations to this coverage. MS JS 01 will not pay for loss or damage resulting from any dishonest or criminal act committed by the named insured, partners, members, officers, managers, directors, trustees, authorized representatives, or by anyone to whom the named insured entrusts the property that is taken or damaged. The endorsement will not pay for loss or damage, the proof of which as to its existence or amount, is based on an inventory computation or a profit or loss computation. The endorsement will not apply to loss or damage that the named insured sustains through acts not committed during the policy period, and the coverage will apply only for loss or damage discovered no later than one year from the end of the policy period. The limits of insurance for this type of coverage do not accumulate from policy period to policy period. And, this endorsement does not apply to loss caused by any employee after discovery by the named insured of any dishonest act committed by that employee before or after being hired by the named insured. So, if the named insured hires someone it knows has been convicted of theft or fraud, and that employee then proceeds to steal from the named insured after being hired, the loss is not covered by MS JS 01.

MS JS 01 will also pay for loss of or damage to money, securities, and other property sustained by the named insured's client resulting directly from theft committed by an identified employee. The property must be inside the client's premises in order for the coverage to apply. This coverage is for the benefit of the insured only; the client derives no rights or benefits from MS JS 01.

Artificially Generated Electrical Current. The endorsement will pay for loss or damage to computers due to artificially generated electrical current if such loss or damage is caused by or results from an occurrence that took place within 1,000 feet of the described premises.

Key and Lock Replacement. MS JS 01 will pay for the cost to replace keys and locks at the client's premises due to theft or other loss to keys entrusted to the named insured by the client. The most to be paid under this coverage is $5,000 for all loss or damage in any one occurrence and a per occurrence deductible of $100 will apply. The coverage does not apply to loss or damage resulting from dishonest or criminal acts, including theft, committed by the named insured or the named insured's partners, members, officers, managers, employees, directors, trustees, or authorized representatives, whether working alone or in collusion. The 2013 form revision clarified that employees include temporary and leased workers and that the exclusion applies whether or not an act occurs during the insured's normal operating hours. The exclusion does not apply to the previous list of colleagues who commit acts of destruction.

Coverage Extensions

MS JS 01 makes several changes to the coverage extensions section of the Building and Personal Property Coverage Form, CP 00 10.

Newly Acquired or Constructed Property. The first change is to the period of coverage for newly acquired or constructed property. MS JS 01 declares that coverage will end when any of the following first occurs: the policy expires; thirty days expire after the named insured acquires the property or begins construction; with respect to computers, when specific insurance at the newly acquired premises is obtained; or, when the named insured reports values to the insurer. The insured is charged additional premium for values reported from the date the named insured acquires the property or begins construction.

Personal Effects and Property of Others. The business personal property insurance is extended to personal effects owned by the named insured, officers, partners, managers, and employees (loss caused by theft is not covered); it is also extended to personal property of others in the care, custody, or control of the named insured. The most that the insurer will pay is $5,000 in any one occurrence while the property is at each described premises, at a client's premises, or while in transit. However, in no event will the insurer pay more than $500 for loss or damage to the personal property of any one client; on the other hand, no deductible applies to loss of or damage to personal property of a client.

Valuable Papers and Records (Other Than Electronic Data). The business personal property insurance is extended to apply to direct physical loss or damage to valuable papers and records that the named insured owns or that are in the care, custody, or control of the named insured. Coverage includes the cost to research lost information on valuable papers and records for which duplicates do not exist. The loss or damage must be caused by the specified causes of loss as defined in the Causes of Loss – Special form or by collapse. The most that the insurer will pay under this extension is $5,000 in any one occurrence at each described premises; for valuable papers and records not at a described premises, the most that will be paid is $2,500. These amounts are additional insurance. The coverage does not extend to electronic data, property held as samples or for delivery after sale, or to property in storage away from the premises shown in the declarations.

Property Off-Premises. The named insured may extend coverage to property while it is away from the described premises, under certain conditions. The property must be temporarily at a location that the named insured does not own, lease, or operate; the property must be in storage at a location leased by the named insured; or the property must be at a fair, trade show, or exhibition; or the property must be janitorial equipment and supplies in storage at a client's premises. The extension does not apply to property in or on a vehicle (except for computers) or to property in the care, custody, or control of the named insured's salespersons (unless the property is in such care at a fair, trade show, or exhibition). The most the insurer will pay for loss or damage is $10,000 in any one occurrence.

Outdoor Property. MS JS 01 will pay for loss or damage to fences and retaining walls that are not part of a building; the most that will be paid in any one occurrence is $2,500. The endorsement will pay for loss or damage to outdoor radio, TV, satellite, or other antennas; the most to be paid for this coverage extension is $3,000 in any one occurrence. Covered also are trees, shrubs, and plants other than stock (a defined term); the most paid here is $2,500 in any one occurrence, but not more than $500 for any one tree, shrub, or plant. The 2013 form revision added trees, shrubs, or plants that are part of a vegetated roof to this extension. The 2013 revision also added a section addressing debris removal and its coverage under this extension for the expense of removing the debris of trees, shrubs, and plants that are the property of others from the described premises. If the insured is a tenant and the property belongs to the landlord, though, there is no coverage. This coverage for outdoor property is only for the following covered causes of loss: fire, lightning, explosion, riot or civil commotion, or aircraft.

Accounts Receivable. MS JS 01 can cover accounts receivable. The endorsement will pay all amounts due from the named insured's customers that cannot be collected, interest charges on any loan required to offset amounts that cannot be collected, necessary excess collection expenses, and other reasonable expenses incurred by the named insured to reestablish accounts receivable records. The payment is made due to direct physical loss or damage by any covered cause of loss to the accounts receivable records. The most that will be paid under this extension in any one occurrence is $5,000. For accounts receivable not at a described premises, the most the insurer will pay is $2,500 in any one occurrence.

Changes to the Causes of Loss Form

MS JS 01 modifies the Causes of Loss – Special form, CP 10 30 10 12. Certain changes are made to particular parts of form CP 10 30.

The mechanical breakdown exclusion in the exclusion section of CP 10 30 does not apply to loss or damage to computers.

The paragraphs referencing the excluded causes of loss to personal property in the exclusions section are replaced by the following. MS JS 01 will not pay for loss or damage caused by or resulting from the following causes of loss: dampness or dryness of atmosphere or changes or extremes of temperature (unless such conditions result from physical damage caused by a covered cause of loss to an air conditioning unit or system) or marring or scratching. However, if one of these excluded causes of loss results in a specified cause of loss (a defined term) or building glass breakage, the insurer will pay for the loss or damage caused by that specified cause of loss or glass breakage.

The following four exclusions are added to the exclusions section but apply only to coverage for computers. These exclusions apply regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

Errors or Omissions. The endorsement does not apply to loss or damage caused by errors or omissions in processing, recording, or storing electronic data on computers. However, the insurer will pay for direct loss or damage caused by resulting fire or explosion if these causes of loss would be covered by the endorsement.

Electrical Disturbance. Loss due to electrical or magnetic injury, disturbance, or reassure of electronic recordings is not covered. Direct loss or damage caused by lightning is covered.

Computer-Related Losses. The inability to correctly recognize, process, distinguish, interpret, or accept one or more dates or times is another cause of loss that MS JS 01 does not cover. This relates to failure, malfunction, or inadequacy of the following: computer hardware, software, operating systems, networks, microprocessors (computer chips) that are not part of any computer system, and any other computerized or electronic equipment or components.

Computer Advice or Consultation. MS JS 01 will not respond to a loss or damage caused by any advice, consultation, design, evaluation, inspection, maintenance, repair, replacement, or supervision provided or done by or for the named insured in order to rectify or test for any potential or actual problems described in the previously mentioned computer-related loss clause.

If an excluded cause of loss as described in these four clauses results in a specified cause of loss (a defined term on CP 10 30), or in elevator collision resulting from mechanical breakdown, the insurer will pay for the loss or damage caused by these things. The insurer will also not pay for repair, replacement, or modification of any items in this set of exclusions to correct any deficiencies or change any features.

The exclusions section of CP 10 30 does not apply to the coverage for employee dishonesty that this endorsement provides, except for the governmental action, nuclear hazard, and war and military action exclusions.

The exclusions section and the limitations section do not apply to the coverage for outdoor signs that MS JS 01 provides. There are exceptions. The following exclusions do apply: governmental action; nuclear hazard; war and military action; wear and tear; rust or other corrosion, decay, deterioration, hidden or latent defect in the property that causes it to destroy itself; and mechanical breakdown, including rupture or bursting caused by centrifugal force.

As for the coverage for valuable papers and accounts receivable that MS JS 01 offers, the endorsement notes that the exclusions section of CP 10 30 does not apply except for certain exclusions.

The exclusions that apply to valuable papers and accounts receivable coverage are as follows: governmental action; nuclear hazard; war and military action; computer-related losses; computer advice or consultation; continuous or repeated seepage or leakage of water; water and other liquids that flow from plumbing or air conditioning equipment; weather conditions; acts or decisions of any governmental body; and faulty, inadequate, or defective design, workmanship,, maintenance, or materials used in repair or construction of part or all of any property on or off the described premises.

The exclusions that apply just to accounts receivable coverage are as follows: loss or damage caused by or resulting from alteration, falsification or destruction of records of accounts receivable done to conceal the wrongful giving or taking of money, securities, or other property; loss or damage caused by or resulting from bookkeeping, accounting, or billing errors; any loss or damage that requires any audit of records or any inventory computation to prove its factual existence.

MS JS 01 does offer an additional coverage extension for property in transit. The coverage for loss or damage is increased to $10,000 from the $5,000 offered under CP 10 30.

Changes to the CGL Form

The Commercial General Liability (CGL) form is changed by MS JS 01 in several sections of the form.

An insuring agreement applying to the work of the named insured is added to the coverages section of the CGL form. MS JS 01 offers to reimburse the named insured for property damage claims directly arising from the named insured's work for a client. The amount of such reimbursement is limited as described in the limits of insurance section. This insurance applies only under the following conditions: the work was done by the named insured or an employee with the express knowledge of the insured, the work was done during the policy period, the named insured reasonably determines that payment is necessary, and the named insured has received a notarized notification if a demand for remuneration from the client within ninety days after the work was performed.

The following exclusions are added to the exclusions section of the CGL form. The insurance under MS JS 01 does not apply to the named insured's work performed at any location owned by, rented, or leased to the insured. The coverage does not apply to work performed by a subcontractor. MS JS 01 does not apply to property damage that is excluded under the bodily injury and property damage liability section (coverage A) of the CGL form.

The following is added to the limits of insurance section of the CGL form. The most that the insurer will reimburse the named insured for the sum of all damages covered under the previously described insuring agreement is $5,000 in any one occurrence and $10,000 in any annual period.

The duties in the event of a claim clause of the CGL form is changed for the work of the named insured coverage. The named insured must notify the insurer as soon as possible of the notification from the client of a demand for remuneration for property damage resulting from the named insured's work. The notice to the insurer has to include the following: a notarized letter from the client; the names and addresses of the clients; a written description of how the event occurred; and a cancelled check or money order written to the client. The named insured also has to give the insurer a complete inventory of the damaged and undamaged property. And, of course, the named insured has to cooperate with the insurer in the overall review of the reimbursement request.

Definitions

Client. A client is an individual, company, or organization with whom the named insured has a written contract or work order for janitorial services for a described premises. The insured should also have billed the client for his services.

Client's premises. This means the interior of that portion of any building the client occupies in conducting its particular business.

Computer. A computer is programmable electronic equipment used to store, retrieve, and process electronic data. A computer includes component parts and associated peripheral equipment that provides communication but does not include electronic data and media.

Counterfeit money. This means an imitation of money that is intended to deceive and to be taken as genuine.

Employee. An employee is any natural person while in the service of the named insured (and for thirty days after termination of service) who is compensated directly by the named insured and over whom the named insured has the right to direct and control while performing janitorial services. Temporary substitute workers are also considered employees while subject to the direction and control of the named insured while performing services for the named insured.

The 2013 form revision expanded this definition considerably, adding that the thirty days after termination provision does not apply if the employee was terminated due to theft or any other dishonest act. Others added to the definition are leased employees; former employees who become consultants; interns or guest students; employees from mergers and consolidations; and managers, directors, and officers while performing certain duties.

Forgery. A forgery is the signing of the name of another person or organization with intent to deceive.

Manager. A manager is a person serving in a directorial capacity for a limited liability company.

Member. The 2013 revision added this definition, in relation to the section pertaining to employee dishonesty, which means an owner of a limited liability company represented by its membership interest. A member may also serve as a manager.

Money. Money is currency, coins, and bank notes in current use and having a face value. Travelers checks, register checks, and money orders are also considered money.

Other property. This is any tangible property other than money and securities that has intrinsic value but that does not include any property excluded under MS JS 01.

Securities. Securities are negotiable and nonnegotiable instruments or contracts representing either money or other property. This includes food stamps, lottery tickets, tokens, revenue and other stamps, and evidences of debt issued in connection with a credit card.

Theft. Theft means the unlawful taking of money, securities, or other property to the deprivation of the client.

Endorsements

MS JS 02. This endorsement is for equipment breakdown protection coverage. and applies to direct loss of or damage to covered property at the described premises that is caused by or results from a mechanical breakdown or electrical failure to pressure, mechanical, or electrical machinery and equipment. This coverage is akin to boiler and machinery coverage and, in fact, MS JS 01 refers to the exclusions on the cause of loss form that relate to explosion of steam boilers.

MS JS DS. This endorsement is the supplemental schedule for the Janitorial Services Coverage Form. The schedule is used in conjunction with the declarations pages of the CGL form and the Building and Personal Property Coverage Form. MS JS DS 03 05 allows for the insured to choose a specifically described limit of insurance to apply to the following coverages: money and securities, money orders and counterfeit money, forgery or alteration, outdoor signs, employee dishonesty, personal effects and property of others, valuable papers and records, property off-premises, accounts receivable, property in transit, and an all-encompassing item named “other.” MS JS DS also has a space for the insured to list his chosen deductible for the equipment breakdown protection coverage offered by MS JS 02.