Summary: The Mutual Service Office, Inc. (MSO)'s Businessowners policy (BOP) is a package policy offering property and liability coverage for certain groups of commercial insureds. MSO offers several versions of the BOP. Form BU 04 01 01 10, analyzed here, offers two perils options: Basic Plus Coverage provides open perils coverage on the building and named perils coverage on business personal property. Expanded Coverage provides open perils coverage on both buildings and personal property. MSO also offers Form BU 04 02, not analyzed here, which provides named perils coverage on both buildings and personal property.

The cornerstone of the MSO BOP is a thirty-page booklet that includes in a single document all primary property and business interruption coverages, both causes of loss property options, liability coverage, and the applicable policy definitions and conditions. Several commonly used endorsements, such as water backup coverage, are preprinted in the body of the policy, thereby eliminating the need for separate attachments; each of these endorsements can be triggered simply by listing the endorsement number in the Declarations. MSO refers to these options as "trigger endorsements," but the form itself does not refer to these options as "endorsements

In contrast to other insurance forms that provide incidental coverages as exceptions to exclusions, MSO uses "pure exclusions" and shows the "exceptions" as supplemental coverages. Consequently, MSO's exclusions tend to be shorter, and the list of supplemental coverages tends to be longer, when compared with other BOPs.

Topics covered:

Eligibility – occupancies

Ineligible classes of business

Part I A – main property coverages

Coverage A – buildings

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Part I C – losses insured

Part I D – property exclusions/limitations

Part I E – losses not insured

Part I F – optional coverages

Part I G – special part I conditions

Eligibility—Occupancies

 The MSO Businessowners form, like other BOPs, is directed at main street commercial insureds. Over seventy-five specific eligible classes are listed in MSO's Businessowners Manual; individual insurers' eligibility requirements may vary, of course. Eligible risks within acceptable classes are subject to certain size limitations:

 Apartments/condominiums may not exceed sixty units per complex, but they may include office and mercantile/service occupancies.

 Mercantile/service occupancies up to 25,000 square feet are eligible.

 Offices up to 100,000 square feet are eligible, and they may include up to 25,000 square feet of mercantile/service occupancy.

 Light mixed commercial/industrial occupancies may not exceed 25,000 square feet.

Ineligible Classes of Business

 Ineligible risks include auto dealers or service; bars, grills, restaurants, or commercial cooking exposure; contractors or rental equipment dealers; occupancies that include manufacturing or processing activities; offices of credit or financial institutions, places of amusement, most wholesalers, and apartments with fewer than five units.

 Your Policy Includes:

•The Declarations Page, describing

•You and Your Business

•The Locations Covered

•The Applicable Coverages

•The Applicable Limits of Liability and Deductible

•Who We are and Your Insurance Representative

•The Declarations Supplement, describing

•Special Limits of Liability

•Certain Special Conditions of Coverage

•This Businessowners Form – BU 04 01

•The policy may also include other endorsements.

 Analysis

 A complete MSO Businessowners policy may include only three documents: the Businessowners Policy Declarations, the Declarations Supplement, and the thirty-page Businessowners Form.

 In the Businessowners Policy Declarations, a schedule identifies each described premises. For each listed location, it contains entries that indicate the dollar limits and property coverages that apply under the property coverage, Part I. Another entry shows the limits of liability that apply to Part II (liability).

 Endorsements and forms that are made a part of the policy are listed in another section of the Declarations. Several common endorsements are preprinted in the form, and these endorsements are triggered by entering the applicable endorsement number in the Declarations; there is no need to attach a separate document.

 The Declarations Supplement (BU 04 03) includes a list of standard policy dollar limits or factors (multipliers) for each of the form's supplemental coverages. For example, the building code/law coverage factor of 0.10 indicates that 10 percent of the Coverage A (Buildings) limit is available for this supplemental coverage. Many of these dollar limits or factors can be changed by entering a different limit or factor in the Declarations Supplement. The Declarations Supplement can also indicate whether a supplemental coverage applies to one or more specific locations. The Declarations Supplement also contains dollar sublimits for property subject to limitations. Liability limits for fire and explosion liability and personal injury/advertising injury are also indicated.

While the beginning of the policy includes directions about defined terms in the glossary, it also specifies that any terms not found in the glossary or definitions section are to be taken at their relevant conventional definition based on consideration of the context in which they are used. This is simply making it clear that common understanding is to be used when a term is not specifically defined.

 Part I A – Main Property Coverages

 Coverage A – Buildings

 This agreement covers the following property at the described premises for which a limit of liability is shown for Coverage A, subject to all applicable provisions in this policy.

A.Buildings (buildings include related structures such as garages, storage and similar outdoor structures) owned by you and usual to your business/operations as described.

B.Additions under construction.* Alterations or repairs.

Completed additions.

C. Equipment, fixtures and machinery, that are permanent parts of such structures. For example, air conditioning systems, elevators, and heating systems.

D.Outdoor yard fixtures. For example, fences, flag poles, and lamps.

E.Supplies and materials for use in alteration, construction, or repair of such property.*

If a special limit for such property is shown in the Declarations Supplement, loss caused by theft is only covered up to that limit.

*If covered by other insurance, such are covered in this policy only on an excess basis.

 Analysis

 Building coverage includes any buildings or structures (and their completed additions) at a location shown on the declarations page with a dollar limit for "buildings." It does not matter whether the additions are in place when the policy is written or if they are added later. Coverage also applies to alterations and repairs in progress.

 The form covers any additions under construction, as well as related building equipment, fixtures, materials, and supplies, on a primary basis if no other insurance exists for the project. If other insurance exists, coverage applies on an excess basis.

 The building/structures coverage includes coverage for equipment, fixtures, and machinery that is a permanent part of the structure. This category specifically includes, but is not limited to, HVAC systems and elevators.

 Coverage disputes occasionally arise over the meaning of "permanent." "Permanent" means "continuing or enduring without fundamental or marked change; stable" (Merriam-Webster's Collegiate Dictionary). Fixtures are things that are permanently attached to the building and cannot be removed without affecting either the value or the aesthetics of the structure, and they can include everything from intercoms and public address systems to permanently installed blinds, drapery fittings, or hardware.

 The form also specifically includes outdoor yard fixtures as building property. While the policy includes a few examples—fences, flag poles, and lamps—these are not an exhaustive list. Further examples might include parking stops, mailboxes, and in-ground sprinkler systems (but underground pipes are excluded, as discussed later).

 A separate paragraph states that the Declarations Supplement may include a separate theft sublimit for supplies and materials for use in alteration, construction, or repair of the covered building.

 Coverage B – Business Personal Property