Are 1,200 sign locations considered"premises the named insured owns, rents or controls AND to whichthe insurance applies" for purpose of liability coverage under theBOP form. (Photo: Shutterstock)

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Question:The insured has a business owners policy (BOP) covering oneoffice location listed in the "premises information" schedule; therisk is a "Trust". Their business is placing "informational" signsalong toll roads across Pennsylvania on behalf of the PA Departmentof Transportation.

Maybe you have seen thesetypes of signs? They can be seen in almost every state. Asyou approach an exit on a toll road, there are blue signsthat will show that there is a "McDonald's," or a "SheetsConvenience Store," or a "Campground" located near theexit.

The insured is responsiblefor the construction of any and all new signs. They maintain allcurrent signs and take down any signs, as needed. There arecurrently 1,200 signs in place. All work is subbed out. The trustis just an office in Harrisburg, Pa. They have no employees just aboard of directors. The office work and accounting work is done byindependent contractors.

The BOP policy includesendorsement BP 04 07 07 13, "Additional Insured – State orGovernmental Agency – Permits or Authorizations Relating toPremises." I am getting hung up on the language in the endorsement,which states, "premises the named insured owns, rents or controlsAND to which the insurance applies." I would think that the 1,200sign locations would be considered a "premises the named insuredcontrols." My issue is that the current BOP policy does not list/orschedule any of the 1,200 sign locations. It only lists/schedulesthe office location. Does this endorsement automatically extend theliability coverage under the BOP to include the 1,200 signlocations?

Given the info above, isthere liability coverage under the BOP for the "named insured" atthese 1,200 locations? Would these locations be considered "namedinsured operations," and therefore, be covered under Section II,Liability Coverage, despite the fact the 1,200 locations are not"scheduled" on the policy?

—Pennsylvania Subscriber

Answer: Yourquestion is whether the 1,200 sign locations are "premises thenamed insured owns, rents or controls AND to which the insuranceapplies" for purpose of liability coverage under the BOP form, BP00 03 07 13. The insured is a Trust, which according to thestandard definition of Merriam-Webster includes, "a propertyinterest held by one person for the benefit of another…" By thisdefinition, the insured has a property interest in the 1,200 signlocations. The insured's operations are to construct, maintain, andservice signs on behalf of the PA DOT. By this description, theinsured is the contractor, and they subcontract out all work ateach of the sign premises.

The liability coverage under theBOP form would indeed apply to the sign locations, with coverageapplying to bodily injury or property damage due to occurrences that takeplace in the coverage territory. 

However, the exclusions in theform will also apply. For example, exclusion k. Damage to Property,paragraph (5) excludes property damage to that particular part ofreal property on which you or any contractor or subcontractorworking directly or indirectly on your behalf is performingoperations, if the "property damage" arises out of thoseoperations; or (6) that particular part of any property that mustbe restored, repaired or replaced because "your work" wasincorrectly performed on it. Paragraph (6) does not apply to"property damage" included in the "products-completed operationshazard".

Exclusion m. Damage to Your Workexcludes damage arising out of the insured's work, except if thatwork was performed on the insured's behalf by asubcontractor.

However, attachment ofendorsement BP 04 07 07 13 supersedes the coverage in the BOP formwith respect to these 1,200 sign locations. This endorsementapplies to the insured's operations performed by the insured or ontheir behalf for which the state or subdivision has issued apermit. The insurance applies only when the state, governmentalagency or subdivision, or political subdivision has issued a permitor authorization in connection with premises the name insured owns,rents, or controls and to which the insurance applies. Therefore,the 1,200 sign locations are covered for the hazards listed in theendorsement, as follows:

Only the following hazards are covered: the existence,maintenance, repair, construction, erection, or removal ofadvertising signs, awnings, canopies, cellar entrances, coal holes,driveways, manholes, marquees, hoistaway openings, sidewalk vaults,street banners or decoration, or similar exposures; theconstruction, erection, or removal of elevators; or the ownership,maintenance, or use of any elevators covered by the insurance.

Further, some states haveanti-indemnification laws, which prohibit provisions inconstruction contracts that require a party to indemnify anotherparty against liability for such other party's own fault ornegligence. Therefore, the endorsement states that insurance isprovided only to the extent permitted by law.

The endorsement also states thatif coverage provided to the additional insured is required byagreement or contract, the insurance provided will not be broaderthan what is required by the agreement or contract. The most theinsurer will pay is the amount required by the agreement orcontract or the policy limits, whichever is less. The endorsementwill not increase the applicable limits of insurance in thedeclarations. 

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