Summary: The Insurance Services Office (ISO) value reporting form (CP 13 10 04 02) extends the business personal property coverage of the building and personal property and condominium commercial unit owners forms to include personal property at all reported, acquired, and incidental locations (but not fairs or exhibitions). Following is a discussion of the coverage provided by the form, and the endorsements that may be used with it.
Introduction
The value reporting form may be attached to the business and personal property coverage form or the condominium commercial unit-owners form. It allows an insured with business personal property that fluctuates in value to be protected at all times, and to pay a premium based on the values actually at risk. Periodic submissions of values are made in accordance with the option selected by the insured—daily, weekly, monthly, quarterly, or policy year. A provisional premium is charged at the beginning of the policy year, and adjusted in accordance with the reports made. If timely, accurate reports of values are made, automatic coverage is provided as values fluctuate. Coverage applies at “reported locations,” “acquired locations,” and “incidental locations”—defined terms discussed later.
Covered Property
A. ADDITIONAL COVERED PROPERTY
1. Covered Property is extended to include personal property at the following types of locations for which a limit of insurance is shown in the Declarations or on the Reported-Acquired-Incidental Locations Schedule:
a. ”reported locations”;
b. ”acquired locations”; and
c. ”incidental locations.”
2. The following is added to property not covered: Covered property does not include property at fairs or exhibitions.
Analysis
In describing the CP 13 10, the commercial lines manual (CLM) states that coverage may be written under the endorsement to apply to merchandise and stock (raw, in process, or finished), owned by the insured, business personal property owned by the insured, or personal property of others in the insured's care, custody, or control. Coverage may apply in one or more states on a specific or blanket basis. Certain property is not eligible for this form, notably property located at facilities owned or controlled by the insured and rated under one of the following schedules: petroleum properties, petrochemical plants, public utility electric generating stations or natural gas pumping stations. Also ineligible is property scheduled under a rating plan for highly protected or superior risks.
Reporting Requirements
B. REPORTING PROVISIONS
For Covered Property to which this endorsement applies:
1. Reports of Values.
a. You must file a report with us following each “reporting period” and at expiration, in accordance with b. or c. below, showing the values of Covered Property separately at each location. Each report must show the values that existed on the dates required by the “reporting period”; these dates are the report dates.
b. If this policy is a renewal of a value reporting form policy we previously issued, you must file a report with us within 30 days of the end of each 'reporting period' and at expiration.
c. If coverage was not previously issued by us on a value reporting form basis and:
(1) Reporting Period symbol DR (Daily), WR (Weekly) or MR (Monthly) is shown in the Declarations, you must:
(a) File the first report with us within 60 days of the end of the first “reporting period”; and
(b) File the second report with us within 30 days of the end of the second “reporting period”, concurrent with submission of the first report; and
(c) File each subsequent report with us within 30 days of the end of each subsequent “reporting period” and at expiration.
(2) Reporting Period symbol QR (Quarterly) is shown in the Declarations and the inception date of the policy falls in March, June, September or December, you must:
(a) File the first report with us within 60 days of the end of the first “reporting period”; and
(b) File each subsequent report with us within 30 days of the end of each subsequent “reporting period” and at expiration.
(3) Reporting Period symbol QR (quarterly) is shown in the Declarations and the inception date of the policy does not fall in March, June, September or December, you must file a report with us within 30 days of the end of each “reporting period” and at expiration.
(4) Reporting Period symbol PR (Policy Year) is shown in the Declarations, you must file a report with us within 30 days of the end of each “reporting period” and at expiration.
d. For properly at “incidental locations”, your reports must show separately the entire values in each state.
e. You may not correct inaccurate reports after loss or damage.
2. Full Reporting
The COINSURANCE Additional Condition is replaced by the following:
COINSURANCE
If your report of values for a location where loss or damage occurs, for the last “reporting period” before loss or damage, shows less than the full value of the Covered Properly at that location on the report dates, we will pay only a proportion of the loss. The proportion of loss payable, prior to application of the deductible, will not be greater than the proportion determined by:
(1) The values you reported for the location where the loss or damage occurred, divided by
(2) The value of the Covered Property at that location on the report dates.
b. For locations you acquire after the last report of values, we will not pay a greater proportion of loss, prior to the application of the deductible, than the proportion determined by:
(1) The values you reported for all locations, divided by
(2) The value of the Covered Property at all locations on the report dates.
Example of Under Reporting:
If: The values reported are $90,000
The actual values on the report dates were $120,000
The deductible is $ 250
The amount of loss is $ 60,000
Step a: $90,000 divided by $120,000 = .75
Step b: .75 x $60,000 = $45,000
Step c: $45,000 – $250 = $44,750
The most we will pay is $44,750. The remaining $15,250 is not covered.
3. Reports in Excess of Limit of Insurance
If the values you report exceed the Limit of Insurance:
a. We will determine final premium based on all the values you report, less “specific insurance”;
b. In the event of loss or damage, we will not pay more than the Limit of Insurance applicable to the Covered Property.
4. Failure to Submit Reports
If at the time of loss or damage you have failed to submit:
a. The first required report of values:
(1) We will not pay more than 75% of the amount we would otherwise have paid; and
(2) We will only pay for loss or damage at locations shown in the Declarations.
b. Any required report of values after the first required report:
(1) We will not pay more for loss or damage at any location than the values you last reported for that location; and
(2) We will only pay for loss or damage at locations reported in your last report filed before the loss.
5. Treatment of “Specific Insurance”
a. You must include the amount of all “specific insurance” in your reports of value.
b. We will subtract the value of “specific insurance” from your values when computing advance and final premium under this endorsement.
Example:
If: The value of the property is $400,000
The amount of “specific insurance” is $50,000
The Limit of Insurance under this form is $300,000
Your report of values should show:
Value of Property $400,000
Amount of “SpecificInsurance” $50,000
Difference $350,000
We will compute final premium based on the values in excess of reported “specific insurance” during the policy year.
c. Subject to all other applicable provisions of this policy, including the applicable Limit of Insurance, the most we will pay is that portion of the loss that exceeds the sum of (1) and (2) below:
(1) The amount due from “specific insurance', whether you can collect on it or not; plus
(2) The amount of any deductible applying to such “specific insurance”.
Examples
The following examples assume that the Reporting Provisions applicable to this form have been complied with.
If: the amount of the “specific insurance” is $50,000; the Limit of Insurance under this form is $300,000;
the Deductible applicable to the “specific insurance” is $5,000; and
the Deductible applicable to this insurance is $1,000;
we will determine the most we will pay as follows:
Example #1
(“Specific insurance” not subject to a coinsurance requirement.)
Amount of loss……………………………………………………………………………..$300,000
Deductibles
“Specific Insurance” $ 5,000
This insurance $ 1,000
Amount due from
“Specific Insurance” $50,000*
$56,000 ……. – $56,000
The most this insurance will pay………………………………………………………….$244,000
The most payable, combined, from the “specific insurance” and this insurance is $294,000 ($50,000 + $244,000). The remainder of the loss, $6,000, is not covered.
Example #2
(“Specific insurance” subject to 100% coinsurance requirement. Value of property at time of loss is $350,000.)
Amount of loss……………………………………………………………………………….$300,000
Deductibles
“Specific Insurance” $ 5,000
This insurance $ 1,000
Amount due from
“Specific Insurance” $37,900*
$43,900 ……. – $43,900
The most this insurance will pay………………………………………………………….$256,100
The most payable, combined, from the “specific insurance” and this insurance is $294,000 ($37,900 + $256,100). The remainder of the loss, $6,000, is not covered.
Example #3
(“Specific insurance” subject to 100% coinsurance requirement. Value of property at time of loss is $370,000.)
Amount of loss………………………………………………………………………………$360,000
Deductibles
“Specific Insurance” $ 5,000
This insurance $ 1,000
Amount due from
“Specific Insurance” $43.600*
$49,600 ……. – $49,600
$310,400
The most this insurance will pay is $300,000 (the Limit of Insurance).
The most payable, combined, from the “specific insurance” and this insurance is $343,600 ($43,600 + $300,000). The remainder of the loss, $16,400, is not covered.
* The amount due from “specific insurance” will vary based on such factors as the amount of loss, the value of property at time of loss, and the coinsurance requirement, if any, applicable under the policy providing “specific insurance”.
Analysis
The insured may choose from five reporting period options. These options are inserted on the declarations in place of a coinsurance percentage. This is not to say that no penalty could ever apply in event of a loss. The form makes it clear that if the report of values for a location where loss or damage occurs shows less than the full value of the covered property at that location on the report date, then the insurance company will pay only a proportion of the loss. The options, designated by use of a two-letter combination, are as follows:
1. DR (Daily)—reports must show values as of each day; but the reporting period ends on the last day of the month.
2. WR (Weekly)—reports must show values as of the last day of each week; but the reporting period ends on the last day of the month.
3. MR (Monthly)—reports must show values as of the last day of the month; and the reporting period ends on the last day of each month.
4. QR (Quarterly)—reports must show values as of the last day of each month; but the reporting period ends on the last day of March, June, September and December.
5. PR (Policy Year)—reports must show values as of the last day of each month; but the reporting period ends on the policy anniversary date.
Reports of values are submitted on form CP 13 60 10 00 and, if necessary, on supplemental form CP 13 61 11 85. Full actual cash values must be reported unless the policy provisions provide for another basis of loss settlement, such as replacement cost.
Values must be listed separately by location except that those at incidental locations must be grouped by state. If other “specific insurance” exists, its value must also be included on each report submitted. “Specific insurance” is defined as any other insurance covering the same property that is not subject to the same plan, terms, conditions, and provisions as the value reporting form.
Reports of values are required to be in the possession of the insurance company within 30 days of the end of the applicable reporting period. If inaccuracies are found in the filed reports after loss or damage has occurred, it is not permissible to submit corrections.
Loss Settlement
A 25% penalty applies to any payment for loss or damage if the insured fails to submit the first report due to the insurance company. In addition, payments are made only for loss or damage at locations shown in the declarations. Any acquired or incidental locations are not covered. In the event that any subsequent report is late, loss payments are calculated from the last values on file, and only the locations listed on the last report are covered.
Although full reporting is required, there is no virtue in over reporting. In event of loss or damage, the most that will be paid is the limit of insurance. Further, the final premium is based on all the values reported, less any “specific insurance.” The “specific insurance” must be included in the reports of value, but the calculation of advance and final premiums do not include the value of the “specific insurance.”
The form gives examples of how “specific insurance” impacts the amount payable in event of a covered loss. Note that the amount collectible from the ”specific insurance” varies depending on the amount of the loss, and the applicable coinsurance provision (if any) in the policy providing the “specific insurance.”
Premium Adjustment
C. PREMIUM ADJUSTMENT.
For Covered Property to which this endorsement applies:
1. The premium charged at the inception of each policy year is an advance premium. We will determine the final premium for this insurance after the policy year, or expiration, based on the average of your reports of value.
2. Based on the difference between the advance premium and the final premium, for each policy year, we will:
a. Charge additional premium; or
b. Return excess premium.
The due date for any additional premium is the date shown as the due date on the bill.
Analysis
The final premium is based upon the average values at risk at each location as indicated by the filed reports. Subject to the minimum premium, if the final premium is less than the provisional (deposit) premium, the excess is returned to the insured; if it is greater, an additional amount must be paid.
Since the provisions for the value reporting form provide that the final premium be determined at the end of each policy year, no separate endorsement is necessary for three year or continuous policies.
Definitions
D. DEFINITIONS
1. ”Acquired Locations” means any locations in the policy territory acquired after the inception of the coverage under this endorsement.
2. ”Incidental Locations” means any locations not shown in the Declarations, other than “acquired locations” and “reported locations”, with values of $25,000 or less.
3. ”Reported Locations” means any locations, other than those shown in the Declarations, that have been reported to us at the inception of the coverage under this endorsement.
4. ”Reporting Period” means the period of time for which new reports of value are due, as shown by a symbol in the Declarations. If the symbol is:
a. DR (Daily), reports must show values as of each day; but the “reporting period” ends on the last day of the month.
b. WR (Weekly), reports must show values as of the last day of each week; but the “reporting period” ends on the last day of the month.
c. MR (Monthly), reports must show values as of the last day of the month; and the “reporting period” ends on the last day of each month.
d. QR (Quarterly), reports must show values as of the last day of each month; but the “reporting period” ends on the last day of:
(1) March;
(2) June;
(3) September; and
(4) December.
e. PR (Policy Year), reports must show values as of the last day of each month; but the “reporting period” ends on the policy anniversary date.
5. ”Specific Insurance” means other insurance that:
a. Covers the same Covered Properly to which this endorsement applies; and
b. Is not subject to the same plan, terms, conditions and provisions as this insurance, including this endorsement.
Analysis
Many of these definitions—particularly the “reporting period” definitions—have been discussed above. Of note, however, is the definition of “incidental locations.” Locations with a value of $25,000 or less need not be shown in the declarations, but should be listed on endorsement CP 19 13 (see following). However, if the insured has failed to submit the first required report of values, then no coverage applies.
Although the definition of “reported locations” would appear to be at odds with the coverage provided under A.1.a., a reading of the commercial lines manual clarifies that this provision applies only when using multiple location average rating. Locations must be reported to the insurance company—whether “reported,” “acquired,” or “incidental”—for rating purposes.
Endorsements
Agricultural products storage endorsement CP 13 30 07 88 may be used with endorsement CP 13 10 to cover stocks of grain and other agricultural products at grain elevators or other storage locations. When grain or grain products are on the premises and are part of stock at a manufacturing, warehousing, processing or finishing plant, then the CP 13 10 may be used. “Grain products” includes rice, flax seed, beans, soybeans, seeds, or seed grain.
If not shown on the declarations, then endorsement CP 19 13 07 88, reported-acquired-incidental locations schedule is attached. If a limit of insurance applies to incidental locations, the insured must submit a signed statement showing all such values, as of the inception and each anniversary date of the policy, separately for each state.
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