The COP-100 form is constructed somewhat differently from the Insurance Services Office (ISO) forms. The definitions are followed by building property covered and not covered; personal property covered and not covered; property not covered in general; coverage extensions; supplemental coverages; supplemental marine coverages; perils and exclusions; limitations; other coverages; loss conditions; valuation; loss payment; and general policy conditions.

In the insuring agreement, the insurer provides the coverage as described if the insured pays the premium. The declarations, since they may show any additional endorsements, become an important part of the policy.

The COP has many definitions that must be understood prior to determining coverage under the policy. Some are similar or identical to those found on other property policies, such as “you” and “your;” “we,” “us,” and “our”; “surface water”; “limit”; “rents”; “schedule of coverage”; “securities”; “sinkhole collapse;” “terms”; “theft”; and “volcanic action.”

1.     Accident—is what the policy covers equipment against. Accident includes mechanical breakdown, rupturing, and electrical arcing. Equipment covered includes steam boilers and pipes; turbines; and hot water boilers and heaters.

2.     Business—the operations of the insured, including rents if the described premises is rented to someone else.

3.     Computers—hardware owned or in the control of the insured and software.

4.     Computer hacking—another coverage provided by the COP. It includes unauthorized entry into a computer, a computer network, or a Web site (including denial of access to the site). The entry may be by employees or nonemployees.

5,     Computer virus—another coverage provided by the COP. A virus is a malicious code that results in damage to software or hardware or denial of access to a Web Site.

6.     Covered equipment—another coverage provided by the COP, in addition to buildings and personal property. The COP covers equipment that generates or utilizes energy or that operates under vacuum or pressure. The definition does not include: equipment that the insured manufactures or buildings that house the equipment; computers; and motor vehicles.

7.     Covered location—is any location where the insured has buildings or business personal property covered by the policy. The insured may choose to schedule locations, in place of the blanket coverage provided by the policy.

8.     Data—the information stored on media.

9.     Dependent locations—are operated by others, but the insured's business depends on them. They may be suppliers or purchasers.

10.     Fine arts—are “bona fide” works or art or rarity.

11.     Hardware—computer hardware.

12.     Media—where data is recorded, such as films, tapes, and discs.

13.     Mobile equipment—contractors equipment; vehicles that carry other equipment; and vehicles designed for road use, but not licensed.

14.     Money—includes money orders held for sale.

15.     Off-site server—a server for the insured's Web Site that is operated by someone else.

16.     One accident—all accidents resulting from the same occurrence.

17.     Perishable stock—personal property that the insured maintains under controlled conditions and that may suffer loss or damage if those controlled conditions change.

18.     Pollutant—very similar to ISO's definition, but includes electrical and magnetic emissions.

19.     Programs and applications—software purchased by the insured for his operations.

20.     Proprietary programs—are those that the insured developed or had developed.

21.     Restoration period—the first part is very similar to ISO's definition. However, it also includes time to restore property of a utility or landlord; an of-site server; or property in transit.

22.     Specified perils—an important definition, because some losses are limited to those from the specified perils: aircraft; civil commotion; explosion; falling objects; fire; hail; leakage from fire extinguishing equipment; lightning; riot; “sinkhole collapse”; smoke; sonic boom; vandalism; vehicles; “volcanic action”; water damage; weight of ice, snow, or sleet; and windstorm.

23.     Spoilage—any detrimental change to perishable stock.

24.     Valuable papers—any documents or other records that are inscribed, printed, or written.

The definitions reflect much of the coverage provided in the COP—computer breakdown; sinkhole collapse; fine arts; mobile equipment; rents; and valuable papers and records, for example. Note that covered locations are any location or premises where the insured has building property or business personal property. If the insured wishes, he may change the policy to reflect coverage only at scheduled locations.

The definition of mobile equipment encompasses virtually all equipment other than vehicles licensed for road use. The equipment may be of a mobile or movable nature. It may also be the means by which such equipment is moved or transported, such as a flat-bed truck to which a crane is attached. The final type of mobile equipment is that which may be licensed for road use, but the insured chooses to keep it on premises only, such as a trailer that serves as an office.

The COP includes the following as building property. Remember that the COP provides coverage at any covered location, with the need to specify the particular building. In addition to buildings and structures, the COP covers:

1.     Completed additions.

2     Fixtures, machinery, and equipment which are a permanent part of a covered building or structure.

3.     Outdoor fixtures.

4.     Personal property that the insured owns and uses for maintenance or service of a covered building or structure. The definition includes, but is not limited to: air-conditioning equipment; fire extinguishing apparatus; floor coverings; and appliances for refrigerating, cooking, dish washing, and laundering.

5.     Buildings and additions to buildings under construction (unless insured elsewhere, such as a builders risk policy). This includes coverage for building materials.

6.     Building glass.

7.     Radio and TV antennas.

8.     Signs.

9.     Foundations of buildings.

Note that this coverage is broader than in the AAIS commercial property form. That form only provides $1,000 of coverage for items seven and eight. Also, the COP covers building foundations, while the AAIS property form only covers foundations above ground level.

While the property policy just talks about all property that is either limited or not covered, the COP breaks this element into sections for building and personal property.

The COP says the following are not covered as building property. Note that some coverage is given back later in the policy.

1.     Pilings, piers, wharves, docks, or retaining walls.

2,     Underground pipes, flues, or drains.

3.     Bridges, walkways, roadways, and other paved surfaces.

The COP provides blanket business personal property coverage for the insured's BPP and the property of others, at any covered location as opposed to the property policy requirement that the property be located on the described premises. Remember that covered locations do not need to be enumerated for coverage to exist. Like the property policy, the COP also covers property leased by the named insured.

The COP also provides the following BPP coverages that are broader than the property form:

1.     The amount of the insured's labor, material, and services in the property of others.

2.     Computers.

3.     Personal property and property of others that will become part of an installation (thus, the inclusion of installation floater coverage).

4.     Mobile equipment.

The first thing specified as not covered is the insured's off-site server. Even though this may be property of others, it is not an exposure picked up by this policy.

The following are not covered, except as described in the supplemental marine coverages:

1.     Personal property in transit.

2.     Fine arts.

3.     Computers while away from a covered location.

4.     Property while temporarily on display or exhibit.

5.     Samples of the insured's stock.

6.     Duplicate or back-up software.

The COP lists the following as general types of property not covered:

1.     Airborne or waterborne property, unless it is being shipped via a regularly scheduled airline or ferry service.

2.     Aircraft or watercraft. However, the policy does cover these items held for sale.

3.     Animals, except those that the insured owns and holds for sale; or the animals of others being boarded by the insured.

4.     Automobiles and vehicles, except those that the insured manufactures, processes, or warehouses. Unlike the property policy, the COP does cover mobile equipment.

5.     Checked luggage. The COP provides no coverage for the theft of laptops or other portable computers from checked luggage.

6.     Contraband.

7.     Cost of excavation. Note that only the cost of excavation is not covered. The policy does pay for loss to covered property below the surface of the ground.

8.     Crops outside of buildings.

9.     Exports and imports. The COP does not cover these items if they are covered on another ocean marine policy.

10.     Land, water, and growing crops.

11.     Money, securities, accounts, and valuable papers.

12.     Outdoor trees, shrubs, plants, or lawns.

Note that items 11 and 12 contain the caveat, “except as provided for elsewhere.”

13.     Property more specifically insured. But the COP does cover any excess above that due from the more specific coverage.

14.     Property of others. But the only type not covered is that for which the insured is a carrier for hire or for which the insured has arranged transportation.

15.     Property the insured has sold. Other than property sold under an installation agreement.

The AAIS COP provides the following coverage extensions. The policy provides a basic limit of coverage, but the insured may purchase a higher limit. In that case, the higher limit is shown on the declarations.

1.     Consequential loss. Covers the loss in value of an undamaged product that becomes unmarketable. The loss of marketability must be caused by physical loss to another part of the product by a covered peril.

2.     Debris removal. Like the property policy, the COP pays up to 25 percent of the amount of coverage (included in the limit) to remove the debris of covered property in the event of a loss. If the amount of debris removal expense exceeds this 25 percent or if the total of direct loss and debris removal exceeds the limit of liability, the COP provides up to $50,000 additional for debris removal. The property policy provides an additional $5,000.

3.     Emergency removal. If property must be moved or stored to protect it from a covered peril, the COP covers that property for any loss for up to 365 days. The property policy provides the same coverage for 10 days.

4.     Emergency removal expenses. The COP provides $5,000 for such expenses. The property policy has no equivalent coverage.

5.     Fraud and deceit. The COP pays up to $5,000 if the insured is tricked into parting with covered property. The property policy has no equivalent coverage.

6.     Damage from theft. If the insured is a tenant, the COP covers damage to the building from a theft or attempted theft of the insured's personal property. This coverage applies only if the insured's lease requires it.

7.     Off-Premises utility service interruption. The COP covers direct physical loss caused by an off-premises utility interruption. The limit of this coverage is $50,000.

The COP provides the following supplemental coverages:

1.     Brands or labels expense. Up to $50,000 to remove the labels from damaged property taken by the insurer.

2.     Expediting expenses. Up to $50,000 to expedite repair or replacement of damaged property.

3.     Fire department service charges. Up to $25,000. The property policy provides $1,000.

4.     Inventory and appraisal expense. Up to $50,000 for the expense of taking inventory and securing an appraisal of a loss. Public adjuster fees are specifically excluded.

5.     Ordinance or law (undamaged parts of a building), This coverage is included in the limit of liability. The property policy provides $5,000.

6.     Ordinance or law (increased cost, up to $100,000, to repair and cost to demolish and clear site). The property policy provides $5,000.

7.     Personal effects. Up to $15,000 for personal effects of the insured, officers, partners, or employees. The property policy provides $500 coverage.

8.     Pollutant clean-up and removal. The COP provides $15,000 for this coverage; the property policy provides no coverage.

9.     Recharge of firefighting equipment. Up to $50,000 in the COP; no coverage in the property policy.

10.     Rewards. The COP provides up to $10,000 for information leading to a conviction for arson, theft, or vandalism of covered property. The property policy does not have this coverage.

11.     Sewer backup and water beneath the surface. The COP provides up to $25,000 for this coverage. The property policy does not have this coverage.

12.     Trees, shrubs, and plants. The COP provides up to $50,000 for loss to these items from fire; lightning; explosion; riot or civil commotion; falling objects; or vandalism. The property policy provides $1,000.

13.     Underground pipes, pilings, bridges, and roadways. The COP covers these items for loss from a covered peril for up to $250,000.

The AAIS COP offers the following supplemental marine coverages, none of which are in the property policy:

1.     Accounts receivable. The COP provides up to $50,000 for losses as a result of direct damage to the insured's accounts receivable records. Included are the actual amounts due from customers; interest charges on loans prior to payment of the insurance; collection expenses; and other reasonable expenses incurred as a result of the loss to the accounts receivable records.

2.     Electrical or magnetic disturbance of computers. Included within the limit for this coverage, the COP covers physical loss to computers caused by electrical or magnetic disturbance. Such disturbance must result in the erasure of electronic records.

3.     Power supply disturbance of computers. The COP covers damage to computers from power supply disturbance such as interruption of power supply, power surge, blackout, or brownout.

4.     Virus and hacking coverage. The COP covers loss to the insured's computers, network, or Web Site caused by a virus or by hacking. This coverage is limited to $25,000 per occurrence and $50,000 per year.

5.     Fine arts. The COP provides $100,000 coverage for the insured's fine arts. In addition to covering these items at an insured location, the COP also covers them while:

a.     temporarily on display or exhibit away from a covered location; or

b.     in transit between a covered location and a location where the fine arts will be temporarily on display or exhibit.

6.     Off-premises computers. Up to $25,000 for direct loss to computers while away from a covered location.

7.     Property on exhibition. Up to $50,000 for damage to business personal property while on display or exhibition. The property must be at a location that the insured does not regularly occupy.

8.     Property in transit. Up to $50,000 for loss to such property under any of the following:

a.     Property sold by the named insured and rejected by the recipient because the property is damaged or when the recipient refuses to pay.

b.     When rejected shipments are in the course of return transit to the insured.

c.     When the insured accepts a bill of lading from a carrier that limits its liability to less than the value of the shipment.

d.     However, the policy does not cover loss to perishable stock due to breakdown of refrigeration equipment.

9.     Sales representatives samples. Up to $50,000 for loss to these items belonging to the insured or to others.

10.     Software storage. Up to $50,000 for direct loss to software that is stored in a separate building.

The COP covers property on an open perils basis, subject to the following exclusions:

1.     Ordinance or law. Except as provided in the supplemental coverage, above.

2.     Earth movement.

3.     Civil authority.

4.     Nuclear.

5.     War.

6.     Flood.

7.     Utility failure. Except as provided in the supplemental coverage, above. However, if utility failure results in a covered peril, that damage is covered. Note that this exclusion does not apply to computers, mobile equipment, and the supplemental marine coverages.

8.     Sewer backup and water below the surface. Except as provided in the supplemental coverage, above.

9.     Animal nesting, infestation, or discharge. However, resultant loss from a specified peril is covered.

10.     Collapse. Except as provided in the other coverage, described below.

11.     Computer virus or computer hacking. Except as provided in the supplemental coverage, above.

12.     Contamination or deterioration. However, resultant loss from a specified peril is covered.

13.     Criminal, fraudulent, dishonest, or illegal acts. Destruction by employees is covered, but theft is not.

14.     Defects, errors, and omissions. However, resultant loss from a covered peril is covered.

15.     Electrical currents. Resulting fire is covered.

16     Steam boiler explosion. Resulting fire or combustion explosion is covered.

17.     Increased hazard.

18.     Loss of use.

19.     Mechanical breakdown. However, resultant loss from a specified peril is covered. The exclusion does not apply to computers.

20.     Neglect.

21.     Pollutants. However, resultant loss from a specified peril is covered.

22.     Seepage of water or steam over a period of 14 days.

23.     Settling, cracking, shrinking, bulging, or expanding. However, resultant loss from a specified peril is covered. The exclusion does not apply to computers and mobile equipment.

24.     Smoke, vapor, or gas. The exclusion does not apply to computers and mobile equipment.

25.     Smog. However, resultant loss from a specified peril is covered. The exclusion does not apply to computers and mobile equipment.

26.     Temperature/Humidity. However, resultant loss from a specified peril is covered.

27.     Wear and tear. However, resultant loss from a specified peril is covered.

28.     Weather. However, resultant loss from a covered peril is covered.

29.     Voluntary parting. Except as provided under the coverage extensions.

The COP limits the following items:

1.     Accounts receivable. No coverage for errors in bookkeeping or accounting or for the discovery of a discrepancy that can only be proved via an audit or inventory computation.

2.     Animals. However, resultant loss to animals held for sale from a specified peril is covered.

3.     Boilers. However, loss to such equipment from fire or combustion explosion is covered.

4.     Contamination of perishable stock due to release of refrigerant.

5.     Furs. Coverage for theft is limited to $10,000 per occurrence.

6.     Glassware/fragile articles. However, resultant loss from a specified peril is covered.

7.     Jewelry, watches, and precious stones. Coverage for theft is limited to $10,000 per occurrence.

8.     Missing property. No coverage if the only proof is an inventory shortage. The exclusion does not apply to property in the custody of a carrier for hire.

9.     Personal property in the open caused by rain, snow, ice, or sleet. The exclusion does not apply to mobile equipment or to property in the care of a common carrier.

10.     Stamps, tickets, and/or letters of credit. Coverage for theft is limited to $5,000 per occurrence.

11.     Unauthorized or fraudulent transfer. Except as provided under the coverage extension.

12.     Valuable papers. No coverage for errors in copying or processing.

The COP offers the following other coverages:

1.     Collapse.

2.     Tearing out and replacing of a building due to loss by water, other liquids, steam, or molten material.

1.     Notice of loss. Prompt notice to the insurer is required.

2.     Protect property.

3.     Proof of loss. Must be filed within 60 days after the insurer's request.

4.     Examination under oath.

5.     Records.

6.     Damaged property. Must be shown to the insurer when requested.

7.     Volunteer payments. No voluntary payments may be made, except at the insured's expense.

8.     Abandonment.

9.     Cooperation.

The COP values most items at replacement cost. Note that the insured may not collect the replacement cost until the item has actually been replaced.

The COP also provides for the following valuation procedures:

1.     Actual cash value. May be chosen instead of replacement cost.

2.     Fine arts. Current market value.

3.     Glass. Safety glass will be used where required by law.

4.     Hardware. If the insured replaces the hardware, it will be covered at the cost of functionally equivalent hardware. If not replaced, the hardware will be valued at ACV. The insurer will pay no more than the reasonable cost to restore partially damaged hardware to its original condition.

5.     Software. Payment for programs and applications is based on the cost to install new ones from licensed discs. If the discs are lost, the payment is the cost to install the most recent edition from discs. Payment for proprietary software is based on the cost of reproduction from duplicate copies. If there are no duplicate copies, the value is based on the cost of research to reproduce the proprietary program. Payment for data records is based on the cost of reproduction from duplicate copies. Payment for media is based on the cost to replace with media of like kind and quality.

6.     Merchandise sold. Selling price less discounts.

7.     Manufactured stock. Selling price less all discounts.

8.     Pair or set.

9.     Loss to parts.

10.     Tenants improvements. Based on the unexpired portion of the lease.

11.     Valuable papers. Actual cash value.

12.     Accounts receivable.

The amount of the insurer's payment is based on several things:

1.     Insurable interest of the insured.

2.     Deductible.

3.     Earthquake period. 168 hours.

4.     The lesser of the amount determined or the policy limit.

5.     If more than one coverage applies to the loss, the insurer will pay no more than the actual claim sustained.

6.     If more than one policy applies to the loss, this policy shares pro-rata.

7.     Automatic increase. Limits are automatically increased by the percentage shown on the declarations page.

1.     The insurer's options. The insurer may pay the value of the lost or damaged property; may pay the cost of repair or replacement; may rebuild or repair the property; or may take the property at an agreed value.

2.     The insured's losses will be adjusted with the insured.

3.     Losses to the property of others may be paid either to the insured on behalf of the owner or directly to the owner.

The COP contains the following other conditions:

1.     Appraisal.

2.     Benefit to others. The COP only benefits the named insured.

3.     Conformity with statute.

4.     Control of property. Coverage is not affected by acts out of the insured's control.

5.     Death of the named insured.

6.     Liberalization.

7.     Misrepresentation, concealment, or fraud. These result in the voiding of the policy.

8.     Policy period.

9.     Recoveries.

10.     Restoration of limits. Except for some of the supplemental coverages, any payment does not reduce the limits available.

11.     Subrogation.

12.     Suit against the insurer.

13.     Territorial limits.

14.     Mortgage provisions.

15.     Vacancy-Unoccupancy. If the building is vacant or unoccupied for 60 consecutive days, there is no coverage for loss from theft, vandalism, or water damage. Payment for any other covered loss is reduced by 15 percent.

The following endorsements may be added to the COP:

1.     Scheduled Locations—as noted, the COP covers all locations on a blanket basis. The policy may be endorsed to cover each location on a scheduled basis using endorsements CO 1227 and CO 1052.

2.     Flood Coverage—both property and time element coverages may be extended to cover loss from flood. If the property is covered on a blanket basis, the form for flood coverage is CO 1223; if on a scheduled basis, forms CO 1223 and CO 1063 are used.

3.     Earthquake Coverage—both property and time element coverages may be extended to cover loss from earthquake. If the property is covered on a blanket basis, the form for earthquake coverage is CO 1221; if on a scheduled basis, forms CO 1221 and CO 1062 are used. A minimum deductible of $500 applies.

4.     Earthquake Sprinkler Leakage—both property and time element coverages may be extended to cover loss caused by earthquake sprinkler leakage. The endorsement is CO 1278. A minimum deductible of $500 applies.

5.     Property Excluded—the insured may choose to exclude certain types of property from coverage via endorsement CO 1228.

6.     Inflation Guard—the property limits may be increased by a certain percentage, that is indicated on the schedule of coverages. Inflation guard is not available to policies written on a reporting basis.

7.     Theft Exclusion—for a rate credit, theft coverage may be excluded via endorsement CO 1247.

8.     Stated Value—may be added to any property on the schedule, using endorsement CO 1254.

9.     Protective Devices—use endorsement CO 1238 and schedule CO 1065.

10.     Transit Backhaul—the insured may purchase coverage for the property of others that is shipped on the insured's vehicles with endorsement CO 1264.

11.     Functional Replacement Cost—instead of replacement cost, the insured may choose functional replacement cost for specific items of covered property. Attach endorsement CO 1279 and schedule CO 1077

12.     Off-Premises Utility Services Interruption—the COP provides up to $50,000 coverage for loss caused by any off-premises power interruption. For a rate credit, the insured may choose to limit this coverage to only a specific utility.

13.     Peak Season Increase—the amount of business personal property coverage may be increased to a given amount during a certain time frame with endorsement CO 1288.

14.     Overseas Transit and Location—the insured may choose to cover specific personal property while temporarily at a foreign location and while in transit to and from a foreign location. Only the following types of personal property are eligible for this coverage: personal effects, portable computers, property while on exhibit, and samples of stock in trade. The endorsement is CO 1282.

15.     Off Site Server and Interruption of Web site—the insured may extend the policy to cover property and/or income for an off site server that hosts the insured's Web site. The forms are endorsement CO 1285 and schedule CO 1071

16.     Installment Sales—the insured may purchase coverage for personal property that is sold under an installment sales plan while the property is in transit to the purchaser or after delivery to the purchaser.

The COP insured may also choose to add any or all of the following coverage parts:

1.     Spoilage.

2.     Time element.

3.     Equipment breakdown.

4.     Crime—employee fraud and dishonesty; money and securities.

The insured may add blanket spoilage coverage for perishable stock with form CO 1005. Scheduled coverage may be added via form CO 1004. Remember that spoilage is any detrimental change to perishable stock and that perishable stock is stock that must be maintained under controlled conditions. The coverage applies whenever perishable stock suffers loss from one of the following causes:

1.     The mechanical breakdown of covered equipment.

2.     The loss of refrigerant due to mechanical breakdown.

3.     The loss of refrigerant due to other causes besides mechanical breakdown.

4.     Power disruption caused by an accident to equipment owned by a utility that provides electrical power to the insured.

5.     Power disruption caused by conditions beyond the control of the insured.

While most of the exclusions in the spoilage coverage part are identical to those in the property part, two are unique to this part:

1.     Disconnection or deactivation—the policy does not cover spoilage that happens when the electricity to the covered equipment is merely turned off.

2.     Inability to provide sufficient power—there is also no coverage if a utility cannot generate adequate electricity. The exclusion applies whether the inability to provide electricity is due to a governmental order or mere lack of generating capacity on the part of the utility.

The insured may choose to have covered property valued at selling price. If selling price is not selected, then the valuation reverts to the terms of the COP property part. A separate deductible for spoilage is indicated. The insurer's payment is limited to the lesser of the following:

1.     The amount determined under the valuation provision.

2.     The cost to replace the damaged stock with material of like kind and quality.

3.     The spoilage limit of liability.

If the insured has indicated that he has a refrigeration maintenance or service agreement, he must notify the insurer if that agreement is terminated. If the insured does not make such notification, the spoilage coverage does not apply. However, this condition does not apply if the spoilage is caused by power failure or fluctuation away from a scheduled location.

The income coverage part for the COP covers the insured's loss of income due to damage to property at a covered location from a covered peril. The insured may choose among the following options:

1.     Earnings, rents, and extra expense.

2.     Earnings and extra expense.

3.     Rents and extra expense.

4.     Extra expense only

The income coverage part contains the following unique coverages:

1.     Computer virus and hacking—covers loss of income (up to $25,000 per occurrence with an annual limit of $75,000) if a virus or hacking causes direct damage to computers, the insured's network, or the insured's Web site. The coverage also applies if the virus or hacker denies access to or services from the insured's computer, network, or Web site.

2.     Dependent locations—if the insured's business in interrupted by loss at a dependent location, the policy pays up to $100,000 for loss of income.

3.     Off-premises power interruption—up to $10,000 for loss of income due to off-premises power outage caused by direct damage from a covered peril to the property of a utility supplier.

4.     Pollutant cleanup and removal—if a loss at a covered location requires the insured to engage in pollutant cleanup and removal, the income lost during that cleanup period is covered for up to $25,000.

5.     Contract penalty—if the insured cannot meet a contractual obligation due to a covered loss, the policy pays up to $25,000 per occurrence and $100,000 per year. The loss must be to covered property at a covered location.

6.     Property in transit, on exhibition, or in the custody of sales representatives—if the insured's property sustains covered loss while it is in transit, on exhibition, or in the custody of a salesperson, the policy provides up to $10,000 for loss of income.

The equipment breakdown coverage part pays for loss to covered property (as described on the COP property part) from an accident to certain types of equipment that generates or utilizes energy or that operates under vacuum or pressure. The equipment breakdown coverage part provides the following coverage extensions:

1.     Business income and extra expense.

2.     Expediting expenses.

3.     Damage to property from pollutants.

4.     Ordinance or law.

5.     Off-premises power interruption.

6.     Defense costs.

Even if the insured purchases this coverage, it still does not cover spoilage of perishable stock from an accident. The insured must still purchase spoilage coverage. See above.

Under the equipment breakdown coverage, damaged property is valued as follows:

1.     Replacement cost, unless otherwise indicated in the COP property part.

2.     The extra cost to replace damaged equipment with equipment that is “better for the environment, safer for people, or more energy efficient” than the damaged equipment. This coverage is limited to 125 percent of what the insurer would have spent to replace the damaged equipment with like kind and quality.

3.     Equipment utilizing CFC refrigerants—if damaged equipment utilizes CFC refrigerants (older types), this coverage part pays the lesser of the following:

a.     The repair or replacement of the equipment and any lost CFC refrigerant.

b.     The cost to retrofit the damaged equipment so that it may use non-CFC refrigerant and the cost to charge the equipment with non-CFC refrigerant.

The crime coverage part covers loss to money, securities, and other property. Covered property includes both the insured's property and the property of others.  The loss must be caused by employee dishonesty or other fraudulent acts. Such acts include theft, computer fraud, and forgery or alteration. The crime part also covers money and securities for loss from theft, disappearance, or destruction.

The crime part offers the following coverage extensions:

1.     Employee fraud and dishonesty, outside the coverage territory—such acts are covered if the property is outside the coverage territory for no more than 90 days.

2.     Money and securities, conveyance by armored vehicle—the policy covers money, securities, and other property belonging to the insured or others, while it is in the custody of an armored car company. The policy pays only what the insured cannot collect under its contract with the armored car company or from that company's insurer.

AAIS also has designed a commercial output policy for the largest commercial accounts that builds on the COP; the extension is called COP XL. This policy may be issued as a monoline policy or packaged with other coverage forms. Built into the COP XL is coverage for building, business personal property, computers, and equipment breakdown; building and business personal property coverages are covered on a blanket basis. Optional coverage parts are available, as well as endorsements to further modify coverage. The COP XL program includes four basic coverage forms. They are: property and equipment breakdown coverage part; crime coverage part; spoilage coverage part; and income coverage part.

The COP XL program is available to manufacturing, institutional, industrial, or commercial operations and may be written for individuals, partnerships, or corporations. Ineligible operations are electrical generating stations and natural gas companies. Eligible risks are also subject to the following criteria: total insured values must be in excess of $10 million; total annual gross revenues must be in excess of $10 million; total premiums must be $5,000 or more for property insurance, $10,000 or more for general liability insurance, or $15,000 or more for multi-peril insurance; four or more locations; or one or more locations outside the United States.

The COP XL covers property usual to a large operation, such as building property and additions, permanently installed equipment and fixtures, and signs and building glass. The policy also covers foundations, piers, and underground pipes—items normally excluded in standard commercial property coverage forms. There is coverage also for business personal property, including leased property, computers, mobile equipment, property of others, and installation risks. Tenants improvements and betterments are covered as well.

The coverage extensions and supplemental coverages are numerous. Among them are $100,000 for accounts receivable; $100,000 for brands or labels; $100,000 for overseas transit and location coverage; and $100,000 for property on exhibition. Debris removal is covered for 25 percent of the amount paid for direct physical loss, plus an additional $100,000 when the debris removal expense exceeds the 25 percent or when the loss plus the debris removal exceeds the limit of liability.

Crime coverage may be added on either a discovery—that is, the loss must be discovered during the policy period—or on a loss sustained basis—the loss must occur during the policy period. Both crime forms cover loss resulting from computer and telecommunications fraud. Both crime forms contain coverage extensions, such as employee fraud and dishonesty and forged or altered checks. Both crime forms have supplemental coverage for inventory fees and proof of loss expense.

Coverage for spoilage may be added on either a blanket or scheduled basis. When income coverage is included as part of the package, then both forms cover loss of earnings and/or necessary extra expenses incurred resulting from a loss covered under this coverage part.

Income coverage is the fourth of the coverage parts. The insured may elect coverage for earnings, rents, and extra expense; earnings and extra expense; rents and extra expense; or extra expense only.