Additional Coverages

MS PS 01 adds the following coverages to the building and personal property coverage form.

Money and Securities. The personal care services form will pay for loss of money and securities used in the business of the named insured while at the following locations: a bank or savings institution; within the living quarters of the named insured or a partner or employee having use and custody of the property; at the premises described in the declarations; or in transit between any of these places. The loss must be caused directly by theft (meaning any act of stealing), disappearance, or destruction. MS PS 01 will not pay for loss that results from accounting or arithmetical errors or omissions, loss due to the giving or surrendering of property in any exchange or purchase, or loss of property contained in any money-operated device (unless the amount of money deposited in it is recorded by a continuous reading instrument).

Unless different limits are shown in the declarations, the most to be paid for loss in any one occurrence is $10,000 for money and securities while in or on the described premises, or $5,000 for money and securities while anywhere else.

The named insured has to keep records of all money and securities so that the insurer can verify the amount of any loss or damage.

Fire Extinguisher Systems Expense. MS PS 01 offers two items of coverage here. The endorsement will pay for the cost of recharging or replacing the fire extinguishers and fire extinguishing systems if they are discharged on or within 100 feet of the described premises. And, the endorsement will pay for loss or damage to covered property is the loss or damage is the result of an accidental discharge from the fire extinguisher or system. In other words, MS PS 01 will pay for the damage caused by a fire extinguisher discharging to covered property, and then pay for recharging the extinguisher.

There is no coverage here if the fire extinguishing system is discharged during installation or testing.

The most that will be paid under this additional coverage is $5,000 in any one occurrence.

Reward Payment. MS PS 01 will reimburse the named insured for rewards paid as follows.

The policy will pay up to $5,000 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. The policy will pay up to $5,000 to an eligible person for the return of stolen covered property when the loss is caused by theft. However, there are limitations that apply to both these coverages.

The insurer will pay no more than the lesser of the following amounts: actual cash value of the covered property at the time of loss, but not more than the amount required to repair or replace it; or, the amount determined by the loss settlement procedure applicable to the covered property under the loss payment condition that appears on the building and personal property coverage form.

This additional coverage applies subject to some other conditions. No reward will be reimbursed unless and until the person committing the crime is convicted or the covered property is returned. And, the lesser of the amount of the reward or $5,000 is the most the insurer will reimburse for loss in any one occurrence.

Since this coverage pertains to rewards paid to eligible persons, that term needs to be defined. 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 of the criminal, or to the return of the stolen covered property. The following persons are not considered eligible persons under the terms of this policy: the named insured or family members; employees of the named insured or any 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; and of course, any person involved in the crime.

Money Orders and Counterfeit Money. The insurer will pay for loss resulting directly from the named insured accepting (in good faith and in exchange for merchandise, money, or services) money orders that are not paid upon presentation, or counterfeit money that is acquired during the regular course of business. The most that the insurer will pay in any one occurrence under this additional coverage is $1,500 unless a different limit is shown in the declarations.

Forgery or Alteration. MS PS 01 will pay for loss resulting directly from forgery or alteration of checks, drafts, promissory notes, or similar written promises, orders, or directions to pay a sum certain in money. This coverage is there when these items are made or drawn by or upon the named insured, or made or drawn by one acting as the agent of the named insured.

Coverage is there also if the named insured is sued for refusing to pay any instrument listed in the previous paragraph. The requirements for this coverage are that the refusal to pay is on the basis that the instrument has been forged or altered, and the insurer must give its written consent to defend against the lawsuit. The insurer promises to pay for any reasonable (not defined) legal expenses that the named insured incurs and pays in its defense.

Mechanically reproduced facsimile signatures are treated the same as handwritten signatures. And, a check now includes a substitute check as defined in the Check Clearing for the 21st Century Act and will be treated the same as the original it replaced.

The most the insurer will pay for any loss in any one occurrence, including legal expenses, is $2,500 unless a different limit is shown in the declarations.

Outdoor Signs. Outdoor signs are covered for direct physical loss or damage. The signs have to be 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 that the insurer will pay for the loss or damage to signs in any one occurrence is $5,000, unless a different limit is shown in the declarations.

The provisions of this additional coverage supersede all other outdoor signs coverage references in the building and personal property coverage form. In that form, outdoor signs that are not attached to the buildings are covered for loss due to fire, lightning, explosion, riot or civil commotion, or aircraft. And, the most that will be paid is $1,000. MS PS 01 makes the coverage for outdoor signs all risk and allows up to $5,000 in coverage limits.

Employee Dishonesty. The insurer will pay for direct loss of or damage to the business personal property of the named insured, and money and securities of the named insured resulting from dishonest acts committed by any employee. This is true no matter if the employee is acting alone or in collusion with other persons (except the named insured, partners, or managers). The employee has to have the manifest intent (not a defined term) to cause the named insured to sustain loss or damage, and also to obtain financial benefit.

There are several exclusions to this coverage.

MS PS 01 will not pay for loss or damage resulting from any dishonest or criminal act committed by the named insured, partners or members. Also not covered are dishonest or criminal acts committed by officers, managers, directors, trustees, authorized representatives, or anyone else to whom the named insured entrusts the property for any purpose.

MS PS 01 will not pay for loss or damage that is an indirect result of any act covered by the insurance policy. Examples of this would be inability to realize income that would have been realized had there been no loss of or damage to money or securities. Another example is payment of damages for which the named insured becomes legally liable. And still another example is the payment of costs, fees, or other expenses that the named insured incurs in establishing either the existence or the amount of loss.

The endorsement will not pay for expenses related to any legal action. And the endorsement will not pay for loss or damage, the only proof of which as to its existence or amount is one or both of the following: an inventory computation, or a profit and loss computation.

Finally, this additional coverage does not apply to loss caused by any employee after discovery by the named insured (or any partner, officer, director, trustee, or manager) of any dishonest act committed by that employee either before or after being hired by the named insured.

The most that will be paid under this additional coverage for loss or damage in any one occurrence is $10,000, unless a different limit for employee dishonesty is shown in the declarations. And, there is no accumulation from year to year under this policy; it pays only for loss or damage sustained through acts committed during the policy period. However, MS PS 01 will pay for covered loss or damage discovered no later than one year from the end of the policy period.

If the named insured discovers a loss during the policy period that he sustained during the period of any prior insurance, a loss that the named insured could have recovered under that insurance except that the time within which to discover loss or damage had expired, the current MS PS 01 will pay for that prior loss, under certain conditions. There is coverage for the prior loss provided that this additional coverage became effective at the time of cancellation or termination of the prior policy. In addition, in order for coverage to exist under the current policy, the loss or damage would have had to be covered by the additional coverage had it been in effect when the loss or damage occurred.

This prior loss coverage is provided within and not in addition to the limit of insurance stated in the current MS PS 01. And, there is another limit applied to this coverage: this policy will pay the lesser of the amount recoverable under this additional coverage as of its effective date, or the prior insurance, had it remained in effect.

Artificially Generated Electrical Current. MS PS 01 will pay for loss or damage to computers due to artificially generated electrical current under certain circumstances. The loss or damage has to be caused by or result from an occurrence that took place within 1,000 feet of the described premises; or, result from an interruption of electric power supply, power surge, blackout, or brownout if the cause of such occurrence took place within 1,000 feet of the described premises.

If a loss or damage exceeds in any one occurrence the applicable deductible shown in the declarations, the insurer will pay the amount of loss or damage in excess of the deductible, up to the applicable limit of insurance for the equipment.

Brands and Labels. If branded or labeled merchandise that is covered property is damaged by a covered cause of loss, the insurer may take all or any part of the property at an agreed or appraised value. If this is what happens, the insurer will pay the reasonable expenses of the named insured and the named insured can stamp the word salvage on the merchandise (if the stamp will not physically damage the merchandise). Or, the insured can remove the brands or labels, as long as this does not physically damage the merchandise.

Under this coverage, the insurer agrees to pay for the loss in value of the salvage merchandise that results from stamping it or removing the brands and labels. But, the most the insurer will pay for loss or damage in any one occurrence is $25,000.

Coverage Extensions

MS PS 01 offers the following coverage extensions.

Period of Coverage for Newly Acquired Property. With respect to insurance on or at each newly acquired or constructed property, coverage ends when any of the following first occurs: the policy expires; 30 days expire after the named insured acquires the property; 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 insurer will charge the named insured additional premium for values reported from the date of acquisition or the beginning of construction.

Personal Effects and Property of Others. MS PS 01 replaces this clause in the commercial property form with the following data.

MS PS 01 allows the named insured to extend the insurance that applies to business personal property to personal effects owned by the named insured, officers, partners or members, managers, or employees; this extension does not apply to loss or damage caused by theft, or to any loss or damage to equipment belonging to employees. Coverage is also extended to loss or damage to personal property of others that is in the care, custody, or control of the named insured.

The most that the insurer will pay under this coverage in any one occurrence is $5,000 (although a different limit for personal effects can be shown in the declarations). This is the most that will be paid while the property is at each described premises, at a client's premises, or while in transit.

The payment for loss of or damage to personal property of others is only for the account of the owner of that property.

Valuable Papers and Records. This coverage extension applies to valuable papers and records other than electronic data. It allows the named insured to extend insurance that applies to business personal property to direct physical loss or damage to valuable papers and records that the named insured owns or that are in his care, custody, or control; the loss has to be from a covered cause of loss. This extension of coverage includes the cost to research lost information on valuable papers and records for which duplicates do not exist. Coverage under this extension is limited to the specified causes of loss as defined in the causes of loss—special form.

This extension of coverage does not apply to property held as samples or for delivery after sales, and does not apply to property in storage away from the premises shown in the declarations.

The most that the insurer will pay under this extension of coverage for loss or damage in any one occurrence at each described premises is $5,000 (unless a different limit is shown in the declarations). For valuable papers and records not at a described premises, the most that will be paid is $2,500 in any one occurrence. These amounts are considered additional insurance.

MS PS 01 will also pay for the cost of blank material for reproducing the records, and for the cost of labor to transcribe or copy the records. These costs are not considered as additional insurance; they are subject to the applicable limit of insurance on the business personal property of the named insured.

Property Off-Premises. Insurance may be extended by the named insured to apply to covered property while it is away from the described premises under certain conditions. The property has to be temporarily at a location that the named insured does not own, lease, or operate; the property has to be in storage at a location leased by the named insured; or the property has to be at any fair, trade show, or exhibition. Note that this coverage extension also applies to computers while in the course of transit.

This extension of coverage does not apply to property in or on a vehicle (except for computers), or in the care, custody, or control of salespersons (unless at a fair, trade show, or exhibition).

The most that will be paid under this extension of coverage for loss or damage in any one occurrence is $10,000.

Outdoor Property. MS PS 01 provides coverage for several items of outdoor property located on the described premises.

Fences and retaining walls that are not part of a building are covered for up to $2,500 in any one occurrence.

Outdoor radio, television, satellite, or other antennas are covered for up to $3,000 in any one occurrence. This coverage includes masts, towers, and lead-in and support wiring.

Trees, shrubs, and plants are covered for up to $2,500 for any one occurrence; however, the limit is no more than $500 for any one tree, shrub, or plant. Debris removal expense is included in the overall coverage limit of $2,500.

This coverage is for loss caused by or resulting from fire, lightning, explosion, riot or civil commotion, or aircraft.

Employees' Equipment. MS PS 01 allows the insured to extend the insurance that applies to business personal property to equipment owned by employees under certain circumstances. The equipment has to be at the described premises, on a client's premise, or in transit with the employees; the transit has to be directly between the described premises and a client's premises, and while in a motor vehicle owned, leased, or operated by the named insured.

Theft loss from any unattended vehicle is not covered unless, at the time of theft, the vehicle's windows, doors, and compartments were closed and locked, and there are visible signs of forced entry. This exclusion does not apply to property in the custody of a carrier for hire.

The most that will be paid under this coverage extension is $5,000 for any one occurrence at a described premises, $2,500 in any one occurrence while in transit, and $2,500 in any one occurrence at a client's premises. Different limits can be shown in the declarations. But, in no event will the insurer pay more than $500 for any one piece of equipment, or more than $1,000 for the equipment of any one employee.

The insurance provided by this coverage extension applies only to loss caused by or resulting from fire, lightning, explosion, aircraft, vandalism, or theft.

Accounts Receivable. Insurance that applies to business personal property can be applied to accounts receivable. MS PS 01 will pay for the following: all amounts due from the customers of the named insured that are not able to be collected; interest charges on any loan required to offset amounts that the named insured is unable to collect; collection expenses in excess of the normal collection expenses; and other reasonable expenses that the named insured incurs to reestablish the records of accounts receivable. Loss must be from direct physical loss or damage by any covered cause of loss.

The most that will be paid here for loss or damage in any one occurrence at each described premises is $10,000, unless a different limit is shown in the declarations. For accounts receivable not at a described premises, the most that will be paid is $1,500 in any one occurrence.

Changes to the Causes of Loss Form

There are several changes that MS PS 01 makes to the causes of loss form, mostly in the exclusions section.

MS PS 01 notes first that the mechanical breakdown exclusion in the exclusions section of the causes of loss form does not apply to loss or damage to computers.

Then, MS PS 01 addresses the exclusion paragraphs referencing personal property. These paragraphs are replaced by the following. The insurer will not pay for loss or damage caused by or resulting from loss to personal property caused by dampness or dryness of atmosphere, or changes or extremes of temperature; this is so unless such conditions result from physical damages caused by a covered cause of loss to an air conditioning unit or system that is part of, or used with computers. The insurer also will not pay for loss or damage caused by 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 so caused.

MS PS 01 next adds some exclusions of its own. These pertain to coverage for computers.

This endorsement will not pay for loss or damage to computers caused directly or indirectly by any of the following: errors or omissions; electrical disturbance; computer-related losses; or computer advice or consultation. Such loss is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. However, if any of these exclusions result in a specified cause of loss or in elevator collision, MS PS 01 will pay for that damage.

The errors or omissions exclusion applies to errors or omissions in processing, recording, or storing electronic data on computers. Direct loss or damages caused by a resulting fire or explosion are covered.

The electrical disturbance exclusion pertains to erasure of electronic recordings. Direct loss or damages caused by lightning is covered.

MS PS 01 will not pay for loss or damage due to the failure, malfunction, or inadequacy of computer hardware, software, networks, or operating systems due to the inability to correctly recognize, process, interpret, or accept one or more dates or times. This exclusion applies whether the computer system belongs to any insured or to others.

If the named insured provides (or is provided) any advice, consultation, design, inspection, repair, or supervision to determine or rectify any potential or actual problems in a computer system, MS PS 01 will not cover any resulting loss or damage.

MS PS 01 revises the employee dishonesty coverage by deleting exclusions in the causes of loss form that apply to employee dishonesty, except for loss caused by governmental action, nuclear hazard, or war and military action. The same is true for coverage for outdoor signs, although there are some additional exclusions that apply to this particular coverage: wear and tear; rust, corrosion, decay, deterioration, or defect; and mechanical breakdown, including rupture or bursting caused by centrifugal force.

The exclusions section on the causes of loss form does not apply to the valuable papers and records or the accounts receivable section of MS PS 01. This is so, with the following exceptions. There is no coverage for loss or damage due to: governmental action; nuclear hazard; war and military action; computer-related losses; computer advice or consultation; continuous or repeated seepage or leakage of water, or the presence of humidity or moisture that occurs over a period of fourteen days or more; water and other liquids that leak from plumbing, heating, or air conditioning equipment caused by or resulting from freezing. This exclusion can be overcome if the named insured does his best to maintain heat in the building or he drains the equipment and shuts off the supply if the heat is not maintained.

MS PS 01 will not cover loss or damage to valuable papers and records or to accounts receivable caused by any of the following causes of loss: weather conditions; acts or decisions of any person, group, organization, or governmental body; and faulty, inadequate, or defective planning design, workmanship, or maintenance of part or all of any property on or off the described premises.

Note that the weather conditions exclusion only applies if the conditions contribute in any way with a cause or event excluded in any of the following exclusions to produce the loss or damage: ordinance or law; earth movement; governmental action; nuclear hazard; utility services; war and military action; water; and fungus, wet rot, dry rot, and bacteria.

The last section of exclusions on MS PS 01 deals with the accounts receivable coverage extension. The insurer will not pay for loss or damage caused by or resulting from alteration, falsification, concealment or destruction of records of accounts receivable done to conceal the wrongful giving, taking, or withholding of money, securities, or other property. The insurer will not pay for loss or damage caused by or resulting from bookkeeping, accounting or billing errors or omissions. And, the insurer will not pay for any loss or damage that requires any audit of records or any inventory computation to prove its factual existence.

Definitions

There are eight terms that are defined on the personal care services endorsement. Unless noted here, the definitions that are on the CGL form and the commercial property forms apply to the coverage provided by MS PS 01.

Computer. This means the programmable electronic equipment of the named insured that is used to store, retrieve, and process electronic data. This definition 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, as respects to money and securities and employee dishonesty coverages only, means any natural person while in the service of the named insured or for thirty days after termination of service. This person has to be compensated directly by the named insured, and has to be under the direction and control of the named insured while performing services to the named insured. An employee also includes a person who is furnished temporarily to the named insured to substitute for a permanent employee or to meet seasonal or short-term workload conditions.

An employee is none of the following: any agent, broker, person leased to the named insured by a labor leasing firm, an independent contractor, any manager, director, or trustee.

Forgery. Forgery means the signing of the name of another person or organization with intent to deceive. It does not mean a signature that consists in whole or in part of one's own name signed with or without authority, in any capacity, for any purpose.

Manager. As respects coverage provided by the employee dishonesty part of this endorsement, a manager is a person serving in a directorial capacity for a limited liability company.

Money. Money is currency, coins, bank notes, travelers checks, register checks, and money orders.

Occurrence. This term has four parts to it.

As respects money and securities coverage, an occurrence means all loss caused by one or more persons and involving a single act or series of related acts.

As respects computer fraud and money orders and counterfeit money coverages, an occurrence means an act or series of related acts involving one or more persons, or an act or event, or a series of related acts or events not involving any person.

As respects forgery or alteration coverage, an occurrence means all loss caused by any person or in which that person is involved, whether the loss involves one or more instruments.

And as respects employee dishonesty coverage, an occurrence means all loss caused by, or involving, one or more employees, whether the result of a single act or series of acts.

Securities. This word means negotiable and nonnegotiable instruments or contracts representing either money or other property. This term includes food stamps, lottery tickets, tokens, stamps, and evidences of debt issued in connection with credit or charge cards. However, the term does not include money.

Endorsements

There are four endorsements that can be used to modify MS PS 01.

MS PS DS 01 06. This is the personal care services supplemental schedule. This endorsement allows the insured to choose different limits of insurance for the various coverages offered by MS PS 01. The limits for the following coverages can be changed: fire department service charge; 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; accounts receivable; employees' equipment on premises and in transit; and other coverages that are chosen by the insured.

This endorsement also allows the insured to choose a per occurrence limit of insurance for both hired auto and nonowned auto liability coverages.

Equipment breakdown protection coverage is another subject found on MS PS DS. The insured chooses the deductible and waiting period for this coverage.

And finally, the insured can use this endorsement to list the premises for which fine arts coverage is provided, and to which particular coverage forms are applicable.

MS PS 02 01 06. This endorsement provides equipment breakdown protection coverage. The insurer will pay for direct loss of or damage to covered property at the premises described in the declarations caused by or resulting from a mechanical breakdown or electrical failure to pressure, mechanical, or electrical machinery and equipment. The loss or damage is not paid until the amount of loss exceeds the deductible shown in the declarations. MS PS 02 does not apply to the following: malfunction; leakage at any valve, joint, or connection; damage to any vacuum tube, gas tube, or brush; or the functioning of any safety or protective device.

MS PS 03 01 06. This endorsement is for hired auto and nonowned auto liability insurance. Coverage is provided for bodily injury and property damage arising out of the use of a hired auto or a nonowned auto; the hired auto coverage is for use by the named insured and employees, and the nonowned auto coverage is for use by any person in the course of the named insured's business.

MS PS 04 01 06. Fine arts coverage is provided by this endorsement. MS PS 04 applies to direct loss of or damage to fine arts whether owned by the named insured or owned by others but in the care, custody, or control of the named insured. Fine arts includes, but is not limited to the following: antiques; paintings; etchings; drawings; tapestries; sculptures; an fragile property. The most that will be paid for loss in any one occurrence under this coverage is $25,000 at each described premises.