Summary: The AAIS commercial property program includes forms to cover condominium buildings (CP-19) and commercial condominium unit-owners (CP-21). As described earlier see AAIS Commercial Property Program; the AAIS program uses a modular approach. In this case the appropriate condominium form is combined with a perils part, conditions, and endorsements to form a policy.
The pages that follow describe the general features of the condominium coverage parts.
Topics covered:
Insuring agreement and covered property Property excluded and limitations Additional coverages Perils Supplemental coverages Loss conditions Valuation How much we pay Loss payment Commercial property coverage conditions, CP-100 Other conditions Coverage for unit-owners
Insuring Agreement and Covered Property
We cover direct physical loss to covered property at the premises described on the declarations caused by a covered peril.
PROPERTY COVERED
We cover the following types of property for which a limit is shown on the declarations.
BUILDING PROPERTY
This means buildings and structures described on the declarations, including:
1. completed additions;
2. fixtures, machinery, and equipment which are a permanent part of the described building or structure;
3. outdoor fixtures;
4. personal property owned by you and used to maintain or service the described building or structure or its premises, including air-conditioning equipment; fire extinguishing apparatus; floor coverings; and appliances for refrigerating, cooking, dish washing, and laundering;
5. if not covered by other insurance;
a. additions under construction, alterations, and repairs to the building or structure; and
b. materials, equipment, supplies, and temporary structures, on or within 100 feet of the described premises, used for making additions, alterations, or repairs to the building or structure.
6. the following property contained within a unit, regardless of ownership, if required by your Condominium Association Agreement to insure:
a. fixtures, improvements, and alterations that are a part of the building or structure; and
b. appliances for refrigerating, cooking, dishwashing, laundering, security, or housekeeping.
This does not include personal property owned by, used by, or in the care, custody, or control of a unit-owner except as provided in paragraph 6. above.
BUSINESS PERSONAL PROPERTY
This means your business personal property in the buildings and structures described on the declarations or in the open (or in vehicles) on or within 100 feet of the described premises. Unless otherwise specified on the declarations, this includes:
1. your interest in personal property of others to the extent of your labor, material, and services;
2. personal property owned by you or owned indivisibly by all unit-owners; and
3. leased personal property which you have a contractual responsibility to insure, unless otherwise insured by the Commercial Property Coverage under Personal Property of Others.
Your business personal property does not include personal property owned solely by a unit-owner.
PERSONAL PROPERTY OF OTHERS
This means personal property of others:
1. that is in your care, custody, or control; and
2. located in the buildings and structures described on the declarations or in the open (or in vehicles) on or within 100 feet of the described premises.
However, our payment for loss to personal property of others is only for the benefit of the owners of the personal property.
Analysis
While the CP-19 covers much the same building property as the CP-12 (Building and Personal Property form), it has been modified to meet the special needs of a condominium association. It agrees to cover, as building property, certain items—regardless of who owns them—if the condominium association agreement requires the association to cover it. Such items include things that are part of the building, such as fixtures, improvements, and alterations. Also covered as building property are certain appliances like refrigerators, stoves, dishwashers, laundry equipment, and housekeeping items. Again, the CP-19 covers these only if the association agreement requires it.
Where the CP-12 agrees to cover the insured's use interest in improvements and betterments as business personal property, the CP-19 substitutes personal property that the association owns or that all the unit-owners own indivisibly. Property owned by the association might include items at a swimming pool or in a clubhouse.
Finally, like the CP-12, the CP-19 covers the property of others under certain circumstances.
Property Excluded and Limitations
1. Animals—We do not cover animals, including birds and fish, unless owned by others and boarded by you. We do cover animals you own and hold for sale.
2. Antennas, Awnings, Canopies, Fences, and Signs—Except as provided under Supplemental Coverages, we do not cover outdoor:
a. radio, television, satellite, dish-type, or other antennas including their masts, towers, and lead-in wiring;
b. awnings or canopies of fabric or slat construction or their supports;
c. fences; or
d. signs, other than signs attached to buildings.
3. Contraband—We do not cover contraband or property in the course of illegal transportation or trade.
4. Foundations, Retaining Walls, Piling, Piers, Wharves, or Docks—We do not cover foundations which are below the lowest basement floor or below ground level if there is no basement; retaining walls that are not part of buildings or structures; or pilings, piers, wharves, or docks.
5. Land; Water; Growing Crops or Lawns; Cost of Excavation, Grading, or Filling; Paved Surfaces; or Underground Pipes, Flues, or Drains—We do not cover:
a. land, including land on which the property is located;
b. underground or surface water;
c. growing crops or lawns;
d. cost of excavations, grading, or filling;
e. paved outdoor surfaces, including driveways, parking lots, roads, bridges, and walks; or
f. underground pipes, flues, and drains.
6. Money and Securities—We do not cover accounts, bills, currency, food stamps, or other evidences of debt, lottery tickets not held for sale, money, notes, or securities.
7. Property More Specifically Insured—We do not cover property which is more specifically insured in whole or in part by any other insurance. We do cover the amount in excess of the amount due from the more specific insurance.
8. Trees, Shrubs, and Plants—Except as provided under Supplemental Coverages, we do not cover trees; shrubs; plants; and grain, hay, straw, or other crops, when outdoors. However, we do cover trees, shrubs, and plants you own and hold for sale.
9. Valuable Papers and Records—Research Cost—Except as provided under Supplemental Coverages, we do not cover the cost to research, replace, or restore the information on valuable papers and records, including those which exist on electronic or magnetic media.
10. Vehicles, Aircraft, and Watercraft—We do not cover vehicles or self-propelled machines (including aircraft or watercraft and their motors, equipment, and accessories) that are:
a. required to be licensed for use on public roads; or
b. operated principally away from the described premises.
We do cover vehicles or self-propelled machine you manufacture, process, warehouse, or hold for sale. However, this does not include autos you hold for sale. We also cover rowboats or canoes out of water at the described premises.
Analysis
The CP-19 applies the same limitations to covered property as does the CP-12.
Like the ISO CP 00 10, the AAIS form defines the following items as “property not covered”: animals; contraband; foundations below the surface of the ground, retaining walls, piers, etc.; land, water, and growing crops; cost of excavations and backfilling; underground pipes, flues, or drains; money and securities (including accounts, food stamps, etc.); property specifically insured elsewhere; cost to research and restore valuable papers; and vehicles, aircraft, and watercraft.
The ISO policy specifies the following items as not covered, while the AAIS policy is silent on them: bridges, roadways, walks, patios, or other paved surfaces.
1.Debris Removal—We cover the cost to remove the debris of covered property that is caused by a covered peril. This coverage does not include costs to:
a.extract pollutants from land or water; or
b.remove, restore, or replace polluted land or water.
We do not pay any more under this coverage than 25 percent of the amount we pay for the direct physical loss. We do not pay more for loss to property and debris removal combined than the limit for the damaged property.
However, we pay an additional amount of debris removal expense up to $5,000 when the debris removal expense exceeds 25 percent of the amount we pay for direct physical loss or when the loss to property and debris removal combined exceeds the limit for the damaged property.
We do not pay any expenses unless they are reported to us in writing within 180 days from the date of direct physical loss to covered property.
2.Emergency Removal—We cover loss to covered property while moved or being moved from the described premises for preservation from loss caused by a covered peril. We pay for any direct physical loss to that property. This coverage applies for up to 10 days after the property is first moved. This does not increase the limit.
3.Fire Department Service Charges—We pay up to $1,000 to cover your liability, assumed by contract or agreement prior to the loss, for fire department service charges.
This coverage is limited to charges incurred when the fire department is called to save or protect covered property from a covered peril.
No deductible applies.
This is an additional limit.
4.Pollutant Clean Up and Removal—We pay your expense to extract pollutants from land or water at the described premises if the discharge, dispersal, seepage, migration, release, or escape of the pollutants is caused by a covered peril that occurs during the policy period.
We pay the cost of testing, evaluating, observing, or recording the existence, level, or effects of pollutants only when the expense of extracting the pollutants is covered by this Additional Coverage.
The most we pay for each described premises is $10,000 for the sum of all such expenses arising out of a covered peril occurring during each separate 12 month period of this policy. The expenses are paid only if they are reported to us in writing within 180 days from the date the covered peril occurs.
This is an additional limit.
Analysis
The CP-19 offers the same additional coverages for condominium owners as does the CP-12.
AAIS's commercial property program includes four additional coverages: debris removal, emergency removal; fire department service charge; and pollutant cleanup and removal.
Debris removal. The policy covers the cost to remove the debris of covered property that is caused by a covered peril. However, this coverage does not include costs to extract pollutants from land or water or remove, restore, or replace polluted land or water. Debris removal coverage is limited to 25 percent of the amount paid for direct physical loss; however, coverage for direct loss and debris removal combined is capped at the policy limit. If the amount of direct damage and debris removal expense exceeds the limit of liability, an additional $5,000 flat amount is available for debris removal. ISO provides $10,000 in this case in the latest version of its commercial property policy. Debris removal costs must be reported to the insurance company within 180 days from the date of direct physical loss in order to be covered.
Emergency removal. Without increasing the policy limits, the AAIS policy covers loss to covered property if it must be moved to avoid loss from a covered peril. This coverage is for any cause of loss—not just for the covered causes of loss. This coverage applies for up to ten days (thirty days in ISO) after the property is first moved.
Fire department service charge. $1,000 is available to pay the insured's liability, assumed by contract or agreement prior to the loss, for fire department service charges. This applies to charges incurred when the fire department is called to save or protect covered property from a covered peril. No deductible applies and this amount is in addition to the policy limits.
Pollutant clean up and removal. Additional coverage applies to the insured's expense to extract pollutants from land or water at the described premises. The discharge, dispersal, seepage, migration, release, or escape of the pollutants must be caused by a covered peril occurring during the policy period. The cost of testing, evaluating, observing, or recording the existence, level, or effect of pollutants is covered only when the expense of extracting pollutants is covered under this additional coverage. The limit for pollutant clean up is $10,000 for the sum of all such expenses arising out of a covered peril occurring during each separate twelve-month period. Such expenses must be reported to the insurer within 180 days from the date the covered peril occurs.
ADDITIONAL DEFINITIONS
1.Sinkhole Collapse—This means the sudden settlement or collapse of earth supporting the covered property into subterranean voids created by the action of water on a limestone or similar rock formation. It does not include the value of the land or the cost of filling sinkholes.
2.Specified Perils—This means 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.
Falling objects does not include loss to personal property in the open or to the interior of buildings or structures or personal property inside buildings or structures unless the exterior of the roof or walls are first damaged by a falling object.
Water damage means the sudden or accidental discharge or leakage of water or steam as a direct result of breaking or cracking of a part of the system or appliance containing the water or steam.
3.Volcanic Action—This means airborne volcanic blast or airborne shock waves; ash, dust, or particulate matter; or lava flow. It does not include the cost to remove ash, dust, or particulate matter that does not cause direct physical loss to the covered property.
PERILS COVERED
When “Special Perils” is shown on the declarations, we cover risks of direct physical loss unless the loss is limited or caused by a peril that is excluded.
PERILS EXCLUDED
1.We do not pay for loss if one or more of the following exclusions apply to the loss, regardless of other causes or events that contribute to or aggravate the loss, whether such causes or events act to produce the loss before, at the same time as, or after the excluded causes or events.
a.Ordinance or Law—We do not cover loss or increased cost caused by enforcement of any code, ordinance, or law regulating the use, construction, or repair of any building or structure; or requiring the demolition of any building or structure including the cost of removing its debris.
b.Earth Movement or Volcanic Eruption—We do not cover loss caused by any earth movement (other than sinkhole collapse) or caused by eruption, explosion, or effusion of a volcano. Earth movement includes, but is not limited to earthquake; landslide; mudflow; mudslide; mine subsidence; or sinking, rising, or shifting of earth.
We cover direct physical loss by fire, explosion, or volcanic action resulting from either earth movement or eruption, explosion, or effusion of a volcano.
All volcanic eruptions that occur within a 168 hour period shall be considered a single loss.
c.Civil Authority—We do not cover loss caused by order of any civil authority, including seizure, confiscation, destruction, or quarantine of property.
We cover loss resulting from acts of destruction by the civil authority to prevent the spread of fire, unless the fire is caused by a peril excluded under this policy.
d.Nuclear Hazard—We do not cover loss caused by a nuclear reaction, nuclear radiation, or radioactive contamination (whether controlled or uncontrolled; whether caused by, contributed to or aggravated by a covered peril; and whether caused by natural, accidental, or artificial means). Loss caused by nuclear hazard is not considered loss caused by fire, explosion, or smoke. Direct physical loss by fire resulting from the nuclear hazard is covered.
e.Utility Failure—We do not cover loss caused by interruption of power or other utility services resulting from any cause if the interruption takes place away from the described premises. Interruption includes reduced or increased voltage, low or high pressure, or other interruptions of normal services.
We cover the direct physical loss by a covered peril which occurs on the described premises as a result of any power interruption.
f.War—We do not cover loss caused by war. This means:
1)declared war, undeclared war, civil war, insurrection, rebellion, or revolution;
2)a warlike act by a military force or by military personnel;
3)the destruction, seizure, or use of the property for a military purpose; or
4)the discharge of a nuclear weapon, even if it is accidental.
g.Water—We do not cover loss caused by water. This means:
1)flood, surface water, waves, tidal water, or the overflow of a body of water. This includes spray that results from these whether driven by wind or not;
2)water that backs up through a sewer or drain; and
3)water below the surface of the ground. This includes water that exerts pressure on or flows, seeps, or leaks through or into a building or structure, sidewalk, driveway, foundation, swimming pool, or other structure.
If fire, explosion, or sprinkler leakage results, we do cover the resulting loss.
2.We do not pay for loss if one or more of the following exclusions apply to the loss:
a.Animals—We do not cover loss caused by animals, including birds, insects, or vermin. We cover any resulting loss caused by a specified peril or breakage of building glass.
b.Collapse—We do not cover loss caused by collapse, except as provided in the Additional Coverage for Collapse. If loss caused by a covered peril results at the described premises, we pay for that resulting loss.
c.Contamination or Deterioration—We do not cover loss caused by contamination or deterioration including corrosion, decay, fungus, mildew, mold, rot, rust or any quality, fault, or weakness in property that causes it to damage or destroy itself. We cover any resulting loss caused by a specified peril or breakage of building glass.
d.Criminal, Fraudulent, or Dishonest Acts—We do not cover loss caused by criminal, fraudulent, dishonest, or illegal acts, alone or in collusion with another, by:
1)you;
2)others who have an interest in the property;
3)others to whom you entrust the property;
4)your partners, officers, directors, trustees, joint adventurers; or
5)the employees or agents of 1), 2), 3), or 4) above, whether or not they are at work.
e.Defects, Errors, and Omissions—We do not cover loss which results from one or more of the following;
1)an act, error, or omission (negligent or not) relating to:
a)land use;
b)the design, specification, construction, workmanship, installation, or maintenance of property;
c)planning, zoning, development, siting, surveying, grading, or compaction; or
d)maintenance of property (including land, structures, or improvements);
whether on or off the described premises;
2)a defect, a weakness, the inadequacy, a fault, or unsoundness in materials used in construction or repair, whether on or off the described premises;
3)the cost to make good an error in design; or
4)a data processing error or omission in programming or giving improper instructions.
In addition, we do not cover loss to Business Personal Property caused by deficiency or defects in design, specifications, materials, or workmanship, or caused by latent or inherent defects.
We cover any resulting loss caused by a covered peril unless the resulting loss itself is excluded.
f.Electrical Currents—We do not cover loss caused by arcing or by electrical currents other than lightning. If a fire results, we cover only the loss caused by fire.
g.Explosion—We do not cover loss caused by explosion of steam boilers, steam pipes, steam turbines, or steam engines that you own or lease or that are operated under your control. If a fire or combustion explosion results, we cover the resulting loss. We also cover loss caused by the explosion of gas or fuel in a firebox, combustion chamber, or flue.
h.Freezing—We do not cover loss caused by water, other liquids, powder, or molten material that leaks or flows from plumbing, heating, air-conditioning systems or appliances (other than fire protective systems) as a result of freezing. This does not apply if you use reasonable care to maintain heat in the building or structure; or you drain the equipment and turn off the supply if the heat is not maintained.
i.Increased Hazard—We do not cover loss occurring while the hazard has been materially increased by any means within your knowledge or your control.
j.Loss of Use—We do not cover loss caused by loss of use, business interruption, delay, or loss of market.
k.Mechanical Breakdown—We do not cover loss caused by mechanical breakdown or rupturing or bursting of moving parts of machinery caused by centrifugal force. We cover any resulting loss caused by a specified peril, breakage of building glass, or elevator collision.
l.Neglect—We do not cover loss caused by your neglect to use all reasonable means to save covered property at and after the time of loss. We do not cover loss caused by your neglect to use all reasonable means to save and preserve covered property when endangered by a covered peril.
m.Pollutants—We do not cover loss caused by release, discharge, seepage, migration, dispersal, or escape of pollutants unless the release, discharge, seepage, migration, dispersal, or escape is caused by a specified peril. We cover any resulting loss caused by a specified peril.
n.Seepage—We do not cover loss caused by continuous or repeated seepage or leakage of water or steam that occurs over a period of 14 days or more.
o.Settling, Cracking, Shrinking, Bulging, or Expanding—We do not cover loss caused by settling, cracking, shrinking, bulging, or expanding of pavements, footings, foundations, walls, ceilings, or roofs. We cover any resulting loss caused by a specified peril or breakage of building glass.
p.Smog, Smoke, Vapor, or Gas—We do not cover loss caused by smog, smoke, vapor, or gas from agricultural smudging or industrial operations.
q.Temperature/Humidity—We do not cover loss to personal property caused by dampness, dryness, or changes in or extremes of temperature. We cover any resulting loss caused by specified perils or breakage of building glass.
r.Voluntary Parting—We do not cover loss caused by voluntary parting with title to or possession of any property because of any fraudulent scheme, trick, or false pretense.
s.Wear and Tear—We do not cover loss caused by wear and tear, marring, or scratching. We cover any resulting loss caused by a specified peril or breakage of building glass.
t.Weather—We do not pay for loss caused by weather conditions if the weather conditions contribute in any way with a cause or event excluded in paragraph 1. above.
We cover any resulting loss caused by a covered peril unless the resulting loss itself is excluded.
ADDITIONAL PROPERTY EXCLUDED AND LIMITATIONS
1.Animals—We do not cover loss to animals, including birds and fish, except death or destruction of animals caused by specified perils or breakage of building glass.
2.Boilers—We do not cover loss to steam boilers, steam pipes, steam turbines, or steam engines caused by any condition or occurrence within such equipment. We do cover loss to such equipment caused by the explosion of gas or fuel in a firebox, combustion chamber, or flue.
We do not cover loss to hot water boilers or heaters caused by any condition or occurrence within such equipment other than explosion. This exclusion includes bursting, cracking, exploding, or rupturing.
3.Building Materials—We do not cover loss to building materials and supplies that are not attached to buildings or structures, unless held for sale by you, caused by theft.
We cover loss caused by looting and pillaging at the time and place of a riot or civil commotion.
4.Furs—We do not cover furs or fur garments for loss by theft for more than $2,500 total in any one occurrence.
5Glass Breakage—We do not cover building glass breakage loss for more than $100 for any plate, pane, multiple plate insulating unit, heating pane, jalousie, louver, or shutter, or more than $500 in any one occurrence. These limits do not apply to loss by specified perils other than vandalism.
6.Glassware/Fragile Articles—We do not cover breakage of fragile articles such as glassware, statuary, porcelains, and bric-a-brac, except as a result of specified perils or breakage of building glass. This does not apply to glass that is a part of a building or structure; bottles or other containers held for sale; or lenses of photographic and scientific instruments.
7.Gutters and Downspouts—We do not cover loss to gutters and downspouts caused by the weight of ice, sleet, or snow.
8.Interior of Buildings—We do not cover loss to the interior of buildings or structures or to personal property in the buildings or structures caused by rain, snow, sleet, ice, sand, or dust, unless:
a.entering through openings made by a specified peril; or
b.the loss is caused by the thawing of snow, sleet, or ice on the building or structure.
9.Jewelry, Watches, Jewels, Pearls, Precious Stones, and Metals—We do not cover more than $2,500 total in any one occurrence for loss by theft of jewelry; watches; watch movements; jewels; pearls; precious or semi-precious stones; gold, silver, or other precious metals; or items consisting primarily of precious metals. This limitation does not apply to items of jewelry or watches worth $100 or less.
10.Machinery, Tools, and Equipment—We do not cover builders' machinery, tools, and equipment owned by you or in your care, while away from the described premises except as a result of specified perils or breakage of building glass.
11.Missing Property—We do not cover missing property where the only proof of loss is unexplained or mysterious disappearance, or shortage discovered on taking inventory, or other instance where there is no physical evidence to show what happened to the property.
12.Patterns, Dies, Molds, Models, and Forms—We do not cover more than $2,500 total in one occurrence for loss by theft to patterns, dies, molds, models, or forms.
13.Personal Property in the Open—We do not cover loss to personal property in the open caused by rain, snow, ice, or sleet.
14.Stamps, Tickets, Letters of Credit—We do not cover more than $250 total in any one occurrence for loss by theft to stamps, tickets (including lottery tickets held for sale), or letters of credit.
15.Transferred Property—We do not cover loss to property that has been transferred to a person or to a place away from the described premises on the basis of unauthorized instructions.
16.Valuable Papers and Records—We do not cover loss to valuable papers or records except by specified perils or breakage of building glass. This applies to account books, bills, card index systems, electronic data processing media and the information on such media, deeds, drawings, evidence of debt, manuscripts, and other records.
ADDITIONAL COVERAGES
1.Collapse—We pay for loss caused by direct physical loss involving collapse of a building or structure or any part of a building or structure caused only by one or more of the following:
a.specified perils; all only as covered in the Commercial Property Coverage;
b.hidden decay;
c.hidden insect or vermin damage;
d.weight of people or business personal property;
e.weight of rain that collects on a roof; or
f.the use of defective material or methods in construction, remodeling, or renovation if the collapse occurs during the course of the construction, remodeling, or renovation.
If otherwise covered under the Commercial Property Coverage, under items a. through f. above, we do not pay for loss to the following types of property unless the loss is a direct result of the collapse of a building or structure:
outdoor radio, television, satellite, dish-type, or other antennas including their masts, towers, and lead-in wiring; outdoor awnings or canopies or their supports; fences; gutters and downspouts; yard fixtures; outdoor swimming pools; piers, wharves, and docks; beach or diving platforms or appurtenances; retaining walls; foundations; walks, roadways, and other paved surfaces.
Collapse does not include settling, cracking, shrinking, bulging, or expanding.
This does not increase the limit.
2.Tearing Out and Replacing—When loss caused by:
a.water;
b.other liquids;
c.powder; or
d.molten material
is covered, we also pay the cost of tearing out and replacing any part of the building or structure to repair damage to the system or appliance from which the water or other substance escapes.
We do not pay for damage to the system or appliance from which the water or other substance escapes. However, we pay the cost to repair or replace damaged parts of fire extinguishing equipment if the damage results in discharge of any substance from an automatic fire protection system; or is directly caused by freezing.
Analysis
The special perils coverage of the CP-19 is identical to that of the CP-12.
The AAIS Special Perils Part is a separate form—CP-85—and covers insured property for risks of direct physical loss, except as excluded or limited in the form. The exclusions and limitations of the other AAIS perils parts are also included in the special form. In addition, there are numerous other exclusions and limitations, most of which closely parallel the comparable provisions of ISO's Causes of Loss – Special form, CP 10 30 10 12. For a discussion of this form see Causes of Loss Forms.
The AAIS special perils part, like the ISO Causes of Loss – Special form, describes certain categories of property that are covered only for specified perils. Those categories of property are valuable papers and records, animals and pets held for sale, glassware and other fragile items, and in the ISO form, builders' machinery, tools, and equipment while away from the premises. Under the most recent editions of AAIS and ISO forms, the definition of specified perils is similar, except that AAIS lists sonic boom and building collapse as specified perils and the ISO form does not..
Other types of property—furs, jewelry, patterns and dies, stamps, and tickets—are subject to dollar limitations for loss due to theft. The only difference between the AAIS and ISO forms is that under AAIS provisions the limitation does not apply to items of jewelry or watches worth $50 or less and $100 or less under ISO wording.
The specified perils are mentioned in connection with the exclusion of building glass breakage in excess of $100 per pane, plate, multiple plate insulating unit, heating pane, jalousie, lover, or shutter or $500 per occurrence. The limits do not apply if glass is broken by a specified peril other than breakage of building glass (i.e., breakage by any cause other than another specified peril) or vandalism. Because collapse is a specified peril on the AAIS form, the limits do not apply if building glass breakage is caused by collapse.
Another reference to the specified perils occurs with reference to rain, snow, sand, or dust. The form states that loss to the interior of buildings by those elements is covered if the rain, snow, sand, or dust enters through openings made by specified perils. The ISO wording provides broader coverage, requiring only that the opening be made by a covered cause of loss, not just by a specified peril.
There is one other mention of specified perils in conjunction with an exclusion in the AAIS special perils part entitled “work or operations.” It excludes “loss to property resulting from actual work or operations. This includes: altering, constructing, installing, manufacturing, processing, servicing or testing.” However, the exclusion does not apply to—there is coverage for—resulting losses caused by specified perils. A similar workmanship exclusion has been removed from ISO forms in favor of the broader concurrent causation-based exclusion concerning weather conditions, acts or decisions of persons or groups, and faulty, inadequate, or defective planning, design, materials, and maintenance. Interestingly, the AAIS special perils part contains its version of such an exclusion (entitled “defects, errors and omissions”) as well as the work or operations exclusion just mentioned.
An AAIS exclusion applies to freezing of fire protection equipment during periods of permitted vacancy or unoccupancy unless the insured has “used reasonable care to maintain conditions necessary for the proper operation of the fire protection equipment.” In the ISO program, due diligence during vacancy is required only with respect to sprinkler leakage systems.
If a Coinsurance percentage of 80% or more is shown on the declarations, we provide the following supplemental coverages.
Unless otherwise stated, each supplemental coverage:
a.applies for loss caused by a covered peril;
b.applies to property in or on buildings or structures described on the declarations or in the open (or in vehicles) within 100 feet of the described premises;
c.is an additional amount of coverage; and
d.is not subject to and not considered in applying coinsurance.
1.The following supplemental coverages apply when a limit is shown on the declarations for either Building Property or Business Personal Property.
a.Antennas, Awnings, Canopies, Fences, and Signs—We pay up to $1,000 for your outdoor:
1)radio, television, satellite, dish-type, or other antennas including their masts, towers, and lead-in wiring;
2)awnings or canopies of fabric or slat construction or their supports;
3)fences; or
4)signs.
We only cover direct physical loss caused by aircraft, civil commotion, explosion, fire, lightning, or riot, including debris removal expense.
b.Property Off Premises—We pay up to $5,000 for covered property while temporarily at a location that you do not own, control, rent, or lease.
This coverage does not include property:
1)in or on a vehicle;
2)in the care, custody, or control of your salesperson; or
3)at any fair or exhibition.
2.The following supplemental coverages apply only when a limit is shown on the declarations for Building Property.
a.Increased Costs—Ordinance or Law—We pay up to $5,000 for each described premises to cover the increased costs of a covered loss, including debris removal expense, resulting from the enforcement of any ordinance, law, or decree that regulates or requires:
1)the construction, use, or repair of any property; or
2)the demolition of any property, in part or in whole, not damaged by a covered peril.
The ordinance, law, or decree must be in force at the time of loss.
Under Perils Excluded, Ordinance or Law does not apply to this Supplemental Coverage.
b.Newly Acquired Buildings—We cover your buildings or structures being built or that you acquire during the policy period.
This coverage applies for 30 days after construction is started or for 30 days from the date you acquire the building or structure; or until you report the newly acquired property to us; whichever occurs first. This coverage does not extend beyond the end of the policy period.
You must pay any additional premium due from the date construction is started or the date you acquire the property.
We pay up to 25 percent of the limit shown on the declarations for Building Property but not exceeding $250,000 for each building or structure.
c.Trees, Shrubs, and Plants—We pay up to $1,000 for your outdoor trees, shrubs, and plants not held for sale. We only cover loss caused by aircraft, civil commotion, explosion, fire, lightning, or riot. This coverage is limited to $250 on any one tree, shrub, or plant, including debris removal.
3.The following supplemental coverages apply only when a limit is shown on the declarations for Business Personal Property.
a.Extra Expenses—We pay up to $1,000 for the necessary extra expenses that you incur in order to continue as nearly as practical your normal business following loss by a covered peril. This applies when the damage is to property in the described buildings or structures or in the open (or in vehicles) on or within 100 feet of the described premises.
We cover your extra expenses for the time it should reasonably take to resume your normal business, but not longer than the time it should reasonably take to rebuild, repair, or replace the property that has incurred the loss.
We do not cover the normal cost of repair, replacement, or restoration of property. We cover expenses in excess of normal that you necessarily incur to reduce loss, but only to the extent they reduce the loss under this coverage.
We do not cover the cost of research or other extra expense necessary to reproduce, replace, or restore lost information on lost or damaged valuable papers and records, including those which exist on electronic or magnetic media.
We cover expenses in excess of normal that you necessarily incur to reduce loss, but only to the extent that they reduce the loss under this coverage.
b.Personal Effects—We pay up to $500, at each described premises, for personal effects owned by you, your officers, your partners, or your employees. This coverage is limited to $100 on property owned by any one person.
c.Personal Property—Acquired Locations—We cover your business personal property at locations that you acquire, other than fairs or exhibitions.
This coverage applies for 30 days from the date you acquire the location or until you report the acquired location to us, whichever occurs first. This coverage does not extend beyond the end of the policy period.
You must pay any additional premium due from that date you acquire the location.
We pay up to 10 percent of the limit shown on the declarations for Business Personal Property but not exceeding $100,000 for each location.
d.Personal Property of Others—We pay up to $2,500, at each described premises, for personal property of others in your care, custody, or control. This coverage is only for the benefit of the owners of the personal property.
e.Property in Transit—We pay up to $1,000 for covered business personal property (other than property in the care, custody, or control of your salesperson) in transit more than 100 feet from the described premises in vehicles you own, lease, or operate.
We only cover direct physical loss caused by civil commotion; collision with another vehicle or object, other than the road bed; explosion, fire; hail; lightning; overturn or upset of the vehicle; riot; vandalism; or windstorm.
This coverage also includes loss of an entire package, case, or bale from within a locked part of your vehicle caused by theft. Theft must be proven by visible marks of forced entry.
f.Valuable Papers and Records—Research Cost—We pay up to $1,000 for the cost of research or other expenses necessary to reproduce, replace, or restore lost information on lost or damaged valuable papers and records, including those which exist on electronic or magnetic media, for which duplicates do not exist.
Analysis
Again, the supplemental coverages in the CP-19 are the same as in the CP-12, with one exception. Since the CP-19 is aimed at condominiums, there is no mention of coverage for the improvements and betterments within a unit. Those are covered earlier in the policy.
Certain supplemental coverages apply provided that insurance coverage is written with a coinsurance percentage of 80 percent or more. Unless otherwise stated in the policy, each supplemental coverage applies for a loss caused by a covered peril; applies to property in or on buildings or structures named in the declarations or in the open (or in vehicles) within 100 feet of the premises; is an additional amount of coverage; and is not subject to and not considered in applying coinsurance.
WHAT MUST BE DONE IN CASE OF LOSS
1.Notice—In case of a loss, you must:
a.give us or our agent prompt notice including a description of the property involved (we may request written notice);
b.give notice to the police when the act that causes the loss is a crime; and
c.give notice to the credit card company if the loss involves a credit card.
2.Protect Property—You must take all reasonable steps to protect covered property at and after an insured loss to avoid further loss. We pay the reasonable costs incurred by you for necessary repairs or emergency measures performed solely to protect covered property from further damage by a covered peril if a covered peril has already caused a loss to covered property. However, we do not pay for such repairs or emergency measures performed on property which has not been damaged by a covered peril. This does not increase our limit.
3.Proof of Loss—You must send us, within 60 days after our request, a signed, sworn proof of loss. This must include the following information:
a.the time, place, and circumstances of the loss;
b.other policies of insurance that may cover the loss;
c.your interest and the interests of all others in the property involved, including all mortgages and liens;
d.changes in title or occupancy of the covered property during the policy period;
e.detailed estimates for repair or replacement of covered property;
f.available plans and specifications of buildings or structures;
g.detailed estimates of any covered loss of income and expenses; and
h.an inventory of damaged and undamaged covered personal property showing in detail the quantity, description, cost, actual cash value, and amount of the loss. You must attach to the inventory copies of all bills, receipts, and related documents that substantiate the inventory. An inventory of undamaged personal property is not required if the total claim for a loss is less than $10,000 and less than five percent of the total limit.
4. Examination Under Oath—You must submit to examination under oath in matters connected with the loss as often as we reasonably request and give us sworn statements of the answers. If more than one person is examined, we have the right to examine and receive statements separately and not in the presence of the others.
5. Records—You must produce records, including tax returns and bank microfilms of all cancelled checks, relating to value, loss, and expense and permit copies and extracts to be made of them as often as we reasonably request.
6. Damaged Property—You must exhibit the damaged and undamaged property as often as we reasonably request and allow us to inspect or take samples of the property.
7. Volunteer Payments—You must not, except at your own expense, voluntarily make any payments, assume any obligations, pay or offer any rewards, or incur any other expenses except as respects protecting property from further damage.
8. Abandonment—We do not have to accept any abandonment of property.
9. Cooperation—You must cooperate in performing all acts required by the Commercial Property Coverage.
Analysis
The loss conditions under the CP-19 are identical to those found in the CP-12.
1.Actual Cash Value—When replacement cost is not shown on the declarations for covered property, the value is based on the actual cash value at the time of the loss (with a deduction for depreciation), except as provided in paragraphs 2. through 9. below.
2.Limited Replacement Cost—When the limit for Building Property satisfies the coinsurance requirement, we pay up to $2,500 to cover the cost to repair or replace your buildings or structures. This applies only when the total loss does not exceed $2,500. This provision does not apply to awnings; canopies; floor coverings; appliances for refrigerating, ventilating, cooking, dishwashing, or laundering; or outdoor equipment or furniture.
3.Glass—The value of glass is based on the cost of safety glazing material where required by code, ordinance, or law.
4.Valuable Papers and Records—The value of valuable papers and records, including those which exist on electronic or magnetic media (other than prepackaged software programs) is based on the cost of blank materials, and the labor to transcribe or copy the records when there is a duplicate.
5.Pair or Set—The value of a lost or damaged article which is part of a pair or set is based on a reasonable proportion of the value of the entire pair or set. The loss is not considered a total loss of the pair or set.
6.Loss to Parts—The value of a lost or damaged part of an item that consists of several parts when it is complete is based on the value of only the lost or damaged part or the cost to repair or replace it.
7.Replacement Cost—When replacement cost is shown on the declarations for covered property, the value is based on replacement cost without any deduction for depreciation.
This replacement cost provision does not apply to objects of art, rarity, or antiquity; property of others; or paragraphs 3. through 6. above.
The replacement cost is limited to the cost of repair or replacement with similar materials on the same site and used for the same purpose. The payment shall not exceed the amount you spend to repair or replace the damaged or destroyed property.
Except as provided under Limited Replacement Cost, replacement cost valuation does not apply until the damaged or destroyed property is repaired or replaced. You may make a claim for actual cash value before repair or replacement takes place, and
later for the replacement cost if you notify us of your intent within 180 days after the loss.
Analysis
The valuation portion of the CP-19 is the same as the CP-12, with two exceptions. The CP-19 makes no mention of how to value merchandise sold. This is probably because a condominium association would not have anything to sell. And, since the policy insures a condominium building, there would be no tenants in it, hence no mention of tenants improvements and betterments.
7. Unit-Owner's Insurance—If a unit-owner has insurance covering the same property as this policy, our policy shall be primary and not contributory with the unit-owner's insurance.
Analysis
The section on how much the insurer pays is identical in the CP-19 to the CP-12. The CP-19 does, however, add one provision. Provision #7 clarifies that even if a unit-owner has insurance on the same damaged property, the association's policy will provide the primary coverage for loss to that property.
1. Our Options—We may:
a. pay the value of the loss;
b. pay the cost of repairing or replacing the loss;
c. rebuild, repair, or replace with property of equivalent kind and quality, to the extent practicable; or
d. take all or any part of the damaged property at the agreed or appraised value.
We must give you notice of our intentions within 30 days after we have received a satisfactory proof of loss.
2. Your Losses—We adjust all losses with you.
Payment is made to you unless another loss payee is named in the policy. A covered loss is payable 30 days after a satisfactory proof of loss is received, and:
a. the amount of the loss has been agreed to in writing;
b. an appraisal award has been filed with us; or
c. a final judgment has been entered.
If you name an insurance trustee, we adjust losses with you, but we pay the insurance trustee. Payment to the trustee satisfies our obligation to you for the losses.
3. Property of Others—Losses to property of others may be adjusted with and paid to:
a. you on behalf of the owner; or
b. the owner.
If we pay the owner, we do not have to pay you. We may also choose to defend any suits arising from the owners at our expense.
Analysis
Many times the owners of a condominium may not understand insurance or how to disburse the proceeds from a loss payment. In that case, the association may appoint an insurance trustee to handle all insurance matters. The trustee then receives the payment and takes care of the association.
Commercial Property Coverage Conditions, CP-100
The following is added to “Subrogation”:
We waive our right of recovery against any unit-owners of the described condominium or members of their household. Waiver of right of recovery does not apply to the developer who may be held liable for acts or omissions as the developer.
Analysis
The policy adds one provision to those found on the CP-100. The named insured agrees not to pursue subrogation against any unit-owners or members of their families.
In addition to the policy terms which are contained in other sections of the Commercial Property Coverage, the following conditions apply.
1.Appraisal—If you and we do not agree on the amount of the loss or the actual cash value of covered property, either party may demand that these amounts be determined by appraisal.
If either makes a written demand for appraisal, each selects a competent, independent appraiser and notifies the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, you or we can ask a judge of a court of record in the state where the property is located to select an umpire.
The appraisers then determine and state separately the amount of each loss.
The appraisers also determine the actual cash value of covered property items at the time of the loss, if requested.
A written agreement is binding on all parties. If the appraisers fail to agree within a reasonable time, they submit only their differences to the umpire. Written agreement so itemized and signed by any two of these three is binding on all parties.
Each appraiser is paid by the party selecting that appraiser. Other expenses of the appraisal and the compensation of the umpire is paid equally by you and us.
If there is an appraisal, we retain our right to deny the claim.
2.Mortgage Provisions—If a mortgagee (mortgage holder) is named in this policy, loss to Building Property shall be paid to the mortgagee and you as their interest appears. If more than one mortgagee is named, they shall be paid in order of precedence.
The insurance for the mortgagee continues in effect even when your insurance may be void because of your acts, neglect, or failure to comply with the coverage terms. The insurance for the mortgagee does not continue in effect if the mortgagee is aware of changes in ownership or substantial increase in risk and does not notify us.
If we cancel this policy, we notify the mortgagee at least 10 days before the effective date of cancellation if we cancel for your nonpayment of premium, or 30 days before the effective date of cancellation if we cancel for any other reason.
We may request payment of the premium from the mortgagee, if you fail to pay the premium.
If we pay the mortgagee for a loss where your insurance may be void, the mortgagee's right to collect that portion of the mortgage debt from you then belongs to us. This does not affect the mortgagee's right to collect the remainder of the mortgage debt from you. As an alternative, we may pay the mortgagee the remaining principal and accrued interest in return for a full assignment of the mortgagee's interest and any instruments given as security for the mortgage debt.
If we choose not to renew this policy, we give written notice to the mortgagee at least 10 days before the expiration date of this policy.
3.Recoveries—If we pay you for the loss and lost or damaged property is recovered, or payment is made by those responsible for the loss, the following provisions apply:
a.You must notify us promptly if you recover property or receive payment.
b.We must notify you promptly if we recover property, or receive payment.
c.Any recovery expenses incurred by either are reimbursed first.
d.You may keep the recovered property but you must refund to us the amount of the claim paid, or any lesser amount to which we agree.
e.If the claim paid is less than the agreed loss due to a deductible or other limiting term of this policy any recovery is pro rated between you and us based on our respective interest in the loss.
4.Vacancy—Unoccupancy—We do not pay for loss caused by attempted theft, breakage of building glass, sprinkler leakage (unless you have protected the system against freezing), theft, vandalism, or water damage occurring while the building or structure has been:
a.vacant for more than 60 consecutive days; or
b.unoccupied for more than
1)60 consecutive days; or
2)the usual or incidental unoccupancy period for the described premises
whichever is longer.
The amount we pay for any loss that is not otherwise excluded is reduced by 15%.
Unoccupied means that the customary activities or operations of the described occupancy are suspended, but business personal property has not been removed. The building or structure shall be considered vacant and not unoccupied when the occupants have moved, leaving the building or structure empty or containing only limited business personal property. Buildings or structures under construction are not considered vacant or unoccupied.
Analysis
The AAIS condominium building coverage part is subject to the same four additional other conditions as is the CP-12.
Appraisal. If the insurer and insured cannot agree on the amount of loss, procedures for selecting independent appraisers and umpires are outlined.
Mortgage provisions. If a mortgage holder is named in the policy, loss to building property will be paid to the insured and the mortgage holder, as their interests appear. Insurance for the mortgage holder continues even where coverage may be void as to the insured due to the insured's acts or failure to comply with policy terms. If the insurer pays a loss to the mortgage holder where coverage was void as to the insured, the insurer takes over the portion of the mortgage represented by the insurance payment.
Recoveries. If, after insurance payment, property is recovered or payment made by a party responsible for the loss, the following applies: (a) the insured must promptly notify the insurer (or vice versa); (b) recovery expenses incurred by either party are reimbursed first; (c) the insured may keep recovered property but must refund the amount of the claim paid.
Vacancy—Unoccupancy. There is no coverage for loss caused by attempted theft, breakage of building glass, sprinkler leakage (unless the insured has protected the system against freezing), theft, vandalism, or water damage occurring while the building has been vacant for more than sixty consecutive days or unoccupied for more than sixty days or the “usual or incidental unoccupancy period for the described premises” (i.e., the closed season for a fruit market or ice cream stand).
Further, the amount paid for any loss not otherwise excluded is reduced by 15 percent where the building is vacant under the above provision.
“Unoccupied” is defined to mean the customary activities or operation of the described occupancy are suspended, but business personal property has not been removed. The building or structure is considered vacant and not unoccupied when the occupants have moved, leaving the building empty or containing only limited business personal property. Buildings under construction are not considered vacant or unoccupied.
The special needs of a commercial condominium unit-owner may be met with AAIS form CP-21, condominium unit-owner coverage part. The provisions are very similar to those described in this article, with these exceptions:
1. The CP-21 covers only business personal property and the personal property of others. Coverage for the insured's personal property includes fixtures, improvements, and alterations made to the unit at the insured's expense. There is no provision for building coverage.
2. Under property excluded, the AAIS policy does not cover such fixtures or appliances if the condominium association agreement requires the association to carry such coverage.
3. If the condominium association has a policy that also covers the insured's property, the association policy is primary.