ISO Market Segments Program

Summary: The Insurance Services Office (ISO) has developed a market segments program providing specialized coverages for certain specialty insurance markets. This program offers wrap-around endorsements that are used to enhance the coverages provided by standard coverage forms, like the commercial property and general liability forms.

This article provides information on the Hotels, Motels, And Inns coverage form, MS HM 01 07 13. The endorsement modifies the CGL forms, the Building and Personal Property Coverage Form, and the Causes Of Loss – Special form. These policies are analyzed in the following pages: CGL Coverage Form—Coverage A; CGL Coverage Form—Coverage B; Medical Payments; General Provisions of the CGL; Building and Personal Property Coverage Form; and Causes of Loss Forms.

Topics covered: Introduction Changes to the commercial property form Coverage extensions Changes to the causes of loss form Changes to the CGL form Definitions Endorsements

Introduction

MS HM 01 is an endorsement that modifies the CGL forms, the Building and Personal Property Coverage form, and the Causes Of Loss – Special form; the provisions of these forms apply to the risk except as otherwise provided in MS HM 01. The endorsement enhances the coverages provided by the standard forms by offering additional property coverages, some crime coverages, and errors and omissions coverage. The limits of insurance offered by MS HM 01 are base limits that can be increased through the use of the Hotels, Motels, And Inns Supplemental Schedule, MS HM DS 07 13.

Forms that are mandatory to use with this program are Common Policy Conditions Form, IL 00 17 11 98; Building and Personal Property Coverage Form, CP 00 10 10 12; Commercial Property Conditions Form, CP 00 90 07 88; Causes Of Loss – Special Form, CP 10 30 10 12; and Commercial General Liability Coverage Form, CG 00 01 04 13.

The Hotels, Motels, and Inns program applies to four major classes of business: smaller establishments, such as motor lodges, with pools or beaches; smaller establishments without pools or beaches; larger establishiments with pools and beaches; and larger establishments without pools and beaches.

These general liability classifications are the only ones eligible for the program: hotels, motels, and inns with pools or beaches and less than four stories high, and those with four stories and higher; hotels, motels, and inns without pools or beaches and less than four stories high, and those with four stories and higher; and lessor's risk only hotels, motels, and inns and less than four stories high, and those with four stories and higher.

As this program is designed for the types of hotels, motels, and inns described, the following are not eligible for the program: apartment hotels, boarding or rooming houses, campgrounds, camps, clubs, dude ranches, gambling establishments, schools with dormitory facilities, spas, YMCAs, or YWCAs.

Changes to the Commercial Property Form

MS HM 01 changes some of the amounts available as additional coverages under CP 00 10, the Building and Personal Property Coverage Form, and adds other coverages.

The fire department service charge when the department is called to save or protect covered property from a covered cause of loss is increased by MS HM 01 from $1,000 to $5,000. No deductible applies to this coverage.

MS HM 01 provides some additional coverage sections not found on the commercial property form.

Money and Securities. The insurer will pay for loss of money and securities used in the business of the named insured, either on premises or off premises. The coverage is for loss due to theft, disappearance, or destruction. The most that the insurer will pay for all loss in any one occurrence is $10,000 unless a different limit for money and securities is shown on the declarations page. MS HM 01 notes that all loss caused by one or more persons and involving a single act or series of related acts is considered one occurrence. So, for example, if an employee steals cash out of the reception desk's drawer over a period of several months before being discovered, that is considered one occurrence for payment of loss purposes.

Fire Extinguisher Systems Expense. The endorsement offers up to $15,000 in payment of the cost of recharging or replacing (whichever is less) fire extinguishers and extinguishing systems. The discharge must occur in or on the building or within 100 feet of the building or the described premises, whichever distance is greater. This language was changed in the 2013 revision to allow for coverage to apply more broadly for occupants of multi-tenant properties. The $15,000 is also available to pay for loss or damage to covered property if the loss is the result of an accidental discharge of chemicals from a fire extinguisher or extinguishing system. No deductible applies to this coverage.

Reward Payment. The insured can be reimbursed for rewards paid up to $5,000. This coverage is for an eligible person for information leading to the arrest and conviction of any person committing a crime that results in loss to covered property from a covered cause of loss. An obvious example would be a reward paid for information leading to the arrest and conviction of someone who started an arson fire in the insured hotel.

There are some restrictions to note under this coverage. The person eligible for the reward cannot be the named insured, a family member, an employee, an employee of a law enforcement agency, or an employee of a business engaged in property protection. And, no reward will be reimbursed unless and until the person who committed the crime is convicted, or the covered property is returned. So, if the night clerk reports a robbery and helps the police arrest a suspect, MS HM 01 will not reimburse the named insured if it gives the night clerk a reward for his efforts. If a customer of the hotel reports a robbery and helps the police arrest a suspect, but there is no conviction, MS HM 01 will not reimburse the named insured if it has given the customer a reward.

Computer Fraud. Under this coverage, the insurer will pay for loss of or damage to money, securities, or other property resulting directly from the use of any computer to fraudulently cause a transfer of that property to a person or place outside the premises described on the declarations. For example, if someone hacks into the named insured's computer and has some monetary reserves transferred to an offshore account, the insurer will pay for that loss. The coverage is up to $25,000 in any one occurrence unless a different limit for computer fraud is shown on the declarations page.

Money Orders and Counterfeit Paper Currency. If a customer pays his lodging bill with counterfeit money, or if he uses a money order to purchase something from the hotel's gift shop and that money order is not honored upon presentation, MS HM 01 will pay for the loss the insured suffers. The most that will be paid is $1,500 in any one occurrence.

Forgery or Alteration. The insurer promises to pay for loss resulting directly from forgery (a defined term) or alteration of checks, drafts, promissory notes, or similar written promises to pay a sum certain in money. As an example, if a secretary in the hotel forges the signature of the manager, or if an accountant alters the amount of a check that is to be drawn against the hotel, and the insured hotel loses money due to the fraud, the insurer will pay for the loss. The most to be paid is $2,500 in any one occurrence. This amount includes legal expenses of the insured in case the insured is sued for refusing to pay the forged or altered instrument. For example, if the secretary used the check with the forged signature to purchase some item, and the hotel refused to honor that check when it was presented for payment, leading to a lawsuit against the hotel, MS HM 01 will pay any reasonable legal expenses incurred by the hotel in its defense. Of course, if the money loss and the defense costs amount to more than $2,500, the insured will assume the overrun unless a larger amount is chosen for forgery coverage by the insured on the supplemental schedule, MS HM DS.

Outdoor Signs. MS HM 01 offers up to $10,000 for direct physical loss or damage (in any one occurrence) to all outdoor signs at the described premises. The signs must be owned by the named insured or owned by others but in the care, custody, or control of the named insured. The policy will not pay for loss or damage caused by or resulting from wear and tear, hidden or latent defect, rust, corrosion, or mechanical breakdown.

Employee Dishonesty. The policy will pay for direct loss of or damage to the named insured's business personal property, money, and securities resulting from dishonest acts committed by any of the named insured's employees. The employees must have the manifest intent to cause the named insured to sustain loss and to obtain financial benefit. As an example, the employee intends to—and does—steal TV sets from the hotel rooms in order to sell them. The loss suffered by the insured will be paid up to $25,000 in any one occurrence. MS HM 01 declares that all loss or damage caused by one or more employees and involving a single act or series of related acts is considered one occurrence. As an example, if the employee takes five TVs over a period of three months, that is considered one occurrence for coverage purposes.

There are several limitations to this coverage.

MS HM 01 will not pay for loss or damage resulting from any dishonest or criminal act committed by the named insured, partners, members, officers, managers, directors, trustees, authorized representatives, or by anyone to whom the named insured entrusts the property that is taken or damaged. This limitation can lead to interesting contrasts. For example, if the employee steals TVs from the hotel rooms, that is covered; if the employee steals the TVs while taking them off premises for repair work, this is not covered as an employee dishonesty loss.

MS HM 01 will not pay for loss or damage, the proof of which as to its existence or amount, is based on an inventory computation or a profit and loss computation.

The policy will not pay for loss or damage that the named insured sustains through acts not committed during the policy period, and the coverage will apply only for loss or damage discovered no later than one year from the end of the policy period. The limits of insurance for this type of loss do not cumulate from policy period to policy period.

Finally, this additional coverage does not apply to loss caused by any employee after discovery by the named insured of any dishonest act committed by that employee before or after being hired by the named insured. If the named insured hires someone who it knows has been convicted of theft or fraud, and that employee then proceeds to steal from the named insured after being hired, the loss is not covered by MS HM 01.

Ordinance or Law—Equipment Coverage. If a covered cause of loss occurs to equipment that is covered property, the insurer will pay the additional costs to repair or replace the equipment as required to comply with and ordinance or law. For example, if a covered cause of loss occurs to refrigeration equipment, the insurer will pay for the cost to reclaim the refrigerant as required by law, the cost to retrofit the equipment to use a non-CFC refrigerant as required by the Clean Air Act of 1990, and the increased cost to recharge the system with a non-CFC refrigerant. The terms of this coverage apply separately to each piece of covered equipment.

Lock Replacement. MS HM 01 will pay for the cost to repair or replace locks at the described premises due to theft or other loss to keys. The most the insurer will pay for all loss in any one occurrence is $5,000; however, there is a per occurrence deductible of $100. So, if an employee steals the set of master keys, MS HM 01 will pay the cost if the insured wants to have all the locks changed.

Artificially Generated Electrical Current. This policy will pay for loss or damage to computers due to artificially generated electrical current if such loss is caused by an occurrence that takes place within 1,000 feet of the described premises. For example, if something caused a power surge from the on-premises electrical generators into the insured's office computers, this policy will pay for the damage caused.

Guests' Property. The insurer will pay for loss of or damage to guests' property (a defined term) for which the named insured is legally liable; this includes while the property is in a safe deposit box, in the named insured's possession, or even while at the described premises. If the named insured is sued for refusing to pay for loss of or damage to the guest's property, the insurer will pay for any reasonable legal defense costs; the payment of defense costs is in addition to the limit of insurance for guests' property coverage shown on the declarations page. The limit of insurance for this coverage is $25,000 in any one occurrence, with a per guest limit of $5,000.

There are nine exclusions applying to this particular coverage. The insurer will not pay for loss or damage resulting from any dishonest or criminal act that the named insured commits. There is no coverage for loss resulting from liability assumed under any written agreement. There is no coverage for loss from fire. If the property is in a wall safe or other safekeeping container in the guest's quarters, there is no coverage. If the loss or damage is caused by the spilling, upsetting, or leaking of any food or liquid, there is no coverage. A guest's property in the named insured's care and custody for the purpose of laundering or cleaning is not covered for loss or damage. There is no coverage for loss or damage resulting from the named insured's release of any other person or organization from legal liability. Samples or articles carried or held for sale or delivery after sale are not covered. Finally, there is no coverage for any vehicle, its equipment and accessories, or any property contained in or on a vehicle.

Food Contamination. If the named insured is unable to provide food at the described premises by order of the Board of Health as a result of the discovery or suspicion of food contamination, MS HM 01 will pay extra expenses and business income expenses that the named insured incurs. Extra expenses include the cost to clean the equipment as required by the Board of Health, the cost to replace the contaminated food, and the cost of necessary medical tests or vaccinations for the employees of the named insured. The 2013 form revision made clear that employees include temporary and leased employees, and that the employees should be potentially infected by the food contamination. The business income expenses are the actual loss of business income that the named insured sustains due to the necessary suspension of operations as a result of the food contamination, and the cost of additional advertising to restore the reputation of the named insured. The coverage for business income and the cost of additional advertising begins twenty-four hours after the named insured receives a notice of closing.

The definition of “food contamination” was updated in the 2013 form revision and means “an outbreak of food poisoning or food-related illness of one or more persons arising out of: tainted food you distributed or purchased; food which has been improperly processed, stored, handled or prepared in the course of your business operations; or food which has been contaminated by virus or bacteria transmitted through one or more of your employees, including temporary and leased employees.” The revision replaced references to “physical loss or damage” with “food contamination.”

The most the insurer will pay under this additional coverage for loss in any one occurrence is $10,000 for extra expense, $10,000 for business income, and $5,000 for additional advertising expenses incurred by the named insured to restore its reputation. The insurer will not pay any fines or penalties levied against the named insured by the Board of Health. Any exclusion of virus or bacteria in the policy does not apply to this coverage.

Spoilage Coverage. This coverage applies to loss to perishable stock, which is defined as property maintained under controlled conditions for its preservation, and that is susceptible to loss or damage if the controlled conditions change. The following causes of loss are covered: a change in temperature or humidity resulting from mechanical breakdown or failure of refrigeration, cooling, or humidity control equipment; contamination by a refrigerant; and power outage. The most that the insurer will pay for loss in any one occurrence is $50,000 (unless a different limit for spoilage coverage is shown in the declarations); this amount is available after the deductible is met.

The value of the perishable stock is the selling price, less discounts and expenses that the named insured would otherwise have had.

There are several exclusions that apply to this coverage. The coverage does not apply if the spoilage results from: earth movement; governmental action; nuclear hazard; war and military action; water; the disconnection of any refrigerating, cooling, or humidity control system from the source of power; the deactivation of electrical power by the manipulation of any switch; the inability of an electrical utility company or other power source to provide sufficient power due to lack of fuel or governmental order; the inability of a power source at the described premises to provide sufficient power due to lack of generating capacity to meet demand; and the breaking of any glass that is a permanent part of any refrigerating, cooling, or humidity control unit.

The named insured is required to maintain a refrigeration maintenance or service agreement. If the insured fails to do this and does not notify the insurer, the coverage is automatically suspended at the involved location.

Guests' Evacuation Expense Coverage. MS HM 01 promises to reimburse the named insured for reasonable and necessary expenses that it incurs to evacuate a described premises because of imminent danger to the life or safety of guests; that danger must be posed by a covered cause of loss. The most that will be paid is $25,000 at each described premises in any one occurrence. The coverage does not extend to planned evacuation drills or to any strike, bomb threat, or false fire alarm unless the order to evacuate is issued by a civil authority having jurisdiction.

Coverage Extensions

MS HM 01 makes several changes to the coverage extensions section of CP 00 10.

Newly Acquired or Constructed Property. The first change is to the period of coverage for newly acquired or constructed property. MS HM 01 declares that coverage will end when any of the following first occurs: the policy expires; thirty days expire after the named insured acquires the property or begins construction; or with respect to computers, when specific insurance at the newly acquired premises is obtained; or when the named insured reports values to the insurer.

Personal Effects and Property of Others. The coverage extension for personal effects and property of others is also changed. MS HM 01 offers up to $5,000 in any one occurrence for loss or damage to personal effects owned by the named insured and to personal property of others (except guests) in the care, custody, or control of the named insured. This extension does not apply to loss or damage by theft.

Valuable Papers and Records (Other Than Electronic Data). When it comes to valuable papers and records (other than electronic data), MS HM 01 extends coverage to such papers and records that the named insured owns or that are in the named insured's care, custody, or control. Coverage is for loss caused by or resulting from a covered cause of loss, and the coverage includes the cost to research lost information on valuable papers and records for which duplicates do not exist. The most that the insurer will pay for this coverage extension is $25,000 in any one occurrence at each described premises, or $10,000 not at a described premises. This extension does not apply to property held as samples or for delivery after sale or to property in storage away from the premises shown in the declarations.

Property Off-Premises. The named insured may extend coverage to covered property while it is away from the described premises under certain conditions. The property must be temporarily at a location the named insured does not own, lease, or operate; the property must be in storage at a location leased by the named insured; or, the property must be at a fair, trade show, or exhibition. This extension does apply to computers while such property is in the course of transit. The extension does not apply to property in or on a vehicle (except for computers), or to property in the care, custody, or control of the named insured's salespersons (unless the property is at a fair, trade show, or exhibition).

The most the insurer will pay for loss or damage under this extension is $10,000 in any one occurrence.

Outdoor Property. MS HM 01 will pay for loss or damage to fences and retaining walls that are not a part of a building; the most that will be paid in any one occurrence is $15,000. The endorsement will pay for loss or damage to outdoor radio, TV, satellite, or other antennas; the most to be paid for this extension is $15,000 in any one occurrence. Also covered are trees, shrubs, and plants other than stock, or as added by the 2013 form revision, trees, shrubs, or plants that are part of a vegetated roof. The most paid is $25,000 for any one occurrence, but not more than $500 for any one tree, shrub, or plant. And, this coverage extension also applies to bridges, roadways, walks, or patios up to the amount of $15,000 for any once occurrence. This coverage for outdoor property is only for the following covered causes of loss: fire, lightning, explosion, riot or civil commotion, and aircraft.

The 2013 revision added coverage under this extension for the expense to remove debris of trees, shrubs, or plants that are the property of others unless the insured is a tenant and the property is owned by the landlord of the described premises.

Accounts Receivable. The insurer will pay up to $10,000 for loss or damage to the named insured's records of accounts receivable in any one occurrence at each described premises. The amount paid is up to $1,500 for accounts receivable not at described premises.

The coverage extension applies to all amounts due from the named insured's customers that cannot be collected; interest charges on any loan required to offset amounts that are not able to be collected; collection expenses in excess of the normal collection expenses made necessary by loss or damage; and other reasonable expenses that the named insured incurs to reestablish the records of accounts receivable.

Changes to the Causes of Loss Form

MS HM 01 also modifies the Causes Of Loss—Special Form, CP 10 30 10 12.

The first modification is that MS HM 01 states that the ordinance or law exclusion on CP 10 30 does not apply to the ordinance or law—equipment coverage that is provided as an additional coverage by this endorsement.

The mechanical breakdown exclusion in the exclusions section of CP 10 30 does not apply to loss or damage to computers. The paragraph referencing the excluded causes of loss to personal property in the exclusions section is replaced by the following: “the insurer will not pay for loss or damage caused by or resulting from dampness or dryness of atmosphere, or changes in or extremes of temperature, unless such conditions result from physical damage caused by a covered cause of loss to an air conditioning unit or system which is part of, or used with, computers; and the insurer will not pay for loss or damage caused by marring or scratching.”

MS HM 01 adds four exclusions that pertain only to the coverage for computers that the endorsement offers. These exclusions deal with loss by errors or omissions, electrical disturbance, computer-related losses, and computer advice or consultation.

Errors or Omissions. The endorsement does not apply to loss or damage caused by errors or omissions in processing, recording, or storing information on media or computers. However, the insurer will pay for direct loss or damage caused by or resulting from fire or explosion if these causes of loss would be covered by the endorsement.

Electrical Disturbance. Loss due to electrical or magnetic injury, disturbance, or erasure of electronic recordings is not covered. Direct loss or damage caused by lightning is covered.

Computer-Related Losses. The inability to correctly recognize, process, distinguish, interpret, or accept one or more dates or times is another cause of loss that MS HM 01 does not cover. This relates to the failure, malfunction, or inadequacy of the following: computer hardware, software, operating systems, networks, microprocessors (computer chips) that are not part of any computer system, and any other computerized or electronic equipment or components.

Computer Advice or Consultation. MS HM 01 will not respond to a loss or damage caused by any advice, consultation, design, evaluation, inspection, maintenance, repair, replacement, or supervision provided or done by or for the named insured in order to rectify or test for any potential or actual problems described in the computer-related loss clause.

If an excluded cause of loss as described in these four clauses results in a specified cause of loss (a defined term on CP 10 30), or in elevator collision resulting from mechanical breakdown, the insurer will pay for the loss or damage caused by these things.

The insurer will not pay for repair, replacement, or modification of any items noted in the computer-related losses paragraph just in order to correct any deficiencies or change any features.

The following additional exclusions apply only to the accounts receivable coverage extension offered by MS HM 01. 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 also 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.

Changes to the CGL Form

The CGL form contains three insuring agreements: coverage A, bodily injury and property damage liability; coverage B, personal and advertising injury liability; and coverage C, medical payments. MS HM 01 adds an insuring agreement covering services errors and omissions.

MS HM 01 promises to pay those sums that the insured becomes legally obligated to pay as damages because of a failure to provide facilities, goods, or services by the named insured, or any employee, or any concessionaire trading in the named insured's name. The most that the insurer will pay for the sum of all damages under this insuring agreement is $25,000 in any annual period; this limit applies separately to each premises described in the declarations. There is also a $250 deductible on this coverage.

This insurance applies only to errors in the providing of facilities, goods, or services that take place, or omissions in providing such goods, facilities, or services that should have taken place in the coverage territory, and during the policy period. This seems at first to be a rather broad statement of coverage. It could apply to the insured's failure to honor a reservation, to putting a customer in a smoking room after the customer ordered a nonsmoking room, to serving tainted food, to forcing the customer to carry his own luggage because of the lack of bellhop services, to damage done to a customer's car due to lack of security, or to injury to the customer himself who was attacked in the insured's parking lot. However, there are exclusions that apply to limit the scope of this coverage.

The insurance does not apply to bodily injury, property damage, or personal and advertising injury. These items are as defined on the CGL form; see Commercial General Liability Definitions. The insurance does not apply to intentional errors and omissions. The insurance also does not apply to discrimination based on a guest's race, color, national origin, religion, gender, marital status, age, sexual orientation, physical or mental condition, or residence location. In effect, the broad scope of the insuring agreement is matched by the broad sweep of the exclusions.

MS HM 01 also modifies the who is an insured provisions of the CGL form by adding certain classes as insureds. Any person or organization with respect to their liability as a grantor of a franchise to the named insured is added. Also added as an insured is any person or organization with respect to their liability as a concessionaire trading under the named insured's name with the permission of the named insured.

Definitions

There are fourteen definitions listed on MS HM 01.

Business Income. This is the net income that would have been earned (net profit) or incurred (net loss) by the named insured if no food contamination had occurred; this term does not include any net income that would likely have been earned as a result of an increase in the volume of business due to favorable business conditions caused by the impact of the covered causes of loss on customers or on other businesses. Continuing normal operating expenses incurred (including payroll) are also included in this definition.

Computer. A computer is defined as the named insured's programmable electronic equipment that is used to store, retrieve, and process electronic data. A computer includes component parts and dedicated air conditioning, fire suppression equipment, and electrical equipment used exclusively in the named insured's computer operations. It also includes associated peripheral equipment that provides communication, including input and output functions. However, a computer 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. This term is defined with respect to coverage provided under the money and securities and employee dishonesty clauses. An employee is any natural person while in the service of the named insured (or for thirty days after termination), who the named insured compensates directly by salary or wages or commission, and who the named insured has the right to direct and control while performing services for the named insured. An employee also includes any natural person who is furnished temporarily to the named insured to substitute for a permanent employee who is on leave or to meet seasonal or short term work load conditions. An employee does not include any agent, broker, or independent contractor. Any manager, director, or trustee is not an employee except while performing acts coming within the scope of the usual duties of an employee.

Forgery. Forgery is 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, or for any purpose.

Guests' Property. This is money, securities, and other tangible property having intrinsic value that belongs to the guest of the named insured.

Manager. This term is defined with respect to employee dishonesty coverage only and means a person serving in a directorial capacity for a limited liability company.

Member. A member, as respects coverage for employee dishonesty, is an owner of a limited liability company represented by its membership interest, who also may serve as a manager.

Money. Money is currency, coins, and bank notes in current use and having a face value, and travelers checks, and money orders held for sale to the public.

Occurrence. This definition is listed in reference to the following coverages: money and securities; computer fraud, guests' property, money orders and counterfeit money, forgery or alteration, and employee dishonesty. The term means an individual act, the combined total of all separate acts (whether related or not), or a series of acts (whether related or not) committed by a person acting alone or in collusion with other persons during the policy period.

Operations. This word means the named insured's business activities occurring at the described premises.

Perishable Stock. This is personal property maintained under controlled conditions for its preservation and susceptible to loss or damage if the controlled conditions change.

Securities. Securities are negotiable and nonnegotiable instruments or contracts representing either money or other property. The term includes redeemed coupons, tokens, tickets, revenue, and other stamps in current use, and evidences of debt issued in connection with credit cards. The term does not include money.

Suspension. This word means the slowdown or cessation of the named insured's business activities, or that a part or all of the described premises is rendered untenantable, if coverage for business income applies.

Endorsements

MS HM DS 07 13, Hotels, Motel And Inns Supplemental Schedule, may be used in conjunction with the commercial property coverage part declarations and the CGL coverage part declarations; it supplements either or both of these declarations.

The first part of the endorsement lists various property coverages for the insured's premises and allows the insured to choose the limits of insurance on a per occurrence basis, with the next section allowing space for listing the premises number for each applicable coverage. The coverages listed are fire department service charge, money and securities, computer fraud, money orders and counterfeit money, forgery or alteration, outdoor signs, employee dishonesty, food contamination, extra expenses, business income, additional advertising expenses, personal effects and property of others, spoilage coverage, guests' evacuation expense, and valuable papers and records (other than electronic data). There is a space to specify other coverages.

The next section of MS HM DS lists hired auto liability and nonowned auto liability coverages as options for the insured to choose. The limits of insurance are on a per occurrence basis. This is closely followed by coverage choices for loss or damage to the autos of the guests. This coverage can be direct primary coverage for the loss or damage, legal liability coverage, or direct coverage for loss or damage to the guests' autos and other property of the guests. The endorsement provides a space for a limit of insurance on a per event basis and allows a deductible for a collision loss and an other than collision loss

A $25,000 per occurrence (and $50,000 per occurrence for threats to captives) limit of insurance is next offered for extortion coverage.

Equipment breakdown protection coverage, as of the 2013 revision, is no longer available as a coverage on the endorsement because it is now offered as an optional coverage under the Commercial Property program. The last two coverages offered on the schedule are fine arts coverage and guests' relocation expense coverage.

MS HM 03 07 07, Hotels, Motels And Inns – Loss Or Damage To Guests' Autos (Legal Liability Coverage), pertains to legal liability coverage for loss or damage to guests' autos. Under the terms of this endorsement, the insurer promises to pay all sums that the named insured legally must pay as damages for direct physical loss of or damage to (including any resulting loss of use) to autos or auto equipment of guests or other invitees while the autos are at a premises shown in the declarations. Such loss or damage must be caused by or result from a covered cause of loss, and this is any loss or damage not specifically excluded in MS HM 03.

The exclusions listed in MS HM 03 are liability resulting from any agreement by which the named insured accepts responsibility for direct physical loss of or damage to autos left in the care of the named insured; and, loss or damage due to theft or conversion caused in any way by the named insured or any other insureds.

Regardless of the number of autos left in the care of the named insured, the most the insurer will pay for all loss or damage at each premises in any one event is the limit of insurance shown in the declarations minus the applicable deductible. The maximum deductible stated in the declarations for los or damage from any cause other than collision is the most that will be deducted for all loss or damage in any one event caused by theft or mischief or vandalism.

MS HM 04 07 07, Hotels, Motels And Inns – Loss Or Damage To Guests' Autos (Direct Primary Coverage), is similar to MS HM 03 except it applies to direct primary coverage for the loss or damage to the autos of the insured's guests (that is, no legal liability on the part of the named insured is required). MS HM 04 offers to pay for direct physical loss of or damage to (including any resulting loss of use) to autos or auto equipment of guest or other invitees while the autos are at a premises shown in the declarations. The covered cause of loss is any cause of loss or damage except for: theft or conversion caused in any way by the named insured, partners, executive officers, or employees; and loss or damage to property that is otherwise paid under personal property of others of the building and personal property coverage form.

As noted, this coverage is primary insurance.

MS HM 05 07 07, Hotels, Motels And Inns – Loss Or Damage To Guests' Autos And Other Property Of Guests (Direct Primary Coverage), is similar to the two previous endorsements and applies to loss or damage to guests' autos and other property on a direct primary basis.

MS HM 06 01 02, Hotels, Motels And Inns – Extortion Coverage, offers to pay up to $25,000 for a loss as a result of a threat communicated to the named insured during the policy period to do damage to the property or premises of the named insured. Up to $50,000 is available for a loss as a result of a threat communicated to the named insured during the policy period to do bodily harm to the named insured; directors, officers, or trustees; employees; partners; or invitees who are, or who are allegedly, being held captive; this insurance applies only if the captivity takes place within the coverage territory.

This insurance applies to the surrender of money, securities, or other property away from the premises, provided that the person receiving the threat has made a reasonable effort to report the demand to an associate or law enforcement agency.

MS HM 07 07 07, Hotels, Motels And Inns – Hired Auto And Non-owned Auto Liability Insurance, provides hired auto and nonowned auto liability insurance for the insured. The insurance provided applies to bodily injury or property damage arising out of the maintenance or use of a hired auto or a nonowned auto in the course of the business of the named insured. The following exclusions under the general liability coverage part do not apply: contractual liability; liquor liability; employers liability; aircraft, auto, or watercraft; mobile equipment; damage to property; damage to your product; damage to your work; damage to impaired property or property not physically injured; and recall of products, work, or impaired property.

“Hired auto” means any auto that the named insured leases, hires, rents, or borrows, except for those autos leased, hired, rented, or borrowed from any of the named insured's employees, partners, executive officers, or members of their households. A “nonowned auto” is any auto that the named insured does not own, lease, hire, rent, or borrow that is used in connection with the named insured's business.

MS HM 09 07 07, Hotels, Motels And Inns – Equipment Breakdown Protection Coverage, was withdrawn in 2013. Equipment breakdown coverage is available as an optional coverage under the Commercial Property program, so the coverage is no longer necessary under the Market Segments program.

MS HM 10 07 07, Hotels, Motels And Inns – Fine Arts Coverage, offers to pay for 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 include, but are not limited to, antiques, paintings, etchings, drawings, tapestries, sculptures, and fragile property such as porcelains, china, and marble.

The most that the insurer will pay for loss in any one occurrence under this additional coverage is $25,000 at each described premises. The amount payable through MS HM 10 is additional insurance over the insurance available for business personal property.

MS HM 12 07 07, Hotels, Motels And Inns – Guests' Relocation Expense Coverage, pays the named insured's actual expense to reimburse guests whose lodging accommodations are interrupted due to the uninhabitability of a covered property at the premises described in the declarations. The interruption must result from a direct physical loss of or damage to the named insured's covered property caused by or resulting from a covered cause of loss. The most that the insurer will reimburse the named insured in any one occurrence is $50,000 at each described premises, and no more than $500 for any one guest.

The insurer will reimburse the named insured only for reasonable expenses incurred beyond the cost of lodging accommodations at the described premises to secure other comparable lodging accommodations and reasonable extra expenses incurred to travel back and forth from the described premises to the replacement lodging. Such expenses are limited to the amount of time each guest is scheduled to stay at the insured's lodging.