a.Debris Removal

(1)Subject to Paragraphs (3) and (4), we will pay your expense to remove debris of Covered Property caused by or resulting from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the date of direct physical loss or damage.

(2)Debris Removal does not apply to costs to:

(a)Extract “pollutants” from land or water; or

(b)Remove, restore, or replace polluted land or water.

(3)Subject to the exceptions in Paragraph (4)the following provisions apply:

(a)The most we will pay for the total of direct physical loss or damage plus debris removal expense is the Limit of Insurance applicable to the Covered Property that has sustained loss or damage.

(b)Subject to (a) above, the amount we will pay for debris removal expense is limited to 25% of the sum of the deductible plus the amount that we pay for direct physical loss or damage to the Covered Property that has sustained loss or damage

(4)We will pay up to an additional $25,000 for debris removal expense, for each location, in any one occurrence of physical loss or damage to Covered Property, if one or both of the following circumstances apply:

(a)The total of the actual debris removal expense plus the amount we pay for direct physical loss or damage exceeds the Limit of Insurance on the Covered Property that has sustained loss or damage.

(b)The actual debris removal expense exceeds 25% of the sum of the deductible plus the amount that we pay for direct physical loss or damage to the Covered Property that has sustained loss or damage.

Therefore, if (4)(a) and/or (4)(b) applies, our total payment for direct physical loss or damage and debris removal expense may reach but will never exceed the Limit of Insurance on the Covered Property that has sustained loss or damage, plus $25,000.

(5) Examples

The following examples assume that there is no Coinsurance penalty.

Example 1

Limit of Insurance: $ 90,000

Amount of Deductible: $ 500

Amount of Loss: $ 50,000

Amount of Loss Payable: $ 49,500

($50,000 – $500)

Debris Removal Expense: $ 10,000

Debris Removal Expense Payable: $ 10,000

($10,000 is 20% of $50,000.)

The debris removal expense is less than 25% of the sum of the loss payable plus the deductible. The sum of the loss payable and the debris removal expense ($49,500 + $10,000 = $59,500) is less than the Limit of Insurance. Therefore, the full amount of debris removal expense is payable in accordance with the terms of Paragraph (3).

Example 2

Limit of Insurance: $ 90,000

Amount of Deductible: $ 500

Amount of Loss: $ 80,000

Amount of Loss Payable: $ 79,500

($80,000 – $500)

Debris Removal Expense: $ 40,000

Debris Removal Expense Payable:

Basic Amount: $ 10,500

Additional Amount: $ 25,000

The basic amount payable for debris removal expense under the terms of Paragraph (3) is calculated as follows: $80,000 ($79,500 + $500) x .25 = $20,000; capped at $10,500. The cap applies because the sum of the loss payable ($79,500) and the basic amount payable for debris removal expense ($10,500) cannot exceed the Limit of Insurance ($90,000).

The additional amount payable for debris removal expense is provided in accordance with the terms of Paragraph (4), because the debris removal expense ($40,000) exceeds 25% of the loss payable plus the deductible ($40,000 is 50% of $80,000), and because the sum of the loss payable and debris removal expense ($79,500 + $40,000 = $119,500) would exceed the Limit of Insurance ($90,000). The additional amount of covered debris removal expense is $25,000, the maximum payable under Paragraph (4). Thus, the total payable for debris removal expense in this example is $35,500; $4,500 of the debris removal expense is not covered.

b.Preservation Of Property

If it is necessary to move Covered Property from the described premises to preserve it from loss or damage by a Covered Cause of Loss, we will pay for any direct physical loss or damage to that property:

(1)While it is being moved or while temporarily stored at another location; and

(2)Only if the loss or damage occurs within 30 days after the property is first moved.

c.Fire Department Service Charge

When the fire department is called to save or protect Covered Property from a Covered Cause of Loss, we will pay up to $1,000 for service at each premises described in the Declarations, unless a higher limit is shown in the Declarations.

Such limit is the most we will pay regardless of the number of responding fire departments or fire units, and regardless of the number or type of services performed.

This Additional Coverage applies to your liability for fire department service charges:

(1)Assumed by contract or agreement prior to loss; or

(2)Required by local ordinance.

No deductible applies to this Additional Coverage.

d.Pollutant Clean-up And Removal

We will 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 or results from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the date on which the Covered Cause of Loss occurs.

This Additional Coverage does not apply to costs to test for, monitor or assess the existence, concentration or effects of “pollutants”. But we will pay for testing which is performed in the course of extracting the “pollutants” from the land or water.

The most we will pay under this Additional Coverage for each described premises is $10,000 for the sum of all covered expenses arising out of Covered Causes of Loss occurring during each separate 12- month period of this policy.

Property Off-Premises

You may extend the insurance provided by this Coverage Form to apply to Covered Property that is temporarily located in a building or structure you do not own, lease or operate.

This Extension does not apply to Covered Property:

a.In a vehicle;

b.In the care, custody or control of your salespersons; or

c.At any fair or exhibition.

The most we will pay for loss or damage under this Extension is $10,000.

This Extension is additional insurance. The Additional Condition, Need For Full Reports, does not apply to this Extension.

See applicable Causes Of Loss form as shown in the Declarations.

The most we will pay for loss or damage in any one occurrence is the applicable Limit Of Insurance shown in the Declarations.

The limits applicable to the Coverage Extension and the Fire Department Service Charge and Pollutant Clean-up And Removal Additional Coverages are in addition to the Limits of Insurance.

Payments under the Preservation Of Property Additional Coverage will not increase the applicable Limit of Insurance.

In any one occurrence of loss or damage (hereinafter referred to as loss), we will first reduce the amount of loss if required by the Additional Condition, Need For Full Reports. If the adjusted amount of loss is less than or equal to the Deductible, we will not pay for that loss. If the adjusted amount of loss exceeds the Deductible, we will then subtract the Deductible from the adjusted amount of loss, and will pay the resulting amount or the Limit of Insurance, whichever is less.

The following conditions apply in addition to the Common Policy Conditions and the Commercial Property Conditions:

1.Abandonment

There can be no abandonment of any property to us.

2.Appraisal

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

a.Pay its chosen appraiser; and

b.Bear the other expenses of the appraisal and umpire equally.

If there is an appraisal, we will still retain our right to deny the claim.

3.Duties In The Event Of Loss Or Damage

a.You must see that the following are done in the event of loss or damage to Covered Property:

(1)Notify the police if a law may have been broken.

(2)Give us prompt notice of the loss or damage. Include a description of the property involved.

(3)As soon as possible, give us a description of how, when and where the loss or damage occurred.

(4)Take all reasonable steps to protect the Covered Property from further damage, and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance.

However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination.

(5)At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of loss claimed.

(6)As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records. Also permit us to take samples of damaged and undamaged property for inspection, testing and analysis, and permit us to make copies from your books and records.

(7)Send us a signed, sworn proof of loss containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms.

(8)Cooperate with us in the investigation or settlement of the claim.

b.We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured's books and records. In the event of an examination, an insured's answers must be signed.

4.Loss Payment

a.In the event of loss or damage covered by this Coverage Form, at our option, we will either:

(1)Pay the value of lost or damaged property;

(2)Pay the cost of repairing or replacing the lost or damaged property, subject to b. below;

(3)Take all or any part of the property at an agreed or appraised value; or

(4)Repair, rebuild or replace the property with other property of like kind and quality, subject to b. below.

We will determine the value of lost or damaged property, or the cost of its repair or replacement, in accordance with the applicable terms of the Valuation Condition in this Coverage Form or any applicable provision which amends or supersedes the Valuation Condition.

b.The cost to repair, rebuild or replace does not include the increased cost attributable to enforcement of or compliance with any ordinance or law regulating the construction, use or repair of any property.

c.We will give notice of our intentions within 30 days after we receive the sworn proof of loss.

d.We will not pay you more than your financial interest in the Covered Property.

e.We may adjust losses with the owners of lost or damaged property if other than you.

If we pay the owners, such payments will satisfy your claims against us for the owners' property. We will not pay the owners more than their financial interest in the Covered Property.

f.We may elect to defend you against suits arising from claims of owners of property. We will do this at our expense.

g.We will pay for covered loss or damage within 30 days after we receive the sworn proof of loss, if you have complied with all of the terms of this Coverage Part, and:

(1)We have reached agreement with you on the amount of loss; or

(2)An appraisal award has been made.

5.Recovered Property

If either you or we recover any property after loss settlement, that party must give the other prompt notice. At your option, the property will be returned to you. You must then return to us the amount we paid to you for the property. We will pay recovery expenses and the expenses to repair the recovered property, subject to the Limit of Insurance.

6.Valuation

a.We will determine the value of Tobacco in Sales Warehouses in the event of loss or damage at the average price on sales of tobacco of like grades and types:

(1)On the day loss occurs;

(2)On the two sales days immediately prior to the day loss occurs; and

(3)On the two sales days immediately following the day loss occurs.

b.Prices will be based on sales at the tobacco sales warehouse nearest the premises where loss or damage occurs. We will determine the average price as follows:

(1)Divide the total sales by the total number of pounds; and

(2)Deduct any unearned warehouse charges, unearned auction fees and unpaid government taxes at the time of the loss.

The following conditions apply in addition to the Common Policy Conditions and the Commercial Property Conditions:

1.Need For Full Reports

a.We will not pay a greater proportion of loss than:

(1)The values you reported, divided by

(2)The value of the Covered Property during the last auction season, if your last report of values before loss or damage at any location shows less than the full value of the Covered Property at that location during the last auction season.

b.For locations you acquire after the last report of values, we will not pay a greater proportion of loss than:

(1)The values you reported for all locations, divided by

(2)The value of the Covered Property at all locations during the last auction season.

2.Premium Adjustment

a.The premium charged at the inception of each policy year is an advance premium. We will determine the final premium for this insurance after the policy year or expiration, based on your reports of value.

b.Based on the difference between the advance premium and the final premium, for each policy year, we will:

(1)Charge additional premium; or

(2)Return excess premium.

3.Reports Of Value

You must file with us a report, within 30 days of the official closing of the sales auction season, showing separately for each location listed in the Declarations:

a.The total number of pounds of tobacco sold and resold during the last sales auction season; and

b.The total price paid per pound.

“Pollutants” means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.