Radio and Television Towers and Equipment Coverage
ISO Form IH 00 77
September 5, 2016
Summary: The Insurance Services Office (ISO) provides a form that can be used to insure radio and television towers and related equipment. The form is IH 00 77 06 14, Radio And Television Towers And Equipment Coverage Form. When combined with Commercial Inland Marine Conditions Form, CM 00 01 09 04, and Common Policy Conditions Form, IL 00 17 11 98, to form a policy, the insured who is engaged in radio or television broadcasting will have very broad coverage.
Topics covered: Introduction Underwriting considerations Insuring agreement; covered property Property not covered; covered causes of loss Additional coverage Optional coverages Exclusions Limits of insurance; deductible Additional conditions Definitions Endorsements
Television and radio towers have captured the public imagination since Monsieur Eiffel built his tower (324 meters high) in Paris in the latter part of the nineteenth century. Although not originally built as a radio tower, but to honor the centenary of the French Revolution, the idea that these structures could be used for something other than a tourist attraction caught on. Now, these structures have become almost a symbol of the ability to build ever higher and more elaborate structures.
Insurance Services Office (ISO) has developed the Radio And Television Towers And Equipment Coverage Form, IH 00 77 06 14, to cover these structures. The form can be combined with Commercial Inland Marine Conditions Form, CM 00 01, and Common Policy Conditions Form, IL 00 17, to form a broad policy for those insureds engaged in radio or television broadcasting. The form can be amended to include coverage for a building (such as a station or maintenance building) used with the tower and replacement cost coverage. The base deductible is $500; optional deductibles (with a reduction in premium) are available.
The ISO Inland Marine Manual contains valuable information for the underwriter. The underwriter should be aware of the exposure at the location of the tower. Climatic records, if available, should be reviewed, since towers are notably susceptible to lightning strikes, wind, and ice. If the insurance is to apply to a building at or near the base of the tower, consideration should be given to construction and protection for the building in the same manner as to any other building, keeping in mind that if the tower falls it could damage or destroy the building.
Although the bulk of radio and television towers, because of their height, are particularly susceptible to weather-related loss, such as storms and ice, aircraft collisions account for many tower collapses. The wiring and cables in these towers can short-circuit and cause a fire. Careful underwriting as to weather patterns, air traffic, and engineering schematics is therefore obligatory. Other causes of loss are not common—one tower in France was destroyed by terrorists in 1961, a tower near Chicago came down in 2000 when someone used a hack saw on the guy wires, and a TV tower in Serbia was destroyed in a NATO air strike in 1999.
Because the form also covers mobile units (the type often seen broadcasting from a newsworthy event), the underwriter will want to consider the protection given to the mobile unit, as well as the equipment it contains. Remember, though, that form IH 00 77 covers the unit and the equipment only—the form does not provide any liability coverage arising out of its use.
Insuring Agreement; Covered Property
A.Coverage
We will pay for loss of or damage to Covered Property from any of the Covered Causes of Loss.
1.Covered Property
Covered Property, as used in this Coverage Form, means the following property at the locations for which a limit of insurance is shown in the Declarations:
a.Radio and television towers, and related antennae, auxiliary equipment and appurtenant electrical operating and control apparatus;
b.Radio and television transmitting, receiving, recording and monitoring equipment;
c.Business personal property consisting of:
(1)Furniture, fixtures and office supplies;
(2)Scenery, sets and props;
(3)Machinery, tools and fittings;
(4)Patterns, dies, molds and models; and
(5)Tenants' improvements and betterments; and
d.Mobile units.
Analysis
The insuring agreement promises to insure for loss of or damage to covered property at a specified location as indicated in the declarations. Coverage is on an open perils basis—unless specifically excluded, a loss or damage is covered.
As well as television or radio towers, related antennae and equipment, and pertinent electrical operating and control equipment, the form also covers radio and television transmitting and receiving equipment and business personal property. Because it is common for a television tower to have, at or near its base, a building containing equipment necessary for the tower's operation and, in some instances, broadcasting studios, the form also covers business personal property. Coverage for the building structure itself can be arranged as one of the optional coverages. See Coverage Options later in this discussion.
The amount of insurance for each line requested is to be indicated in the declarations.
Property Not Covered; Covered Causes of Loss
2.Property Not Covered
Covered Property does not include:
a.Property leased, rented or sold to others, including property sold under a deferred payment sales agreement;
b.Motor vehicles, aircraft, watercraft and their contents, except as provided in Paragraph 1.;
c.Accounts, bills, currency, deeds, money, notes, securities and evidences of debt;
d.Jewelry, costume jewelry, precious or semi-precious stones, gold, silver, platinum or other precious metals or alloys;
e.Furs or fur garments;
f.Paintings, or other works of art;
g.Contraband, or property in the course of illegal transportation or trade;
h.Bridges, roadways, walks, patios or other paved surfaces;
i.The cost of excavations, grading, backfilling or filling;
j.Foundations of buildings, structures, machinery or boilers if their foundations are below:
(1)The lowest basement floor; or
(2)The surface of the ground, if there is no basement;
k.Land (including land on which the property is located); water, growing crops or lawns;
l.Bulkheads, pilings, piers, wharves or docks;
m.Retaining walls that are not a part of the building; or
n.Underground pipes, flues or drains.
Analysis
Many of the items of property that are not covered also appear in the Building and Personal Property Coverage Form, CP 00 10 10 12, notably items c. (with a few exceptions), g., h., i., j., k., l., m., and n.
Item 2.a. makes the point that once covered property is rented, leased, or sold coverage ceases. This might reflect the underwriting principle that the real subject of insurance is people, not property. Because television and radio towers are subject to extraordinary perils, underwriting would take a hard look at management and maintenance practices. Premises that are rented, leased, or sold to another effectively cancels the practices that were in place when the underwriter accepted the risk.
As is common in building property forms, motor vehicles (there are exceptions on the CP 00 10), aircraft, watercraft, and their contents are not covered, except as indicated in A.1.d. mobile units. “Mobile units” is not a defined term, so possibly the coverage could extend to the traffic helicopters or small fixed-wing aircraft frequently seen over cities that broadcast traffic news or police chases. However, insureds would be advised to check with the insurer rather than chancing that a court might not agree that a mobile unit was an aircraft.
The form also makes that point that jewelry, including costume jewelry, precious or semi-precious stones, gold, silver, or platinum, furs or garments made of fur, or fine arts are not covered. Because the form covers scenery, sets, and props, it is possible that the insurer wants to clarify that even if these articles are used as props (a gold crown, for example), they are not covered.
3.Covered Causes Of Loss
Covered Causes of Loss means Risks Of Direct Physical Loss Or Damage to Covered Property except those causes of loss listed in the exclusions.
Analysis
The “covered causes of loss” statement reinforces the insuring agreement. All loss or damage to covered property is covered unless an exclusion applies. And, as is common with inland marine coverage, the coverage is extremely broad, as noted in the Exclusions section, later in this article.
4.Additional Coverages
a.Debris Removal
(1)We will pay your expenses 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)The most we will pay under this Additional Coverage is 25% of:
(a)The amount we pay for the direct physical loss or damage to Covered Property; plus
(b)The deductible in this policy applicable to that loss or damage.
(3)Payment under this Additional Coverage will not increase the applicable Limit of Insurance, but if:
(a)The sum of direct physical loss or damage and debris removal expense exceeds the Limit of Insurance; or
(b)The debris removal expense exceeds the amount payable under the 25% limitation; we will pay up to an additional $5,000 in any one occurrence under this Additional Coverage.
(4)This Additional Coverage does not apply to costs to:
(a)Extract “pollutants” from land or water; or
(b)Remove, restore or replace polluted land or water.
Analysis
Coverage is provided for the removal of debris of damaged covered property that suffers a covered cause of loss. So, if flooding occurs and furniture is unsalvageable and needs to be hauled away, there is no coverage because flood is not a covered cause of loss. Likewise, if paintings or other art work are destroyed by fire, there is no coverage since the art work is property that is not covered, even though fire is a covered cause of loss. Both the damaged property and the cause of the loss must be covered in order for the removal of the debris to be covered.
The expenses of the removal must be reported to the company within 180 days of the date of the loss. Payment is for 25 percent of the amount for the direct loss to covered property and the deducible. For example, the loss is $5,000 and the deductible is $500. The amount available for debris removal is 25 percent of $4,500, so $1,125 is the amount of available coverage. This is an additional coverage, and the limit of insurance is not increased. However, if the loss and the debris removal exceeds the policy limit, or the debris removal costs exceed the 25 percent of the limit, an additional $5,000 is available. Debris removal does not provide coverage to remove pollutants from land or water or to restore, remove, or replace polluted land or water. Pollution cleanup is a separate additional coverage to be discussed later.
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.
This Additional Coverage does not increase the Limit of Insurance.
c.Pollutant Cleanup And Removal
We will pay your expense to extract “pollutants” from land or water at the described premises if the leakage, 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.
The limit for this Additional Coverage is in addition to the Limit of Insurance.
Analysis
The preservation of property additional coverage provides coverage for property that has been moved off the premises in order to avoid damage. The property is covered while it is being moved to or temporarily stored at another location and as long as damage occurs within thirty days of the date of when the property was first moved. For example, the insured sustains a fire and the roof and a wall are damaged. If the insured moves furniture, files, and other property so that it is not exposed to the elements or thieves, coverage is provided to that property while it is being moved and while it is in storage for thirty days. While this is additional coverage, it does not increase the limit of insurance.
The cleanup of pollutants is often complicated because of state and federal regulations. This policy covers cleanup only if the pollution was caused or resulted from a covered cause of loss, and the expenses must be reported within 180 days of the loss. Costs for testing, monitoring, or assessing the concentration or effects of pollutants are not covered. What is covered is the costs of testing that is involved in the actual extraction of the pollutants from land or water. A maximum of $10,000 is available during each twelve-month period, and this limit is in addition to the limit of insurance.
d.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, unless a higher limit is shown in the Declarations, for 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.
e.Limited Coverage For “Fungi”, Wet Rot And Dry Rot
(1)The coverage described in Paragraphs (2) and (5) only applies when “fungi”, or wet or dry rot is the result of one or more of the Covered Causes of Loss, except fire or lightning, that occur during the policy period and only if all reasonable means were used to save and preserve the property from further damage at the time of and after the time of the occurrence.
(2)We will pay for loss or damage to Covered Property by “fungi”, or wet or dry rot. As used in this Limited Coverage, the term loss or damage means:
(a)Direct physical loss or damage to Covered Property caused by “fungi”, or wet or dry rot, including the cost of removal of the “fungi”, or wet or dry rot;
(b)The cost to tear out and replace any part of the building or other property as needed to gain access to the “fungi”, or wet or dry rot; and
(c)The cost of testing performed after removal, repair, replacement or restoration of the damaged property is completed, provided there is a reason to believe that “fungi”, or wet or dry rot is present.
(3)Unless a higher Limit of Insurance for this coverage is shown in the Declarations, the most we will pay is $15,000 for loss or damage to Covered Property. Regardless of the number of claims, this Limit of Insurance is the most we will pay for the total of all loss or damage arising out of all occurrences of Covered Causes of Loss (other than fire or lightning) which take place in a 12-month period (starting with the beginning of the present annual policy period). With respect to a particular occurrence of loss which results in “fungi”, or wet or dry rot, we will not pay more than a total of $15,000 even if the “fungi”, or wet or dry rot continues to be present or active, or recurs, in a later policy period.
If the Declarations indicate that the Separate Locations Option applies, then the amount of coverage ($15,000, unless a higher amount is shown in the Declarations) is made applicable to separate locations as described in the Declarations. For each location so described, the amount of coverage is an annual aggregate limit, subject to the terms set forth above in this Paragraph (3).
(4)The coverage provided under this Limited Coverage does not increase the applicable Limit of Insurance on any Covered Property. If a particular occurrence results in loss or damage by “fungi”, or wet or dry rot, and other loss or damage, we will not pay more, for the total of all loss or damage, than the applicable Limit of Insurance on the affected Covered Property.
If there is covered loss or damage to Covered Property, not caused by “fungi”, or wet or dry rot, loss payment will not be limited by the terms of this Limited Coverage, except to the extent that “fungi”, or wet or dry rot causes an increase in the loss. Any such increase in the loss will be subject to the terms of this Limited Coverage.
(5)The following, (5)(a) or (5)(b), applies only if Business Income and/or Extra Expense Coverage applies and only if the suspension of “operations” satisfies all terms and conditions of the applicable Business Income and/or Extra Expense Coverage Form.
(a)If the loss which resulted in “fungi”, or wet or dry rot does not in itself necessitate a suspension of “operations” but such suspension is necessary due to loss or damage to property caused by “fungi”, or wet or dry rot, then our payment under Business Income and/or Extra Expense is limited to the amount of loss and/or expense sustained in a period of not more than 30 days, or the number of days shown in the Declarations. The days need not be consecutive.
(b)If a covered suspension of “operations” was caused by loss or damage other than “fungi”, or wet or dry rot but remediation of “fungi”, or wet or dry rot prolongs the “period of restoration”, we will pay for loss and/or expense sustained during the delay (regardless of when such a delay occurs during the “period of restoration”), but such coverage is limited to 30 days, or the number of days shown in the Declarations. The days need not be consecutive.
Analysis
In the 2011 revision, ISO added coverage for a fire department service charge. If the fire department is called to protect covered property from a covered cause of loss, up to $1,000 is available to the insured to cover these charges. The insured must be liable for the service charges either by contract or agreement made prior to the loss or be required by local ordinance. The limit may be changed as long as the amount appears in the declarations.
The coverage for fungi and wet or dry rot does not include bacteria. Coverage is limited to $15,000 in a twelve-month period (unless a higher amount of coverage is selected) for all loss or damage arising out of all occurrences. (Fungi and wet or dry rot resulting from fire or lightning is exempt.) Even if in a later policy period fungi is discovered, and its presence can be tied to the event when the loss was first paid, no additional amount will be available. In keeping with the form's coverage for property at different locations, coverage for fungi is also available for the different locations, as long as these are indicated in the declarations.
If a loss includes damage caused by a covered cause of loss as well as by fungi, then loss payment is not limited by the fungi limitation, except to the extent that the limitation would otherwise apply. For example, building materials, including lighting fixtures and several stacks of drywall, are accidentally damaged by a sudden hail storm, with the result that the fixtures are broken and ruined and the wet dry wall develops mold. The fixtures are covered (provided no other exclusion applies), but coverage for the moldy dry wall is subject to the $15,000 limitation.
If the insured carries business income and/or extra expense coverage, the coverage for fungi will respond if a suspension of operations is necessary due to loss or damage caused by the fungi. Coverage is limited to thirty days, which need not be consecutive. If the period of restoration is increased because remediation of fungi becomes necessary, the coverage pays for loss or expense sustained during the delay; however, coverage is limited to thirty days or the number of days shown in the declarations. Again, the thirty days need not be consecutive.
The insured can select from two available optional coverages. The coverages are included on form IH 00 77 itself; the coverage and the applicable limit of insurance must be indicated on the declarations.
5.Optional Coverages
a.Buildings
Covered Property, as used in this Coverage Form, includes the following property, if a Limit of Insurance is shown in the Declarations for building(s) and the property is not specified as property not covered in Paragraph A.2.
Building, meaning the building or structure described in the Declarations including:
(1)Completed additions;
(2)Fixtures, including outdoor fixtures;
(3)Permanently installed machinery and equipment;
(4)Personal property owned by you that is used to maintain or service the building or structure or its premises, including:
(a)Fire extinguishing equipment;
(b)Outdoor furniture;
(c)Floor coverings; and
(d)Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering; and
(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.
Analysis
If this optional coverage is selected and a limit of insurance indicated in the declarations, then the policy covers the building. This would likely be a building used in connection with the television or radio tower.
Extra Expense
The extra expense coverage option was eliminated in the 2014 revision because coverage is now included in the Business Income And Extra Expense Coverage endorsement, IH 99 28 06 14.
b.Replacement Cost
(1)Replacement Cost (without deduction for depreciation) replaces Actual Cash Value in the Valuation Condition.
(2)This Optional Coverage does not apply to:
(a)Personal property of others;
(b)Contents of a residence;
(c)Manuscripts;
(d)Works of art, antiques or rare articles, including etchings, pictures, statuary, marbles, bronzes, porcelains and bric-a-brac; or
(e)”Stock”, unless the Including “Stock” option is shown in the Declarations.
(3)You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim for the additional coverage this Optional Coverage provides if you notify us of your intent to do so within 180 days after the loss or damage.
(4)We will not pay on a replacement cost basis for any loss or damage;
(a)Until the lost or damaged property is actually repaired or replaced; and
(b)Unless the repair or replacement is made as soon as reasonably possible after the loss or damage.
(5)With respect to tenants' improvements and betterments:
(a)If the conditions in Paragraph (4) are not met, the value of tenants' improvements and betterments will be determined as a proportion of your original cost, as set forth in the Valuation Condition of this Coverage Form; and
(b)We will not pay for loss or damage to tenants' improvements and betterments if others pay for repairs or replacement.
(6)We will not pay more for loss or damage on a replacement cost basis than the least of (a), (b) or (c), subject to (7) below:
(a)The Limit of Insurance applicable to the lost or damaged property;
(b)The cost to replace, on the same premises, the lost or damaged property with other property:
(i) Of comparable material and quality; and
(ii) Used for the same purpose; or
(c)The amount you actually spend that is necessary to repair or replace the lost or damaged property.
If a building is rebuilt at a new premises, the cost described in Paragraph (b) is limited to the cost which would have been incurred if the building had been rebuilt at the original premises.
(7) The cost of repair or replacement does not include the increased cost attributable to enforcement of any ordinance or law regulating the construction, use or repair of any property.
Analysis
The insured can select replacement cost coverage. Otherwise, coverage is on an actual cash value basis. The coverage does not apply to personal property of others, or works of art, contents of a residence, or stock, unless the insured has selected replacement cost coverage for stock (as defined; see Definitions, later in this article). Although it is hard to think of a radio or TV station with stock, it is common for many stations to have supplies of taped or recorded broadcasts or other programs to offer, say, as prizes or for sale. If lost or damaged, the station would have the expense of replacing them.
As is common with replacement cost, the insured can make a claim on an actual cash value basis and then notify the insurer (within 180 days after the loss) that a claim for the difference between replacement and ACV is forthcoming. The insurer will not pay the replacement cost, though, until the property is actually replaced or repaired as soon as reasonably possible following the loss. Reasonably is not defined, so the insured gets the benefit of the doubt. Delay brought about by the insured's simply delaying completion for no good reason, though, will probably not be tolerated.
With regard to tenants' improvements and betterments, as is common with replacement cost coverage, no payment will be made by the insurer or another entity (the building owner, perhaps) pays for the repairs or replacement. If the responsibility to repair or replace falls to the insured, no replacement cost will be paid until repair or replacement is complete.
The replacement cost coverage is subject to the least of the applicable limit of insurance, the cost to replace the property with property of comparable material and used for the same purpose, or the amount actually and necessarily spent to repair or replace. The insured can elect to rebuild at a different location; in this event, he can collect no more than what it would have cost to repair or rebuild at the original premises.
The coverage does not include any additional costs attributable to ordinance or law. So, for example, if a covered building is damaged and it must be retrofitted in accordance with new earthquake codes, this additional cost will not be paid. (But see Endorsements, later in this article.)
The following set of exclusions is prefaced by anti-concurrent causation language.
B.Exclusions
1.We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss or damage.
a.Governmental Action
Seizure or destruction of property by order of governmental authority.
But we will pay for loss or damage caused by or resulting from acts of destruction ordered by governmental authority and taken at the time of a fire to prevent its spread if the fire would be covered under this Coverage Form.
b. Nuclear Hazard
Nuclear reaction or radiation, or radioactive contamination, however caused.
But if nuclear reaction or radiation, or radioactive contamination results in fire, we will pay for the direct loss or damage caused by that fire if the fire would be covered under this coverage form.
c.War And Military Action
(1)War, including undeclared or civil war;
(2)Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or
(3)Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these.
d.Fungi, Wet Rot And Dry Rot
Presence, growth, proliferation, spread or any activity of “fungi”, or wet or dry rot.
But if “fungi”, or wet or dry rot results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.
This exclusion does not apply:
(1)When “fungi”, or wet or dry rot results from fire or lightning; or
(2)To the extent that coverage is provided in the Additional Coverage – Limited Coverage For “Fungi”, Wet Rot And Dry Rot with respect to loss or damage by a cause of loss other than fire or lightning.
e.Virus, Bacterium Or Other Microorganism
Any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness, or disease.
However, this exclusion does not apply to loss or damage caused by or resulting from “fungi”, wet rot or dry rot. Such loss or damage is addressed in the previous exclusion.
The terms of this exclusion, or the inapplicability of this exclusion to a particular loss, does not serve to create coverage for any loss that would otherwise be excluded under this Coverage Part.
This exclusion applies to all coverage under all forms and endorsements that comprise this Coverage Part, including but not limited to forms or endorsements that cover business income, extra expense, or action of civil authority.Exclusions B.1.a. through B.1.d apply whether or not the loss event results in widespread damage or affects a substantial area.
Analysis
The causes of loss are prefaced by anti-concurrent causation language. Therefore, they apply to exclude coverage even though another covered cause of loss might have occurred along with the excluded event.
As is common with inland marine forms, IH 00 77 covers loss or damage by earthquake or flood (although these two causes of loss are subject to separate limits of insurance), and so these two perils do not appear in these exclusions. There is no coverage if the tower is seized or destroyed by governmental authority, unless the seizure or destruction is taken at the time of a fire to prevent the fire's spreading, if the fire is of the type that would be covered by the policy. Although one normally thinks of the government destroying a building to create a firebreak, the tower could be taken over to use as a place to direct on-the-ground efforts in event of, for example, the California wildfires.
The exclusions for nuclear hazard and war and military action are common among most property forms. Radiation, radioactive contamination, and nuclear reaction—however caused—cover any discharge a weapon might cause. Fungi and wet or dry rot are excluded unless they result from fire or lightning or to the extent that coverage is provided in the additional coverage. But if a loss from fungi or wet or dry rot results in a covered cause of loss, the policy will cover that resulting loss. So, for example, if dry rot causes collapse, the resulting collapse is covered since no exclusion applies.
Any virus, bacterium, or microorganism that can cause physical distress, illness, or disease is excluded. This is geared more towards virus or bacteria that can affect people and not the mold that rots the drywall. With the rising threat of a pandemic, this is a significant exclusion. Since fungi and wet or dry rot are excluded separately, they are not mentioned in this particular exclusion. However, the policy then continues and very specifically states that no coverage is created by this exclusion for a loss that is excluded in another coverage part and that this exclusion applies to all forms and endorsements that make up this coverage part.
2.We will not pay for loss or damage caused by or resulting from any of the following:
a.Delay, loss of use, loss or market or any other consequential loss.
b.Unexplained disappearance.
c.Shortage found upon taking inventory.
d.Dishonest or criminal act (including theft) committed by:
(1)You, any of your partners, employees (including temporary employees and leased workers), officers, directors, trustees, or authorized representatives;
(2)A manager or a member if you are a limited liability company;
(3)Anyone else with an interest in the property, or their employees (including temporary employees and leased workers) or authorized representatives;
whether acting alone or in collusion with each other or with any other party.
This exclusion applies whether or not an act occurs during your normal hours of operation.
This exclusion does not apply to acts of destruction by your employees (including temporary employees and leased workers) or authorized representatives; but theft by your employees (including temporary employees and leased workers) or authorized representatives is not covered.
e.Processing or work upon the property.
But we will pay for direct loss or damage caused by resulting fire or explosion if these causes of loss would be covered under this Coverage Form.
f. Artificially generated electrical, magnetic or electromagnetic energy that damages, disturbs, disrupts or otherwise interferes with any:
(1) Electrical or electronic wire, device, appliance, system or network; or
(2) Device, appliance, system or network utilizing cellular or satellite technology; creating a short circuit or other electric disturbance within an article covered under this coverage form.
For the purpose of this exclusion, electrical, magnetic or electromagnetic energy includes, but is not limited to, electrical current, including arcing; electrical charge produced or conducted by a magnetic or electromagnetic field; pulse of electromagnetic energy; electromagnetic waves or microwaves.
But if artificially generated electrical, magnetic or electromagnetic energy, as described above, results in fire or explosion, we will pay for the direct loss or damage caused by that fire or explosion if the fire or explosion would be covered under this coverage form.
This exclusion only applies to loss or damage to that article in which the disturbance occurs.
g.Voluntary parting with any property by you or anyone entrusted with the property if induced to do so by any fraudulent scheme, trick, device or false pretense.
h.Unauthorized instructions to transfer property to any person or to any place.
i.Neglect of an insured to use all reasonable means to save and preserve property from further damage at and after the time of loss.
j.Theft by any person (except carriers for hire) to whom you entrust the property for any purpose, whether acting alone or in collusion with any other party.
This exclusion applies whether or not an act occurs during your normal hours of operation.
Analysis
Many of these exclusions are common to other commercial and inland marine coverage forms. A few of them warrant further discussion. Exclusion 2.e. excludes coverage for processing or work upon the property, but the exception is that resulting loss by explosion or fire is covered unless otherwise excluded. Because of the wiring in these towers, they are susceptible to fire, so if a worker negligently causes two cables to short out, any resulting fire is covered.
Exclusion 2.f. eliminates coverage for short circuit or other electric disturbance within an article covered under the coverage form that is caused by an artificially generated current. This exclusion has been changed to exclude magnetic or electromagnetic energy that damages, disturbs, or disrupts a variety of equipment by creating a short circuit or other electric disturbance within an article covered in this form as well as artificially generated current. Included in magnetic, electromagnetic, and electrical energy are electrical current, arcing, pulse of electromagnetic energy, electromagnetic waves, microwaves, or other electrical charge. Because most radio or television tower broadcasting operations are carried out by computer equipment, this is an important exclusion to keep in mind. The insured should be advised to obtain computer equipment coverage. But, if the short circuit results in fire or explosion, that ensuing loss is covered.
In the 2014 revision, ISO updated the dishonest acts exclusion for consistency with updated policy language that has been included in other commercial property forms. The revision also added 2.j. to exclude theft by an person to whom the insured entrusted the property.
3.We will not pay for loss or damage caused by or resulting from the following. But if loss or damage by a Covered Cause of Loss results, we will pay for the loss or damage caused by that Covered Cause of Loss.
a.Wear and tear, depreciation.
b.Any quality in the property that causes it to damage or destroy itself, hidden or latent defect, gradual deterioration.
c.Mechanical breakdown.
d.Insects, vermin, rodents.
e.Rust or other corrosion, dampness, extremes of temperature.
Analysis
These excluded causes of loss are those that will happen over time and thus are uninsurable. But, in common with other property forms containing these same exclusions, if loss or damage by a covered cause of loss results, the loss or damage will be covered. For example, collapse because of material fault is not uncommon. The tower's collapse because of material fault (latent defect) is not covered. But if the policy covers a building at the tower's base and the tower falls on the building, the loss to the building is covered.
It is important to note that rodent is a scientific classification of a certain type of animal, and not a general term. Squirrels are rodents, raccoons and bats are not. When in doubt, an internet search or the local zoo or extension service can identify whether or not the animal is truly a rodent.
Limits of Insurance; Deductible
C.Limits Of Insurance
The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Declarations.
Separate Limits of Insurance are shown in the Declarations for Earthquake and “Water Damage”.
Analysis
The policy will pay no more for any covered loss than the amount shown in the declarations. Earthquake and water damage (as defined, see Definitions, later in this article) are each subject to a separate limit of insurance, which must be indicated in the declarations. “Water damage” appears in quotation marks here to indicate this is a defined term.
D.Deductible
We will not pay for loss or damage in any one occurrence until the amount of the adjusted loss or damage before applying the applicable Limits of Insurance exceeds the Deductible shown in the Declarations. We will then pay the amount of the adjusted loss or damage in excess of the Deductible, up to the applicable Limit of Insurance.
Specific deductibles apply to:
1.”Water Damage”; and
2.Earthquake.
All earthquake shocks that occur within a 168 hour period following the earthquake will constitute a single earthquake occurrence.
Analysis
The insurer will not pay a loss unless it exceeds the deductible. The amount of the loss is first to be adjusted; presumably this means that, say, the total amount of the loss is assessed, and then any loss to property not covered is subtracted. Then, the insurer pays the loss, but in any event no more than the applicable limit of insurance.
The standard deductible is $500; other deductibles are available.
There are several conditions that are in addition to those in the commercial inland marine conditions form CM 00 01 09 04.
E.Additional Conditions
1.The following is added to the Valuation General Condition in the Commercial Inland Marine Conditions:
IMPROVEMENTS AND BETTERMENTS
We will pay the following in the event of loss or damage:
a.The actual cash value of property that you repair or replace at your expense within a reasonable time; and
b.A percentage of the original cost of property that you do not repair or replace. The percentage will be obtained by dividing the unexpired term of your rental agreement on the date of loss or damage by the period from the date the property was installed to the expiration date of the rental agreement.
2.The following conditions apply in addition to the Commercial Inland Marine Conditions and the Common Policy Conditions:
a. Coverage Territory
(1)We cover property wherever located within:
(a)The United States of America (including its territories and possessions);
(b)Puerto Rico; and
(c)Canada.
(2)We also cover property being shipped by air within and between points in Paragraph (1).
b.Coinsurance
If a Coinsurance percentage is shown in the Declarations, the following condition applies.
We will not pay the full amount of any loss if the value of Covered Property, except property in transit, at the time of loss times the Coinsurance Percentage shown for it in the Declarations is greater than the Limit of Insurance for the property.
Instead, we will determine the most we will pay using the following steps:
(1)Multiply the value of Covered Property, except property in transit, at the time of loss by the Coinsurance percentage;
(2)Divide the Limit of Insurance of the property by the figure determined in Step (1):
(3)Multiply the total amount of loss, before the application of any deductible, by the figure determined in Step (2); and
(4)Subtract the deductible from the figure determined in Step (3).
We will pay the amount determined in Step (4) or the Limit of Insurance, whichever is less. For the remainder, you will either have to rely on other insurance or absorb the loss yourself.
c.Changes To Property
Unless we agree in writing, we do not cover towers or antennae if the character or construction has been materially changed by additional equipment being attached to the tower.
Analysis
The Commercial Inland Marine Conditions Form does not make any reference to improvements and betterments, since inland marine forms are not commonly used to insure buildings. But because IH 00 77 may be used to insure a building, the method of settling a loss to a covered building in event a tenant has installed improvements and betterments is laid out. Valuation for improvements and betterments is similar to that found in CP 00 10 10 12 condition 7.e. valuation, although the provision in IH 00 77 makes no reference to a lease containing a renewal provision, as does the CP 00 10. Settlement is based on actual cash value if the insured repairs or replaces the property at his own expense within a reasonable time, or a percentage of the original cost if the insured does not repair or replace.
The Commercial Inland Marine Conditions Form does not specify what encompasses the coverage territory, simply stating that the insurer covers loss within the coverage territory. Therefore, form IH 00 77 states that the territory is within the United States of America, including its territories and possessions, Puerto Rico, and Canada . Additionally, property being shipped by air within or between points in the coverage territory is covered.
Condition 2.b. refers to a coinsurance percentage. Common coinsurance percentages are 80, 90, or 100 percent of value. The coinsurance percentage does not apply to property in transit. For example the value of covered property is $600,000 and the coinsurance percentage is 80 percent. $600,000 x .80 = $480,000. The limit of insurance, $400,000, is divided by the result of the first step, $480,000; the calculation is $400,000/$480,000 = . 83. Then the loss amount of $500,000 is multiplied by the result of the previous division, $500,000 x .83 = $416,666. At this point any deductible is subtracted from the final amount, and the lesser of the limit of insurance or the calculated figure ($416,666) is the amount paid on the loss.
An important condition is 2.c. changes to property, which states that the insurer must agree in writing to any material change to the character or construction of the tower brought about by additional equipment being attached to it. Although it would seem unlikely that these structures could be much affected by additional wiring, satellite dishes, or ears, that is not the case. Attaching equipment to a non-guyed structure could undermine its balance. There is some speculation that the wiring in the Ostankino tower in Moscow shorted and resulted in a fire because of the increased wiring demands of radio, television, cell phone, and pager communications. The Ostankino tower was 537 meters tall and burned on August 30, 2000.
F.Definitions
1.”Fungi” means any type or form of fungus, including mold or mildew and any mycotoxins, spores, scents or by-products produced or released by fungi.
2.”Period of Restoration” means the period of time that:
a.Begins with the date of loss caused by or resulting from a Covered Cause of Loss at a covered location; and
b.Ends on the date when the property at the covered location should be repaired, rebuilt or replaced with reasonable speed and similar quality.
3. “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.
4.”Stock” means merchandise held in storage or for sale, raw materials and in-process or finished goods, including supplies used in their packing or shipping.
5.”Water Damage” means:
a. Flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge);
b.Mudslide or mudflow;
c.Water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment;
d.Water under the ground surface pressing on, or flowing or seeping through;
(1)Foundations, walls, floors or paved surfaces;
(2)Basements, whether paved or not; or
(3)Doors, windows or other openings.
e.Waterborne material carried or otherwise moved by any of the water referred to in Paragraph a., c. or d., or material carried or otherwise moved by mudslide or mudflow.
Analysis
Because the extra expense optional coverage was removed in the 2014 revision, the definition of “computer equipment,” specifically referred to in the optional coverage for extra expense, was also removed.
The “period of restoration” definition is common to many business interruption forms. The period of restoration begins on the date of the covered loss, and continues until the date when the property at the covered location should be repaired, rebuilt, or replaced with “reasonable speed and similar quality.” No time deductible applies to the period of restoration in this form.
The “pollutants” definition is standard and includes solid, liquid, gaseous or thermal irritants or contaminants including smoke, vapor, soot, fumes, and waste. Waste materials are materials that are to be recycled, reclaimed, or reconditioned.
The definition of “water damage” includes tsunami and storm surge.
There are four endorsements that can be attached to IH 00 77. Ordinance or law coverage can be arranged by attaching IH 99 21 12 13, Ordinance Or Law Coverage. Although the form can be used with the radio and television towers and equipment coverage form, IH 99 21 refers specifically to buildings. Clarification with the insurer should therefore be obtained as to whether the insurer will provide ordinance or law coverage with regard to the tower itself, and not just a building that might also be insured on IH 00 77. As with commercial property ordinance or law form CP 04 05 10 12, the inland marine form covers loss to the undamaged portion of the building, demolition cost coverage, and the increased cost of construction. The insured may choose any or all of the coverages. A separate limit applies to each.
If the property is subject to a mortgage, Mortgageholders endorsement IH 99 14 04 05 can be used.
Two other endorsements modify the policy terms. The first is Additional Covered Property endorsement, IH 99 19 07 99, which allows the insured to move selected property from the property not covered section to the covered property section of the policy. Conversely, coverage for selected items of property can be deleted by attaching Additional Property Not Covered Endorsement, IH 99 20 07 99, and scheduling the property that is to be considered property not covered.