Extensions

Optional Coverages

Optional Coverages – Time Element Insurance

Limits of Insurance

Property Insurance Coverage Extensions

1. Debris Removal

a. We will pay your expense to remove debris of Covered Property and other debris that is on the described premises, when such debris is caused by or results from Flood. However, we will not pay to remove deposits of mud or earth from the grounds of the described premises.

b. We will also pay the expense to remove debris of Covered Property that has floated or been hurled off the described premises by Flood.

c. This coverage for Debris Removal, as set forth in a. and b., does not increase the applicable Limit of Insurance. Therefore, the most we will pay for the total of loss or damage to Covered Property and removal of debris of property at the described premises is the Limit of Insurance that applies to such Covered Property.

2. Removal For Preservation Of Property.

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

a. While it is being moved or while temporarily stored at another location; and

b. Only if the loss or damage occurs within 45 days after the property is first moved.

This Coverage Extension does not increase the Limit of Insurance applicable to the

Covered Property.

3. Loss Avoidance Expenses

a. We will pay up to $1,000 for reasonable expenses incurred in moving Covered

Property from the described premises in accordance with D.2. above.

b. We will pay up to a total of $1,000 for reasonable expenses you incur to protect the described premises from loss or damage by Flood or imminent danger of Flood. Such expenses are limited to sandbags including the sand for filling them, fill for temporary levees, pumps, and plastic sheeting and lumber used in connection with any of the foregoing, and the related cost of labor.

The amounts payable under this Coverage Extension are part of, not in addition to, the Limit of Insurance that applies to Covered Property at the described premises. No Deductible applies to this Coverage Extension.

4. Electronic Data

a. Under this Coverage Extension, electronic data has the meaning described under Property Not Covered – Electronic Data. This Coverage Extension does not apply to your "stock" of prepackaged software, or to electronic data which is integrated in and operates or controls the building's elevator, lighting, heating, ventilation, air conditioning or security system.

b. You may extend the insurance that applies to Your Business Personal Property to apply to the cost to replace or restore electronic data which has been destroyed or corrupted by Flood. To the extent that electronic data is not replaced or restored, the loss will be valued at the cost of replacement of the media on which the electronic data was stored, with blank media of substantially identical type.

c. The most we will pay under this Coverage Extension for Electronic Data is $2,500 (unless a higher limit is shown in the Declarations), regardless of the number of computers or computer systems at the described premises. Such amount is part of, not in addition to, the Limit of Insurance that applies to Your Business Personal Property at the described premises.

Analysis

The policy includes seven coverage extensions. The first is debris removal, a standard coverage. Coverage is for the removal of covered property and other debris on the premises when caused by or resulting from flood. However, the removal of mud or earth deposits from the grounds of the described premises is not covered. If the flood damages the structure so that parts of it are strewn about the grounds, the removal of those pieces is covered. Likewise, if debris from a neighboring property is deposited on the grounds by the flood, the removal of that debris is also covered. However, removal of deposits of mud or earth from the grounds of the premises is not covered. If debris of covered property has been floated or hurled off the property by the flood onto other property, the removal of that debris is covered. For example, if the loading dock door was pushed out by the water and it floated onto neighboring property, the removal of the door from the neighboring property is covered. The policy does not provide any limit as to distance of where property will be removed from. If the loading dock doors are found ½ a mile away, the policy will still pay to remove them from where the flood deposited them. There is no increase in limits when debris removal coverage is provided.

At times, it is necessary to remove covered property from the site in order to preserve it from damage or imminent danger of flood. Any direct damage to such property is covered while it is being moved or stored temporarily at another location, and only if the damage occurs within 45 days after the property is first moved. Note that similar to other standard ISO forms, coverage is for any direct damage, and does not have to be from flood when the property is moved. Again, this does not increase the coverage limits.

Loss avoidance expense provides coverage for actually moving the property to remove it from danger. Up to $1,000 for reasonable moving expenses is covered. Another $1,000 is available for protecting the premises from damage by or imminent danger of damage by flood. This includes costs for sandbags and sand, fill for temporary levees, pumps, plastic sheeting and lumber used as part of the protection process, and cost of labor. Again, this is not in addition to the limits on the policy. No deductible applies.

While electronic data is excluded under property not covered, there is an extension for electronic data that provides coverage for such data destroyed by flood. Electronic data is defined under property not covered and includes information, facts or programs stored, created or used on, or transmitted to or from software, discs or other processing devices or repositories. Programs are electronic instructions that direct operations and functions of a computer. Not included in electronic data is stock or prepackaged software, or data that is integrated in and controls elevators, heating, ventilation and air conditioning of the building.

This coverage allows the insured to extend the business personal property coverage to apply to the cost to replace or restore electronic data destroyed or corrupted by flood. If the data is not replaced, the loss is valued at the cost of replacing the media with blank media of the same type. Unless a higher limit is listed in the declarations, the limit is $2,500 regardless of the number of computers or systems at the premises. This amount is again, part of the limit, and not in addition to the business personal property limit.

 5. Valuable Papers And Records (Other Than Electronic Data)

a. You may extend the insurance that applies to Your Business Personal Property to apply to the cost to replace or restore the lost information on valuable papers and records for which duplicates do not exist. But this Extension does not apply to valuable papers and records which exist as electronic data. Electronic data has the meaning described under Property Not Covered – Electronic Data.

To the extent that such lost information is not replaced or restored, the loss will be valued at the cost of blank material for reproducing the records.

b. The most we will pay under this Coverage Extension for Valuable Papers And Records (Other Than Electronic Data) is $2,500 (unless a higher limit is shown in the Declarations). Such amount is part of, not in addition to, the Limit of Insurance that applies to Your Business Personal Property at the described premises.

6. Glass

When a building or structure that is Covered Property sustains loss or damage by Flood, we will pay for expenses incurred to:

a. Put up temporary plates or board up openings if repair or replacement of damaged glass is delayed; and

b. Remove or replace obstructions in the course of repairing or replacing glass that is part of the building or structure. This does not include removing or replacing window displays.

This Coverage Extension does not increase the Limit of Insurance that applies to the

building or structure at the described premises.

7. Personal Effects And Property Of Others

You may extend the insurance that applies to Your Business Personal Property to apply to the following property located in the building or structure described in the Declarations:

a. Personal effects owned by you, your officers, your partners or members, your managers or your employees; and

b. Personal property of others in your care, custody or control.

The most we will pay for loss or damage under this Coverage Extension is $2,500 at Each described premises. Such amount is part of, not in addition to, the Limit of Insurance that applies to Your Business Personal Property at the described premises.

Our payment for loss of or damage to personal property of others will only be for the account of the owner of the property.

Analysis

The valuable papers and records coverage is for restoration of valuable papers and records for which duplicates do not exist. This does not include electronic data, and that is handled in the earlier coverage. Again, coverage for these papers and records comes from the business personal property coverage. If the information is not replaced or restored, then coverage is only for the blank material for reproducing records. So that if accounting records are stored in paper files and the information is not replaced, what is covered is the cost of paper that the records were on. Unless a higher limit is shown on the declarations the coverage limit is $2,500. As with the other coverages, this is part of, and not in addition to, the business personal property limit.

Additional coverage is available for glass if the covered property is damaged by flood. Expenses are for putting up temporary plates or board openings if repair or replacement is delayed, and the removal or replacement of obstructions in the course of repairing or replacing glass that is part of the structure. Not included is the removal or replacement of window displays. Again, this does not increase coverage limits.

Business personal property coverage can also be extended to cover personal effects owned by the insured, officers, partners, members, managers or employees, and personal property of others in the insured's care, custody or control. The limit is again $2,500 at each described premises and is part of the limit, not in addition to the business personal property limit. Payment is for the account of the owner of the property.

Optional Coverages

E. Optional Coverages - Compliance With Ordinance Or Law

1. General

a. This section, E., sets forth three Coverage Options, as addressed in Paragraphs E.2., E.3. and E.4. One or more of these Coverage Options may be selected. A particular Coverage Option applies only if so indicated in the Declarations.

b. These Coverage Options apply with respect to an ordinance or law that regulates the demolition, construction or repair of buildings or establishes zoning or land use requirements at the described premises, provided that:

(1) The requirements of such ordinance or law are in force at the time of loss; or

(2) Such ordinance or law is promulgated or revised after the loss but prior to commencement of reconstruction or repair and provided that such ordinance or law requires compliance as a condition precedent to obtaining a building permit or certificate of occupancy.

c. These Coverage Options apply only in response to the minimum requirements of the ordinance or law. Losses and costs incurred in complying with recommended actions or standards that exceed actual requirements are not covered.

d. We will not pay for any costs attributable to repair, reconstruction or remodeling activity that does not meet the minimum standards of the State or local floodplain management ordinance or law or other applicable ordinance or law, even if you have received a variance in connection with the current Flood loss;

e. We will not pay for any losses or costs incurred due to an ordinance or law that you were required to comply with before the time of the current Flood loss, even in the absence of building damage, if you failed to comply.

However, this paragraph, e., does not apply to the extent that the property had received a variance from the applicable floodplain management requirements prior to the current Flood loss.

f. We will not pay for the costs associated with the enforcement of or compliance with any ordinance or law that requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants", "fungus", wet rot, dry rot or bacteria.

g. These Coverage Options are not subject to the terms of the Ordinance Or Law Exclusion (or to related ordinance-or-law provisions in the Loss Payment Condition and Replacement Cost Valuation Option) to the extent that such Exclusion or related provisions would conflict with the provisions of these Coverage Options.

Analysis

Under ordinance or law, there are three options that may be selected which are explained further on. Selections will be shown on the declarations. The options apply when an ordinance or law that regulates the demolition, construction or repair of buildings, or establishes zoning requirements is in effect at the time of loss or are revised after the loss but before repairs begin, as long as the ordinance requires compliance in order for building permits to be issued.

Coverage is only for the minimum ordinance or law requirements. Anything that exceeds the requirements will not be covered. Likewise, any repairs that do not meet the minimum requirements, even if the insured obtains a variance, will not be covered. If the insured was required to comply with a particular ordinance or law before the loss and had not done so, then costs incurred in order to comply with those older ordinances are not covered, unless a variance had been received prior to the loss.

Costs related to ordinances or laws that require testing, monitoring, cleaning up or monitoring of pollutants, wet rot, fungus or bacteria are not covered. The ordinance or law exclusion in the policy does not affect these optional ordinance or law options the insured may select.

 2. Increased Cost Of Construction Coverage Option

a. This Increased Cost Of Construction Coverage Option applies only to a building for which an Increased Cost Of Construction Limit Of Insurance is shown in the Declarations.

b. With respect to a building which has sustained covered direct physical loss or damage by Flood, we will pay the increased cost to:

(1) Repair or reconstruct damaged portions of that building; and

(2) Reconstruct or remodel undamaged portions of that building, whether or not demolition is required; when the increased cost is a consequence of a requirement to comply with the minimum standards of the ordinance or law.

Further, such coverage applies only if the restored or remodeled property is intended for similar occupancy as the current property, unless such occupancy is not permitted by zoning or land use provisions of the ordinance or law.

c. We will not pay for:

(1) Any costs incurred to bring additions or improvements constructed after the current Flood loss into compliance with an ordinance or law;

(2) The increased cost of construction if the building is not repaired or replaced; or

(3) The increased cost of construction:

(a) Until the property is actually repaired or replaced at the same or another premises; and

(b) Unless the repair or replacement is made as soon as reasonably possible after the loss or damage, not to exceed two years. We may extend this period in writing during the two years.

d. If the building is repaired or replaced at the same premises, or if you elect to rebuild at another premises, the most we will pay for the increased cost of construction is the least of the following:

(1) The increased cost of construction at the same premises;

(2) The amount you actually spend for the increased cost of construction; or

(3) The applicable Increased Cost Of Construction Limit Of Insurance shown in the Declarations.

e. If the ordinance or law requires relocation to another premises, the most we will pay for the increased cost of construction is the least of the following:

(1) The increased cost of construction at the new premises;

(2) The amount you actually spend for the increased cost of construction; or

(3) The applicable Increased Cost Of Construction Limit Of Insurance shown in the Declarations.

f. The Coinsurance requirement in this Policy, if any, does not apply to the Increased Cost Of Construction Limit Of Insurance.

3. Demolition Cost Coverage Option

a. This Demolition Cost Coverage Option applies only to a building for which a Demolition Cost Limit Of Insurance is shown in the Declarations.

b. If the ordinance or law requires demolition of undamaged parts of the building that has sustained covered direct physical loss or damage by Flood, we will pay the cost to demolish and clear the site of the undamaged parts of that building.

c. The most we will pay for the cost of demolition is the lesser of the amount you actually spend on such cost or the applicable Demolition Cost Limit Of Insurance shown in the Declarations.

4. Contingent Loss Assumption Coverage Option

a. This Contingent Loss Assumption Coverage Option applies only to a building for which such Coverage Option is indicated in the Declarations.

b. If the ordinance or law requires demolition of undamaged parts of the building that has sustained covered direct physical loss or damage by Flood, we will pay for the loss in value of the undamaged parts of that building.

c. Coverage for the loss in value of undamaged parts of the building is payable as part of, not in addition to, the Limit of Insurance that applies to the building and therefore does not increase such Limit. Valuation of the building, including damaged and undamaged portions, will be determined in accordance with the terms of the Valuation Condition applicable to the building.

Analysis

In order for any of the three ordinance or law options to apply, they must be shown in the declarations. Under Increased Cost of Construction coverage, when a building has been damaged by flood the increased cost to repair or reconstruct damaged or undamaged portions of the building, whether or not demolition is required is covered when the increased cost is due to compliance with minimum standards of ordinance or law. The property must be intended for similar occupancy, unless it is not permitted by zoning or land use ordinances.

Not covered are costs to bring additions built after the current flood loss into compliance, costs of construction if the building is not repaired or replaced, or the increased cost of construction until the repairs are completed at the same or a new premises, or if the repairs are not made as soon as possible after the loss. Property that did not exist before the flood is naturally not covered for standard construction requirements. If the building is not repaired there are no ordinances to comply with, and the property must be repaired before payment is made. If the insured does not take steps shortly after the loss to repair the property, this leaves the property open for further damage and there will be no coverage. An exact amount of time is not given as to what is a reasonable amount of time to begin repairs. The most that is paid for repairs or replacement at the original premises or at a new premises is the least of the increased cost at the original premises, the amount actually spent on the increased cost of construction, or the policy limit. If the ordinance requires relocation of the premises, then the most that is paid is the least of the increased cost of construction at the new location, the amount actually spent, or the limit shown in the declarations. Coinsurance does not apply to the increased cost of construction limit.

Under Demolition Cost Coverage, if the ordinance or law requires demolition of undamaged parts of the building that has sustained loss, the cost to demolish and clear the undamaged parts is covered. The most paid is the lesser of the amount actually spent on the demolition or the limit of insurance.

Contingent Loss Assumption applies when undamaged parts of the building must be demolished; this pays for the loss in value of those undamaged parts. This is not a separate limit, and valuation is in accordance with the valuation provisions in the policy.

Optional Coverage-Time Element Insurance

F. Optional Coverage – Time Element Insurance

This Optional Coverage applies only to the described premises for which a Limit Of Insurance for Time Element Insurance is shown in the Declarations.

1. Business Income

Business Income means the:

a. Net Income (Net Profit or Loss before income taxes) that would have been earned

or incurred; and

b. Continuing normal operating expenses incurred, including payroll.

For manufacturing risks, Net Income includes the net sales value of production.

Coverage is provided as described and limited below for one or more of the following options as indicated in the Declarations for Time Element Insurance:

(1) Business Income Including "Rental Value".

(2) Business Income Other Than "Rental Value".

(3) "Rental Value".

If option (1) above is selected, the term Business Income will include "Rental Value". If option (3) above is selected, the term Business Income will mean "Rental Value" only.

If the Declarations indicate selection of more than one of the above options, the provisions of this Policy apply separately to each selected option.

We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "period of restoration". The "suspension" must be caused by direct physical loss of or damage to property at premises which are described in the Declarations for Time Element Insurance. The loss or damage must be caused by or result from Flood.

With respect to the requirements set forth in the preceding paragraph, if you occupy only part of a building, your premises means:

(a) The portion of the building which you rent, lease or occupy; and

(b) Any area within the building or at the location of the described premises, if that area services, or is used to gain access to, the portion of the building which you rent, lease or occupy.

2. Extra Expense

a. Extra Expense Coverage is provided at the premises described in the Declarations for Time Element Insurance.

b. Extra Expense means necessary expenses you incur during the "period of restoration" that you would not have incurred if there had been no direct physical loss or damage to property caused by or resulting from Flood.

We will pay Extra Expense (other than the expense to repair or replace property) to:

(1) Avoid or minimize the "suspension" of business and to continue "operations" at the described premises or at replacement premises or temporary locations, including relocation expenses and costs to equip and operate the replacement location or temporary location.

(2) Minimize the "suspension" of business if you cannot continue "operations". We will also pay Extra Expense to repair or replace property, but only to the extent it reduces the amount of loss that otherwise would have been payable under this Time Element Insurance.

3. Ingress And Egress (Including Civil Authority)

a. With respect to this Ingress And Egress (Including Civil Authority) Coverage, the

described premises are the premises shown in the Declarations for Time Element Insurance.

b. We will pay for the actual loss of Business Income you sustain and necessary Extra Expense you incur, caused by either of the following situations:

(1) Access to the described premises is prevented due to Flood, resulting in the necessary "suspension" of your "operations" at the described premises, even in the absence of physical loss or damage to property at the described premises; or (2) Access to the described premises is prohibited by action of civil authority due to damage caused by Flood to property other than property at the described premises, resulting in the necessary "suspension" of your "operations" at the described premises, provided that both of the following apply:

(a) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the described premises are within that area but are not more than one mile from the damaged property; and

(b) The action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Flood that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property.

c. Coverage addressed in this Paragraph 3.for:

(1) Business Income will begin 72 hours after the time when access is first prevented or prohibited and will apply for a period of up to four consecutive weeks from the date on which such coverage began;

(2) Extra Expense will begin immediately after the time when access is first prevented or prohibited and will apply for a period of up to four consecutive weeks from that date or until the related Business Income coverage ends, whichever date is later.

Analysis

Time Element Insurance is another optional coverage with multiple parts. There are five sections, and in order for coverage to apply the selected coverage must be listed on the declarations. The sections are Business Income, Extra Expense, Ingress and Egress, Extended Business Income, and Increased Period of Restoration Due to Ordinance or Law.

Business income is the net income (profit or loss before taxes) that would have been earned or incurred and continuing normal operating expenses including payroll. For manufacturing risks, net sales value of production is also included. Coverage is broken into three parts; business income including "rental value", business income other than "rental value", and "rental value". If more than one option is selected, then the policy provisions apply separately to each option. The loss of business income during the "suspension" of "operations" during reconstruction is paid. The 'suspension" must be caused by direct physical loss or damage to the property, and the damage must be caused by flood. If the insured occupies only part of the building, then your premises is the portion the insured rents, leases or occupies, and any area within the building if that area services or is used to gain access to the portion the insured occupies. A stairway leading up to the insured's office would be part of his premises.

Extra expense coverage is for necessary expenses the insured incurs during the "period of restoration" that the insured would normally not have incurred. These costs may be the rental of an office to use until the building is repaired, rental of office equipment, and other actions. The extra expenses do not include replacement or repair of property, unless it reduces the amount of loss that otherwise would have been paid under time element coverage.

Ingress and egress provides coverage for loss of business income and extra expense caused by prevention of access to the premises due to flood, or lack of access due to action of civil authority because of damage by flood to premises other than the insured premises. The access must be restricted for the area immediately surrounding the damaged property and be restricted by civil authority, and the action of the civil authority is in response to dangerous conditions or to enable the civil authority to access the area without interference. The shop next to the insured's premises flooded and the local authorities restricted access to the area because of concerns for subsidence of the surrounding ground. Under this provision, coverage for business income will begin 72 hours after access was first prevented or prohibited, and applies for up to four weeks. Extra expense coverage begins immediately after access is first denied, and again lasts for up to four weeks or until the business income coverage ends, whichever is later. Since the business income has a 72 hour waiting period, if coverage runs for four weeks, then the extra expense will be extended for 72 hours beyond its expiration date since the business income coverage started later and will end later.

 4. Extended Business Income

a. Business Income Other Than "Rental Value"

If the necessary "suspension" of your "operations" produces a Business Income loss payable under this Policy, we will pay for the actual loss of Business Income you incur during the period that:

(1) Begins on the date property (except "finished stock") is actually repaired, rebuilt or replaced and "operations" are resumed; and

(2) Ends on the earlier of:

(a) The date you could restore your "operations", with reasonable speed, to the level which would generate the business income amount that would have existed if no direct physical loss or damage had occurred; or

(b) 60 consecutive days after the date determined in a.(1) above.

However, Extended Business Income does not apply to loss of Business Income incurred as a result of unfavorable business conditions caused by the impact of the Flood in the area where the described premises are located.

b. "Rental Value"

If the necessary "suspension" of your "operations" produces a "Rental Value" loss payable under this Policy, we will pay for the actual loss of "Rental Value" you incur during the period that:

(1) Begins on the date property is actually repaired, rebuilt or replaced and tenantability is restored; and

(2) Ends on the earlier of:

(a) The date you could restore tenant occupancy, with reasonable speed, to the level which would generate the "Rental Value" that would have existed if no direct physical loss or damage had occurred; or

(b) 60 consecutive days after the date determined in b.(1) above.

However, Extended Business Income does not apply to loss of "Rental Value" incurred as a result of unfavorable business conditions caused by the impact of the Flood in the area where the described premises are located.

5. Increased Period Of Restoration Due To Ordinance Or Law

If both the Time Element Insurance Optional Coverage and the Increased Cost of Construction Coverage Option apply to a building described in the Declarations, then the following also applies with respect to that building:

If Flood causes direct physical loss or damage to that building, resulting in a "suspension" of "operations" covered under this Policy, the "period of restoration" is extended to include the increased period required to comply with the minimum standards of an ordinance or law provided the ordinance or law is in accordance with the criteria and limitations set forth in Section E. of this Policy.

Analysis

Extended business income is broken into other than "rental value" and "rental value". "Rental value" is defined as business income that consists of net income that would have been earned as rental income from a tenant, and normal operating expenses in connection with the premises including payroll and the amount of charges that are the legal obligation of the tenant but would otherwise be the insured's obligations. Utilities, for example. Other than "rental value" provides for actual loss of business income when a suspension of "operations" causes a business income loss that starts on the day the property is repaired, rebuilt or replaced and "operations" are resumed. This ends on the earlier of the date the insured could restore operations to the level that would generate the normal income had there been no loss, or 60 consecutive days after the date the property is repaired and "operations" are resumed. Extended business income does not apply to a loss due to unfavorable business conditions created by the flood loss. The insured business may have been closed for 60 days while repairs were being made; when that happened regular customers went to other stores. Once the store reopened, it took some time for customers to realize the store was open for business again, and the insured did not have the income coming in that he would have had there not been a flood. Again, extended business income does not apply to loss of income as a result of unfavorable business conditions caused by the flood.

"Rental Value" provides for the loss of "rental value" incurred during the time that the property is repaired and tenantability is restored, and ends on the earlier of the date the insured could restore occupancy with reasonable speed to where the normal rental value would be generated, or 60 consecutive days after the date the property is restored. Again, this does not apply to loss of "rental value" due to unfavorable business conditions caused by the impact of the flood.

If both time element optional coverage and increased cost of construction optional coverage apply to a building, then if flood causes direct physical loss resulting in suspension of operations, the "period of restoration" is extended to include the increased period to meet the minimum standards required by ordinances or laws in accordance with that coverage.

Limits

G. Limits Of Insurance

For purposes of this Section G., reference to loss to property includes damage to property.

1. Application Of Limits Per Occurrence

a. The most we will pay in a single occurrence of Flood is the applicable Limit Of Insurance shown in the Declarations, subject to all provisions in this Section G.

b. The applicable Limit of Insurance for Covered Property applies to the total of:

(1) All loss to Covered Property (including loss in value as addressed in E.4.,

Contingent Loss Assumption if that Coverage Option applies); and

(2) All loss covered under the Property Insurance Coverage Extensions.

c. The applicable Limits of Insurance for Increased Cost of Construction and Demolition Cost are separate from the Limits of Insurance on Covered Property.

d. The applicable Limit of Insurance for Time Element Insurance applies to the total of all covered loss sustained and covered expense incurred under the coverages set forth in Section F.

e. When the Declarations show a single Limit of Insurance for property and time element insurance, Paragraphs G.1.b. and G.1.d. do not apply and the following applies instead:

The single Limit of Insurance for property and time element insurance shown in the

Declarations applies to the total of:

(1) All loss to Covered Property (including loss in value as addressed in E.4.,

Contingent Loss Assumption if that Coverage Option applies);

(2) All loss covered under the Property Insurance Coverage Extensions; and

(3) All covered loss sustained and covered expense incurred under the coverages

set forth in Section F.

2. Sub-limits

a. In any one occurrence of Flood, the sublimit shown for each category, (1) through (5), is the total limit for all loss to all property in that category, regardless of the types or number of articles that are lost or damaged. The sub-limits are (unless a higher sub-limit is shown in the Declarations):

(1) $2,500 for furs, fur garments and garments trimmed with fur;

(2) $2,500 for jewelry, watches, watch movements, jewels, pearls, precious and semiprecious stones, bullion, gold, silver, platinum and other precious alloys or metals. This sub-limit does not apply to jewelry and watches worth $100 or less per item, or to alloys or metals used as tools in the manufacturing process;

(3) $2,500 for artwork, statuary, marbles, chinaware and porcelains;

(4) $2,500 for patterns, dies, molds and forms;

(5) $250 for stamps, tickets, including lottery tickets held for sale, and letters of credit.

These sub-limits are part of, not in addition to, the applicable Limit of Insurance for Covered Property.

b. In any one occurrence of Flood, the most we will pay for the total of all loss to Covered Property incurred under the exception to Exclusion C.2.i. is $10,000 at each described premises unless a higher sub-limit is shown in the Declarations. This sub-limit is part of, not in addition to, the applicable Limit of Insurance.

3. Annual Aggregate Limitation This Paragraph G.3. applies only if an Annual Aggregate Limitation is shown in the Declarations. The Annual Aggregate Limitation may reduce the amount of loss payable under this Policy (including any endorsement to this Policy) in the event of more than one occurrence of Flood in an annual policy period.

If there is more than one occurrence of Flood in a 12-month period (starting with the beginning of the current annual policy period), the most we will pay, for the total of all covered losses and expenses caused by or resulting from all such Floods, is limited to the Annual Aggregate Limitation as shown in the Declarations.

Analysis

The limits section outlines how the limits are applied to covered property. There are sub-limits and aggregate limits that apply for particular coverages. Per occurrence, the applicable limits for covered property applies to the total of covered property, including loss in value under Contingent Loss Assumption if that applies, and losses covered under property insurance coverage extensions.

The limits for increased cost of construction and demolition costs are separate from the limits of insurance on covered property. The time element limits applies to all covered losses under that section, Optional Coverage – Time Element Insurance.

The sub-limits are standard and apply to furs, jewelry, artwork, patterns, stamps and related property. The sub-limits are part of the limit of insurance and are not additional coverage.

Exclusion C.2.i. is the standard exclusion for discharge, dispersal, seepage, leakage of pollutants unless such discharge is caused by flood. The sub-limit for that coverage is presented here, and is $10,000 at each premises unless a higher limit is shown in the declarations.

If an annual aggregate limit is listed in the declarations then an annual aggregate limit applies. If there is more than one occurrence of flood in a 12-month period, the most paid for all losses from all floods is the annual aggregate limit. A policy has an aggregate annual limit of $2 million dollars. The insured sustains a loss in June of $500,000. The insured then sustains a loss in August of $800,000. One more flood loss occurs in October of $800,000. This is a total of $2.1 million in losses. As the annual aggregate is only $2 million, the insured will have to assume the loss of $100,000 since that will not be by the policy.