A business that operates out of a commercial space that is either owned or leased by the insured for a period of over ninety consecutive days is not eligible for the program. This is important to note, as any permanent location in a commercial space is not eligible; this is for a temporary location for a specific limited period of time. Someone setting up at the fairgrounds during the fair, for example. However, this does not apply to a shared space in a single location occupied by two or more businesses with no permanent walls to separate the businesses. Many artisans will work together and share a space; you may have a vendor or specialty items sharing space with someone selling hand-knit items. Also ineligible are operations that rent or lease equipment to others, sell alcohol, or any other operation that is not specifically listed as eligible.

Also, none of the risks within the eligible categories can have more than 10 percent of annual gross sales from other eligible Micro-BOP operations.

Eligible Program Categories

ISO lists specific operations that are ineligible for artisan manufacturing: personal care products such as shampoo, hair color, soap, perfume or other like items that are consumed or applied to the body.

Direct Retail Sales are businesses selling products directly to customers, including art dealers, clothing and accessories, consignment shops, cosmetics, home decor, grocery specialties, jewelry, pet supplies and snacks/nonalcoholic drinks.

Online Retail Sales are businesses selling products online, but no wholesale distribution. These include clothing/accessories, consignment shops, cosmetics, gifts and home decor, grocery specialties, jewelry and pet supplies.

Service businesses encompass a broad list of service classifications such as artists, computer or data services, house sitting/cleaning, inspection services, auctioneers, to name a few. As with artisan risks, any food products must be prepared or manufactured in either a commercially certified kitchen, cottage food kitchen or equivalent in-home kitchen in accordance with state and local regulations.

Refer to the FC&S Coverage Analysis for more information on this new ISO product!

Micro-Businessowners Coverage Form

Coverage under BP 00 04 Micro-Businessowners Coverage Form is described in brief.

Coverage and Limits:

The named perils are fire; lightning; explosion; windstorm or hail (not including frost or cold weather, or ice, snow or sleet); smoke, causing sudden and accidental damage; aircraft or vehicles, meaning only physical contact of an aircraft, spacecraft, a self-propelled missile, a vehicle or an object thrown up by a vehicles with the covered property (but not vehicles owned or used by the insured in the course of business); riot or civil commotion, including striking employees and looting; and vandalism, meaning willful and malicious damage to covered property. Damage from theft is specifically excluded.

The business personal property available limits are $2,500-$25,000, minimum $250 deductible per occurrence. Electronic Data Additional Coverage is included at $1,000, and the deductible applies. The coverage for electronic data includes a computer virus, but not manipulation by an employee, or by an entity hired in connection with the computer system. Since the Micro-BOP coverage is specifically designed to cover only the insured's business personal property, there is no building or structure coverage. Stock, while listed as property not covered, can be covered under a separate ISO Micro-Businessowners Retail endorsement.

The liability section is overall consistent with the liability coverages in BP 00 03, with the following exceptions.

Exclusions:

The professional services exclusion is not included in BP 00 04; however an optional professional exclusion endorsement is available, BP 21 03 Micro-Businessowners Professional Services Exclusion. This endorsement excludes liability arising out of the rendering, or failure to render professional services. The exclusion also applies in the case of negligence or other wrongdoing by the insured in the supervision, hiring, employment, training or monitoring of others, if the occurrence or offense which caused the personal and advertising injury involved the rendering of or failure to render any professional service.

The electronic data exclusion incorporates the exclusion for access to or disclosure of confidential or personal information, consistent with the conditionally mandatory endorsement for the Businessowners Program, BP 15 04 – Exclusion – Access Or Disclosure Of Confidential Or Personal Information And Data-Related Liability – With Limited Bodily Injury Exception. The exclusion contained in BP 15 04 is added as an additional exclusion within the Micro-BOP liability exclusions.

Common Policy Conditions:

Because there is no building coverage, the Cancellation provision of the Micro-BOP form does not contain any references to building occupancy, vacancy, items removed from a building, requirements to furnish utility services, or property taxes. Otherwise, the Cancellation provision is consistent with the BOP Coverage Form.

The Other Insurance condition of the Micro-BOP provides as follows with respect to the Business Liability Coverage; otherwise it is consistent with the BOP form.

If there is other valid and collectible insurance to cover a loss, the coverage will be primary except whenever there is any other insurance available as described in the form. This is the standard other insurance provision as in the ISO CGL form. In addition, the method of sharing provision is added consistent with how it reads in the CGL form.

Available Endorsements

The following endorsements are available under the program:

BP 20 01 – Micro-Businessowners Retail

BP 20 02 – Micro-Businessowners Service

BP 21 01 – Micro-Businessowners Abuse or Molestation Exclusion

BP 21 02 – Micro-Businessowners Employment Related Practices Exclusion

BP 21 03 – Micro-Businessowners Professional Services Exclusion

BP 22 01 – Micro-Businessowners Policy Changes

BP 22 02 – Micro-Businessowners Professional Liability

BP 20 01 is specific to retail risks that meet the eligibility requirements for Artisan Manufacturing Retail Sales, Online Retail Sales, or Direct Retail Sales. The endorsement adds stock as covered property, subject to a separate $500 theft deductible, which can be increased. For coverage to apply, the specific stock must be shown in the Schedule of the endorsement. There are specific exclusions that apply to theft, including dishonesty or criminal acts, voluntary entrustment of property to others under false pretense, and property missing when the only evidence is inventory shortage, or when there is no physical evidence to show what happened to the property. An exclusion is also added for loss or damage to products based on errors or omissions, but if such error or omission results in a covered cause of loss there will be coverage for the loss or damage caused by that covered cause of loss.

The endorsement provides for additional insureds required to be named as such by written contract or agreement with respect to liability in connection with the insured's ongoing operations performed for that additional insured; or arising out of the ownership, maintenance, or use of that part of the premises leased to the insured and used in connection with the insured's operations.

BP 20 02 is used for those insureds in eligible service classifications to add theft as a covered cause of loss with respect to property of others in the insured's care, custody or control. The endorsement adds in theft-related exclusions for dishonesty and false pretenses as described in BP 20 01 above.

BP 21 03, as referenced above, is used to exclude liability arising out of the rendering, or failure to render, professional services. Since professional services is not a defined term in this endorsement, the endorsement effectively excludes all professional services. The exclusion also applies in the case of negligence or other wrongdoing by the insured in the supervision, hiring, employment, training or monitoring of others, if the occurrence or offense which caused the personal and advertising injury involved the rendering of or failure to render any professional service.

BP 22 01 is used for changes to the Micro-BOP policy, with entry fields for effective date, coverage change description, previous and new limits of insurance, and previous and new premiums.

BP 22 02 is used to provide Professional Liability coverage for insureds involved in the service industry. The endorsement may be added for any of those entities meeting the eligibility requirements and listed under the Service classifications described above. Coverage is limited to only the "professional services" listed in the Schedule of the endorsement.

The endorsement provides liability coverage for claims made as a result of wrongful acts occurring in the rendering of or failure to render professional services as described in the endorsement Schedule. Coverage is provided on a claims-made and reported basis. A separate Professional Liability Aggregate Limit of Insurance applies to this coverage, and defense is included within the limit. A separate deductible applies to each claim.

The endorsement provides for scheduling a prior or pending litigation date that serves to exclude any claims that were pending on, or existed prior to, the date shown in the Schedule as applicable to Prior or Pending Litigation. The exclusion also applies to any claims arising out of the same or substantially the same facts, circumstances or allegations which are the subject of, or the basis for such prior or pending claims. "Claim" and "defense expenses" are both defined terms in the endorsement.

The coverage is subject to a number of exclusions that exclude both liability and defense expenses.

Conditions:

In addition to the conditions relating to the Basic and Supplemental Extended Reporting Periods and Limits, several additional conditions are added to this endorsement; assignment, consent to settle, and merger or acquisition of named insured.

Definitions:

A number of definitions are added to the endorsement, not all of which are addressed here. The definitions for "claim" and "defense expenses" have been described above. In brief, "loss" means legal obligations the insured is obligated to pay as compensatory, monetary awards, judgments or settlements; and punitive damages as required by law. It does not include taxes, fines or penalties, liquidated damages, uninsurable amounts by law, restitution, disgorgement, unjust enrichment or profits the insured is not entitled to; or equitable relief or injunctive relief compliance costs. "Wrongful act" means any actual or alleged act, error, misstatement, misleading statement, omission, neglect, breach of duty committed, attempted, or allegedly committed or attempted solely in the performance of or the failure to perform "professional services".

Terrorism Endorsements

Although TRIA was scheduled to terminate on December 31, 2005, Congress has acted to extend the provisions of the Act three times, and it is currently set to expire on December 31, 2020.

The specific TRIA related endorsements available for use with the Micro-Businessowners Program are as follows:

BP 23 02 Micro-Businessowners Cap On Losses From Certified Acts Of Terrorism

This endorsement is attached when an insured accepts certified acts of terrorism coverage for a new or renewal policy.

BP 23 03 Micro-Businessowners Exclusion Of Certified Acts Of Terrorism

This endorsement should be attached when an insured rejects the offer of certified acts of terrorism coverage, on new or renewal policies at the time of policy inception.

BP 23 04 Micro-Businessowners Exclusion Of Certified Acts Of Terrorism Involving Nucler, Biological Chemical Or Radiological Terrorism, Cap On Covered Certified Acts Losses

In Standard Fire Policy (SFP) states coverage is provided for fire following an excluded act of terrorism. This coverage is stated in Paragraph B.2. of the endorsement and is made applicable by entry of state information in the Schedule of the endorsement, enabling the same endorsement to be used in SFP and non-SFP states. The endorsement excludes coverage for:

• A certified act of terrorism that is carried out using radioactive material or a nuclear device;
• A certified act of terrorism in which radioactive material is released, and it appears that one purpose of the terrorism was to release such material;
• A certified act of terrorism that is carried out by means of the dispersal or application of pathogenic or poisonous biological or chemical materials;
• A certified act of terrorism in which pathogenic or poisonous biological or chemical materials are released, and it appears that one purpose of the terrorism was to release such materials.

BP 23 05 Micro-Businessowners Limitations Of Coverage For Certified Acts Of Terrorism

This is a property endorsement. Under this endorsement, the Limit of Insurance for certified acts of terrorism is less than the Limit of Insurance applicable to other perils. As such, the policy's insurance-to-value requirements do not apply to this sub-limited coverage. The sub-limit applies on an annual aggregate basis, and coverage will cease once the stated sub-limit has been exhausted by incurred losses.

The sub-limit will not apply in SFP states. In these states if the fire loss exceeds the amount of the sub-limit, the otherwise applicable limit will apply to direct damage caused by fire following a certified act of terrorism. This provision is stated in the endorsement and is made applicable by entering the state information in the endorsement Schedule.

Includes copyrighted material of Insurance Services Office, Inc., with its permission.