We recently received a question from a subscriber that highlighted the importance of making sure all structures of any type are scheduled to ensure coverage under the Businessowners or Commercial Property Programs. This led us to look into several other coverages where the complete and detailed completion of schedules could determine coverage or leave a coverage gap.
The question we received had to do with an unscheduled structure that the agent believed to be covered under the BPP section of coverage. The structure was a 24×60 Farmtech metal frame structure with a canvas cover. There are steel plates drilled into cement that are then anchored to posts holding the unit in place. The structure stays up all year. A claim for damages was submitted for collapse due to weight of ice and snow. Is this structure considered BPP, or does the fact that it is anchored into the cement make it an appurtenant structure?
No. Covered Property for building is determined to be dependent upon the schedule showing a limit of insurance for that type of property. The language is similar in CP 00 10 Building and Personal Property Coverage Form and in the Businessowners Coverage Form BP 00 03. As such, for the structure to be covered, it would need to be scheduled with an applicable limit of insurance.
Proper scheduling isn't important only to property coverage, but liability as well. Take for instance an insured that has several properties scheduled on the property coverage, but they only lease premises at several others. While this insured would have property coverage, they would not have liability coverage for the leased premises even if they were part of the insured's operations.
The inadequate or improper completion of endorsements has been the cause of many unpaid claimants and court cases. Let's take for example completion of CG 20 26 Additional Insured – Designated Person or Organization. Note that a lot of space has been allocated to completion of this schedule, as often this pertains to a unique relationship with the insured. However, this endorsement is often poorly completed without describing the peculiarities of the relationship which could result in a coverage gap. Another example is in the completion of CG 21 44 Limitation of Coverage To Designated Premises, Project or Operation. Many times the project or operation is being excluded on a premises of the insured that otherwise needs liability coverage, but for the particular project or operation. Improper completion of the endorsement could result in the entire location being excluded from coverage.
Commercial Auto is all about proper scheduling of vehicles, making sure the insured has coverage for all his vehicle needs. But taking a look at CA 20 01 Lessor – Additional Insured and Loss Payee endorsement, improper or inadequate completion of this endorsement could easily leave the insured with coverage gaps – for example, if the lessor was inadvertently left off of the schedule or the leased autos were not described in detail.
These are just a few examples highlighting the importance of completing schedules completely and in detail. It could mean the difference between an insured having coverage or having their claims denied.