Earthquake and Volcanic Eruption Schedule (Sub-Limit Form) CP DS 06 02 19 Contract Analysis
Recently, one of the editors came across an excellent video explaining the New Madrid fault. The fault line, or seismic zone as it is sometimes referred to, lies across parts of Missouri, Arkansas, Tennessee, Kentucky, and Illinois. Due to the nature of the underlying geology, an earthquake in this region can shake an area 20 times larger than earthquakes in California, and travel up to1,000 miles, depending on the size of the earthquake.
In light of that, we realized that we needed to look at the coverage available for earthquakes. There are multiple endorsements which include the following:
CP DS 06 02 19 Earthquake - Volcanic Eruption Coverage Schedule (Sub-Limit Form)
CP 10 28 02 19 Earthquake And Volcanic Eruption Coverage With Flat-Dollar Deductible
CP 10 29 02 19 Earthquake And Volcanic Eruption Coverage (Sub-Limit Form With Flat-Dollar Deductible)
The Earthquake and Volcanic Eruption Coverage with Percentage Deductible CP 10 40 02 19
CP 10 45 02 19 Earthquake And Volcanic Eruption Coverage Endorsement (Sub-Limit Form With Percentage Deductible)
CP 10 41 02 19 Earthquake Inception Extension
For ease of use, we will discuss the forms separately and provide a link to each article.
Analysis of CP DS 06
To provide any of the sub-limit coverage options (CP 10 29 or CP 10 45),the Earthquake and Volcanic Eruption Coverage (Sub-Limit Form) CP DS 06must be completed and attached to show the limit and the property to be covered by the endorsement.
If the limit is a blanket limit, but the coverage does not apply to all buildings or personal property included in a scheduled item, the schedule must identify to which building or personal property the coverage applies. Also, the earthquake coverage limit must be shown per item. There is an option to increase the earthquake aggregate limit and this also must be indicated on the schedule by checking the "yes" or "no" box on the schedule.
An option exists to include coverage for property with masonry veneer; this must be listed on the schedule as well. Another option is to only provide coverage for sprinkler leakage caused by an earthquake. Again, it must be indicated on the schedule as to which building this applies, or stated such in the declarations, with the appropriate limit of insurance which should be less than the limit that applies to other perils.
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Karen Sorrell, CPCU
Karen Sorrell, CPCU is an editor and insurance technical resource for FC&S Expert Coverage Interpretation, a division of National Underwriter Company and Arc Network. Karen has an extensive background in commercial and specialty lines underwriting and product management spanning over 30 years. Her technical underwriting skills combined with her research and analysis skills in insurance product development are a winning combination for her role of insurance editor and in the area of insurance policy language interpretation for Arc Network.