New Commercial Property Forms for
The New Year--2012
The ISO has submitted significant changes for the Commercial Property Forms that have an
effective date of 10/2012. The changes include: new edition dates of existing form numbers;
forms that are being withdrawn and new forms that are being introduced. The information,
upon which this article relies, is the ISO Circular dated January 3, 2012. This multistate revision
will be applicable to the following jurisdictions:
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Guam
Illinois
Indiana
Iowa
Kansas
Kentucky
Maine
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virgin Islands
Virginia
West Virginia
Wisconsin
Wyoming
Many of the ISO changes have already been adopted in insurance company forms while other
changes represent clarification of the “intent” of the form. We will include a listing of the forms
that will be part of the 10/2012 edition date. Specifically we will highlight those changes that
have any significant impact and new endorsements to the form series. This chart is a summary
of the form changes and each form must be reviewed in its entirety to understand the impact
of the changes. As you review the impact of the form changes you will note that there are many
instances where there is no change in coverage. What this means, typically, is that the
language of the form has been modified by adding or removing a word or substituting a word
that is clearer. There is no change in the intent of the form. Some changes result in a coverage
increase typically in a sub-limit that is provided. Some changes result in coverage being
reduced for example removing am extension or sub-limit that appeared in a prior edition date.
Some changes will show coverage is broadened which typically means that form language has
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been added to make the coverage more comprehensive. There are some new endorsements
that are being introduced that we will discuss in more detail as they are new to the form series.
NEW ENDORSEMENTS:
Exclusion of Loss Due to By Products of Production or Processing Operations
(Rental Properties) CP 10 34
This endorsement is as a result of the landlord/tenant business risks relating to the rental of the
property. While the landlord may enter into a lease that holds the tenant responsible for
damages arising from a variety of causes, the insurance contract is not intended to compensate
a landlord for the expected consequences of usage of the rental premises as intended. One
example provided by the ISO in explanation would be when a premise is leased for use as a
restaurant and there is damage from the residue of the cooking operation. This is deemed a
business risk innate to the occupancy not loss compensated by insurance. This question
becomes much more interesting and complex when the property is rented for illegal purposes
such as the rental of premises that is used as a methamphetamine laboratory in which the
damage from methamphetamine “cooking” operations can be likened to the residue from
cooing operations in a restaurant. Needless to say there are many issues at the heart of this
discussion that goes beyond the coverage issue such as: did the landlord know about the
operation; should the landlord have known about the operation and so on.
A case in point that the ISO used in their circular was the Graff v. Allstate Insurance Company,
113 Wash, App.799; 54P.3d 1266 (Wash, Ct. App.2001). In the case the insured filed a claim for
cleanup expenses after a tenant’s methamphetamine laboratory damaged his rental house and
the insurer denied the claim citing the policy’s contamination exclusion. The insured sued and
the trial court held in favor of the insured finding that his insurance policy covered the cleanup
expenses. The appellate court affirmed the lower court’s decision and stated that the
operation of a methamphetamine laboratory is vandalism and therefore covered under the
policy. Thus both the contamination and vandalism issues came into play. The Insurance
company, (plaintiff), contended that coverage is not intended to extend to the inevitable
effect of a production operation which is emphasized in the language of the Special Form. As a
result of this case and similar claims, the ISO has introduced this endorsement to be attached to
all polices issued to owners and tenants of rental property.
Equipment Breakdown Cause of Loss CP 10 46
Suspension or Reinstatement of Coverage for Loss Caused by Breakdown of
Certain Equipment CP 1047
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The ISO is introducing a new Cause of Loss form for Equipment Breakdown that is compatible
with the Special Cause of Loss Form. Currently in the Special Cause of Loss Form there are three
major categories of exclusions that relate to equipment breakdown: artificially generated
electrical current; mechanical breakdown; explosion of steam boilers… By use of this new
endorsement those exclusions are eliminated. There are limitations specific to Equipment
Breakdown coverage that is then added in the form language. Ammonia Contamination and
Hazardous Substance amounts of insurance can be scheduled on the form. Because of the
introduction of the new Equipment Breakdown Form, the ISO has also introduced the
Suspension or Reinstatement of Coverage for Loss Caused by Breakdown of Certain Equipment
to allow the insurance companies to either suspend or reinstate coverage for certain pieces of
equipment.
Increase in Rebuilding Expenses Following Disaster CP 04 09
This endorsement is introduced as a response to nationwide disasters and catastrophic events
that have tested the limits of the policy as relates costs of labor; cost of materials due to
demand and limited resources (demand surge). The ISO circular references Hurricanes Katrina
and Rita wherein estimates per square footage of housing reconstruction quadrupled in the
first six months after the events.
The new endorsement provides an option for insuring additional expenses when the costs of
labor and/or building materials increase as a result of a disaster AND the total cost of repair or
replacement exceeds the applicable limit of insurance. Some significant sections of the
endorsement include:
1. Buildings to be insured are indicated on the endorsement
2. Coverage will only apply as a result of an event that is declared a disaster as well as
damage resulting from an event which occurs in close proximity to the disaster
3. Coverage is on an annual aggregate basis
4. The maximum amount of additional coverage is determined by applying a specified
percentage to the limit of insurance for specific insurance.
Dependent Properties in the Supply Chain (Business Interruption)
Dependent Property Coverage is written by scheduling the business locations that the insured is
“dependent upon” and have chosen to insure. The new endorsement allows for secondary
dependencies. An example provided by the ISO of a secondary dependency is a situation in
which the insured’s supplier (a dependent property identified in the schedule of the current
endorsement) is unable to deliver products/services due to interruption in the business of an
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entity (for example, a manufacturer) upon which the supplier depends but was NOT a supplier
that the insured directly depended upon or was identified in the endorsement.
The new option for covering secondary dependencies is focused on contributing and recipient
locations as defined in the form. Business Income losses arising out of physical loss or damage
at the secondary location is subject to the same Limit of Insurance that applies to the scheduled
dependent location and does not increase the coverage. The coverage territory is reiterated on
the form to avoid any confusion that the coverage goes beyond the stated territory of the
policy for example for locations outside of the United States.
Form
Change
Impact
COVERAGE FORMS
Building and
Personal Property
Form
CP 00 10
Building and
Personal Property
Form
CP 00 10
Building and
Personal Property
Form
CP 00 10 (various)
Building and
Personal Property
Form
CP 00 10 (various)
Building and
Debris Removal: The additional limit provided
is increased from $10,000 to $25,000. When no
Covered Property sustains direct physical loss
there is coverage in the amount of $5,000
provided for removal of debris of others’
property.
Fire Department Service Charge: The policy
clarifies that the $1000.00 limit provided
applies to each premises insured.
Coverage is increased
and expanded in
definition
Business Personal Property in Described
Structures: The coverage provided for
Business Personal Property is clarified to cover
both in the building or structures covered in
the policy.
Coverage Radius: The language is clarified as
relates “where” coverage must occur for
coverage to apply. The form extends coverage
to 100 feet from the building or 100 feet from
the described premises, whichever distance is
greater.
No change in coverage
Property in Storage Units: A new coverage
No change in coverage
The revision broadens
coverage with respect
to a tenant in a
multiple-occupancy
building in such
situation where the
premises are described
in terms of the actual
area (quarters) occupied
by the tenant. Note:
many company forms
already include this
clarification.
This can be considered
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Personal Property
Form
CP 00 10 (various)
extension is introduced on the Commercial
Property Form for Business Personal Property
Temporarily in Portable Storage Units. The
coverage is for 90 days with a sub-limit of
$10,000. The property must be located within
100 feet of the described premises. A higher
limit can be indicated on the Declarations Page.
Building and
Personal Property
Form
CP 00 10
Newly Acquired Business Personal Property:
Currently the Commercial Property forms
provide $100,000 additional coverage at each
building covering newly acquired business
personal property. This provision has been
removed. There is no change for newly
acquired business personal property located at
newly acquired locations. If the insured has
“newly acquired” property at their location,
the coverage should be increased accordingly
to reflect that limit.
Vegetated Roofs: This is one of the new
Coverage is broadened.
“green” extensions in Commercial Property.
Currently the property form excludes trees,
shrubs, plants and lawns and then sub-limits
the coverage. The property form is revised to
include lawns, trees shrubs and plants which
are part of a vegetated roof and thereby
treating such property as an insured part of the
building so that an existing vegetated roof can
be replaced with like kind in the event of a loss.
There are some exclusions that are revised to
relate directly to a vegetated roof.
Electronic Data in Building Equipment:
Coverage is broadened
Currently ISO Commercial Property forms limit
coverage for electronic data to $2,500 on an
annual aggregate basis. The form is revised to
remove the $2,500 limitation with respect to
loss or damage to electronic data which is
integrated in and operates or controls the
building’s elevator, lightning, heating, and
ventilation, air conditioning or security
systems.
Ordinance or Law Exclusion: The form is
No change in coverage
revised to include the word “compliance”. The
new form states the “enforcement of or
Building and
Personal Property
Form
CP 00 10 & Cause
of Loss Forms
Building and
Personal Property
Form
CP 00 10 &
Business Income
Form (various)
Building and
Personal Property
Form
an extension of
coverage, however, if an
insurer previously
treated property in
storage as property in
the open then then
coverage is decreased to
the sub-limit.
Coverage is reduced
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CP 00 10;
Business Income
Form CP 00 30/00
32; Cause of Loss
Forms (various)
Building and
Personal Property
Form
CP 00 10;
Business Income
Form CP 00 30/00
32; Cause of Loss
Forms (various)
Business Income
Form
CP 00 30 and CP
00 32
Cause of Loss
CP10 10, CP10 20,
CP 10 30
Cause of Loss
CP10 10, CP10 20,
CP 10 30
Cause of Loss
CP 10 30
Cause of Loss
CP 10 30
compliance with any ordinance or law. This is a
clarification of language
Options for Increasing Specified Limits: The
coverage forms currently include the ability to
increase coverage via an entry on the
Declarations Page for certain categories of
coverage. This change allows for increased
coverage via Declarations for the additional
coverages of Electronic Data; Newly Acquired
Locations; Interruption of Computer
Operations and Limitations for Theft.
Extended Business Income, Extended Period
of Indemnity: The Business Income forms
provide automatic coverage for 30 days’
following the end of the period of restoration
for residual loss of income. The form revises
the 30 days to 60 days.
Earth Movement Exclusion: The term
“earthquake” now incorporates tremors and
aftershocks. Language is added to the Earth
Movement exclusion to reinforce that earth
movement is excluded regardless of whether it
is caused by an act of nature or is otherwise
caused.
Water Exclusion: The Water Exclusion CP 1032
and is now incorporated in the base policy
forms
Entrusted Property: The revision is included to
distinguish between those who have a role in
the insured’s business such as
partners/employees and others to whom
property may be entrusted such as bailees or
tenants. Specifically there is an exclusion for
loss or damage caused by…dishonest or
criminal acts by…anyone to whom the insured
entrusts the property.
Wear and Tear Exclusion—Special Form: The
coverage is expanded to include coverage for
water damage in the “specified causes of loss”
to include accidental discharge or leakage of
These changes are new
coverage options
Coverage is increased.
Note: Many insurance
company forms
automatically include
more than 30 days.
No change in coverage
No change in coverage
Coverage is broadened
Coverage is broadened
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water or waterborne material as the direct
result of the breaking apart or cracking of
certain off-premises systems due to wear and
tear.
Covered Cause of Loss: The term “risk of” is
deleted. This change has been done
specifically to clarify the collapse exclusion but
has a broader impact. This is modified for
clarity purposes
No change in coverage
Form
Change
Impact
Business Income
Report/Work
Sheet:
CP 15 15
Debris Removal
and Outdoor
Trees, Shrubs and
Plants
CP 04 15 and CP
14 30
The worksheet has been modified to 60 days
No change in coverage
rather than 30 days for the Extended Period of
Indemnity as modified in the Business Income
Form
Debris Removal:
Coverage is broadened
The $10,000 additional limit for debris removal
is increased to $25,000. Note: Many company
forms automatically include this limit
automatically.
Outdoor Trees, Shrubs and Plants:
This specifies that debris removal is included in
the limit provided for this coverage
The endorsement removes a “reference” to the No change in coverage
Cause of Loss Earthquake. If the Earthquake
Form were attached to the policy it’s terms and
conditions are therein specified
Cause of Loss
CP 10 30
ENDORSEMENTS
Radio or
Television
Antennas—
Business Income
or Extra Expense
CP 15 50
Utility Services—
Overhead
Transmission Lines
CP 04 17 (Direct)
and CP 15 45
(Time Element)
Ordinance or Law
CP 04 05; CP 04
38; CP 15 01; CP
The endorsement clarifies that the term
“transmission lines” also includes “distribution
lines” which is the vernacular in the power
industry for a system that provides electricity
to residential and commercial users by
reducing voltage through the use of
substations, transformers and other devices.
The forms now reinforce the intent to cover
both transmission and distribution systems
which serve in the transmission of power or
communication service.
Ordinance or Law: The endorsement form is
revised in the same manner as the exclusion in
the Coverage Forms to include the word
No change in coverage
No change in coverage
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15 02; CP 15 08;
CP 15 09; CP15 25;
CP 15 31; CP 15 34
Condominium
Commercial UnitOwners
Changes—
Standard Property
Policy
CP 17 98
Building Glass
Tenants Policy
Endorsement
CP 14 70
Theft Exclusion
Endorsement
CP 10 33
Flood Coverage
Endorsement and
Schedule
CP 10 65; CP DS 65
Payroll Limitation
or Exclusion
Option
CP 15 10
“compliance”. The new form states the
“enforcement of or compliance with any
ordinance or law. This is a clarification of
language
The endorsement modifies three sections of
the Condominium Unit Owners Policy:
Coverage Radius; Business Personal Property in
Described Structures; and Newly Acquired
Property.
1. Coverage Radius is modified to state
100 feet from the building or described
premises whichever is greater
2. Clarifying that coverage applies both in
a building or structure
This endorsement was first introduced in 2007
to facilitate writing coverage for building glass
under a tenant’s policy that did not cover the
building. This endorsement simply allows for
the deductible for this coverage to be added on
the endorsement rather than on the
Declarations Page
The Theft Exclusion Endorsement currently
does not contain a schedule. The new edition
date will display a schedule of locations so that
there is clarity as to which location the
exclusion applies
Currently the Flood Endorsement states there
is no coverage for loss from any Flood that
begins before or within 72 hours after the
inception date of the endorsement. The prior
form did not make any distinction concerning
renewal policies. The revised form provides
that the 72 hour waiting period will not apply
when the prior policy included flood coverage
and the policy periods are consecutive without
a break in coverage.
The payroll endorsement is being modified to
provide a means of limiting or excluding the
payroll expense of “any category of employees
or individual employees” The term “ordinary
payroll expense” and its definition are removed
from the endorsement. The title, also, will no
No change in coverage
No change in coverage
No change in coverage
Coverage is broadened
No change in intent—
clarification of definition
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Condominium
Commercial UnitOwners Optional
Coverage: Loss
Assessment
CP 04 18
Utility Services—
Wastewater
Removal (Time
Element)
CP 15 45
Earthquake
Sprinkler Leakage
Deductible
CP 10 40; CP 10 45
Builders Risk—
Theft of Building
Materials,
Fixtures,
Machinery,
Equipment
CP 11 21
longer refer to the word “ordinary” and the
word “ordinary” will no longer appear in other
sections such as the “coinsurance section”. The
revised endorsement serves the same purpose
as the prior one but can be used to address any
category of employee on the insured’s payroll.
Currently the endorsement places a $1,000
Coverage is broadened
limitation on an assessment as a result of a
deductible on the condominium association
policy. This endorsement provides a means for
selecting a higher limit.
The Utility Service Time Element endorsement
is being revised to add a new category of utility
service: wastewater removal property. By
definition, wastewater removal property is a
utility system for removing wastewater and
sewage from the described premises other
than a system designed primarily for draining
storm water. The utility property includes
sewer mains, pumping stations and similar
equipment for moving the effluent to a
holding, treatment or disposal facility; and
includes such facilities.
In 1999, the EQSL Endorsement CP 10 39 was
withdrawn from the series and EQSL could be
purchased by activating the EQSL ONLY option
on the EQ endorsements CP 10 40 and CP 10
45. The revision in this form adds language
providing that the EQ deductible provisions
outlined in the EQ endorsement (that is, the
percentage deductible) do not apply to the
EQSL—Only coverage. Instead the Fire
deductible applies.
This change relates back to the issue of
“entrusted property” discussed above.
Entrusted Property: The revision is included to
distinguish between those who have a role in
the insured’s business such as
partners/employees and others to whom
property may be entrusted such as bailees or
tenants. Specifically there is an exclusion for
loss or damage caused by…dishonest or
criminal acts by…anyone to whom the insured
Coverage is broadened
Coverage is clarified and
broadened
There is no change in
“intended coverage”
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Green Upgrades
Endorsement
Revision
CP 04 02
entrusts the property.
The schedule on the form is revised to identify
which property is subject to upgrade when not
all personal property is not to be covered for
Green Upgrades.
Form
Change
No change in coverage
Impact
NEW ENDORSEMENTS
Exclusion of Loss
Due to ByProducts of
Production or
Processing
Operations
(Rental
Properties)
CP 10 34
Specified Property
Away from
Premises
CP 04 04
Higher Limits
CP 04 08
New form introduced to be attached to policies There is no change in
issued to owners and tenants of rental
“intended coverage”
premises.
Discussion of the change is included above.
New form introduced to provide coverage for
business personal property temporarily away
from the described premises in the course of
daily business activities, while in the care,
custody or control of the insured or an
employee of the insured.
Currently the insurance form has many options
to increase coverage via the Declarations Page.
This endorsement is an alternative to activating
the coverages on the Declarations Page by
using this multi-purpose endorsement
Equipment
This is a new optional endorsement which is
Breakdown
compatible with the Special Form Cause of Loss
CP 10 46
CP 00 13.
Discussion of the change is included above
Suspension or
Because of the introduction of the new
Reinstatement of Equipment Breakdown Form, the ISO has also
Coverage for Loss introduced the Suspension or Reinstatement of
Caused by
Coverage for Loss Caused by Breakdown of
Breakdown of
Certain Equipment to allow the insurance
Certain Equipment companies to either suspend or reinstate
CP 10 47
coverage for certain pieces of equipment.
Discussion of the change is included above
Deductible By
Currently there is a Multiple Deductible Form
Location
CP 03 20 adopted in most states which is
CP 03 29
designed to allow for the selection of different
Coverage is broadened
No change in coverage
but new coverage
option
New Coverage Option
New Coverage Option
This is a new optional
way to show deductibles
but does not affect
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Limitations on
Coverage for Roof
Surfacing
CP 10 36
Increase in
Rebuilding
Expenses
Following Disaster
CP 04 09
Dependent
Properties in the
Supply Chain
(Business
Interruption)
Endorsement to
CP 15 01; CP 15
02; CP 15 08; CP
15 09; CP 15 34.
Discharge From
Sewer, Drain or
Sump
CP 10 38
Theft of Building
Materials and
Supplies (Other
Than Builders
Risk)
CP 10 44
deductible by location and peril. This schedule
of endorsement shows separate locations and
the deductible for each location.
This endorsement provides options for insuring
roof surfacing on an ACV basis and for
excluding cosmetic damage to roof surfacing.
The cosmetic exclusion option applies only to
the perils of wind and hail, and could be
written without regard to the underlying
valuation clause.
This is a new endorsement to add additional
expenses following a disaster.
Discussion of the change is included above
existing deductible
options.
Dependent Property Coverage is written by
scheduling the business locations that the
insured is “dependent upon” and have chosen
to insure. The new endorsement allows for
secondary dependencies.
Discussion of the change is included above
New Coverage Option
This is a new endorsement to cover discharge
from a sewer, drain or sump and pertains to
physical damage and/or time element loss as
indicated in the schedule. The amounts stated
in the schedule are sub-limits and therefore do
not increase the underlying limits of the
insurance provided. An annual aggregate
limitation can be selected via the schedule on
the endorsement.
Currently there is a limitation under the Special
Cause of Loss form for theft coverage for
building materials and supplies that are not
part of the building or structure to that which
is held for sale by the insured. The new
endorsement provides coverage for the theft
of building materials and supplies that are
located on or within 100 feet of the premises
when such property is intended to become a
permanent part of the building or structure.
New Coverage Option
New Coverage Option.
This would be chosen by
an insurer when they
deem it necessary
typically on an older
building
New Coverage Option
New Coverage Option
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Protective
Safeguards (Fire)
CP 04 11
Food
Contamination
(Business
Interruption and
Extra Expense)
CP 15 05
The new endorsement replaces the interline
form IL 04 15. This endorsement, therefore,
only pertains to Commercial Property
insurance and contains the same provisions as
the current endorsement.
This new option covers extra expenses and
business income loses arising out of food
contamination and pertains to the Business
Income And Extra Expense Coverage Form.
Coverage is limited to loss of income/extra
expense due to the closure of the business.
Covered expenses include: cost of cleaning
equipment; cost of replacing food; medical
testing and vaccination and advertising
expense.
No Change in Coverage
New Coverage Option
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