BP 04 55–BROADENED COVERAGE FOR DAMAGE TO PREMISES RENTED TO YOU

(September 2022)

INTRODUCTION

This is a Liability Section Endorsement.

The unendorsed Businessowners Coverage Form excludes loss or damage to buildings that the named insured occupies as a tenant. The only exception is when damage is due to fire. This is considered "Damage to Premises Rented to You" coverage.

The default limit for this fire coverage is $50,000 but a higher limit can be purchased. The increased limit is then shown on the Declarations. The maximum limit is $1,000,000.

However, there are two important limitations. The coverage is a sublimit of the Liability and Medical Expenses limit and the only covered cause of loss is fire. When a tenant-insured has exposures in excess of $50,000 and/or needs coverage for causes of loss other than fire, there are two ISO alternatives.

1. CP 00 40–Legal Liability Coverage Form can be purchased. This is a separate policy with its own cause of loss, declarations and limit of insurance.

Related Article: CP 00 40–Legal Liability Coverage Form Analysis

2. BP 04 55– Broadened Coverage for Damage to Premises Rented to You Coverage. This is an endorsement that can be attached to the BOP and is explained below.

Endorsement Schedule

The following appears on the form’s schedule.

Premises: Each premises intended to be protected against liability exposures must be listed. Coverage is inapplicable to any other premises.

Limit: A per occurrence limit of insurance must be entered in the space provided. This limit will apply in place of the Damage to Premises Rented to You amount that appears on the declarations. The endorsement limit remains subject to the Aggregate Limit on the declarations.

Section II – Liability Changes

Exclusions Change

The last paragraph of Section II–Liability B. Exclusions is deleted and replaced with the one in this endorsement. The only changes are as follows:

1. The limit of insurance is not the Damage to Premises Rented to You but, instead, is the limit entered on this endorsement schedule.
2. The word “fire” is eliminated. This means that coverage applies to “property damage” instead of “damage by fire.” This is a significant expansion of coverage.

Example: Kevin was a driver for Monstrous Deal Company. One day he crashed his truck into the company delivery dock. Monstrous Deal leases the facility. Because the BP 04 55 is attached to Monstrous Deal’s policy, the $250,000 in damages to the dock was covered.

3. This expansion does not apply to the pollution or war exclusions. This means that when this endorsement is attached, there’s no impact regarding loss or damage that involves pollutants or warlike incidents.

Liability and Medical Expenses Limits of Insurance

1. Paragraph D. 2. Liability and Paragraph D. 3. Medical Expenses Limits of Insurance are deleted. The remaining Paragraphs (D.1 and D.4) establish the manner that the limit of insurance applies and the operation of the policy’s explains aggregate limits. Regarding the latter, any payment made under this endorsement reduces the amount of coverage available to pay for subsequent liability losses.

Example: The limit of insurance for Monstrous Deal Company’s BP 04 55 was $1,000,000. The cost to repair the dock amounted to $250,000. This meant that the amount available to Monstrous Deal for all other liability losses involving rented, listed premises during the rest of the policy year would be $750,000 ($1,000,000 - $250,000).

2. The following paragraph is added under the BP 04 55 endorsement.

The most the insurance company pays for the total of all damages due to property damage to premises is the limit of insurance on this endorsement's schedule. This applies only to premises that the named insured rents or which the named insured temporarily occupying with the owner's permission.

Note: This limit used to be a sublimit but is currently an independent limit. The changed status is important for any contractual liability but remains a problem due to the aggregate limit.