(July 2026)
This endorsement must be attached to any Insurance Services Office (ISO) Businessowners Coverage Form issued to a contractor. Its primary intent is to provide a more restrictive form of off-premises coverage. The Businessowners Coverage Form was not originally designed for insureds with extensive off-premises exposures. Many contractors have off-premises exposures with little or no on-premises exposure. This endorsement attempts to match the exposure with the premium charged.
NOTE: This is intended for insureds with
relatively small exposures. Inland marine coverage forms or policies should be
used if the insured has more significant exposures because they provide broader
coverage. However, even with separate inland marine coverage, the BP 07 01
remains a mandatory endorsement.
Related Articles:
AAIS Contractors' Equipment Coverage Forms
ISO Contractors’ Equipment Coverage Form
AAIS Installation Floater Coverage Forms
ISO Installation Coverage Form
This endorsement was extensively updated in September 2019. Changes appear in bold.
Related Article: ISO Businessowners Program Archive
This coverage is mandatory. The only entry is a Limit of Insurance.
NOTE: This
replaces the four separate limits that were required in the prior edition.
This coverage is mandatory. The following entries are required.
1. Blanket Limit
The blanket limit must be provided. This limit applies to tools and equipment that are not scheduled, so a single-item limit must be selected. The available options are $500, $1,000, or $2,000.
If an X is entered in the Actual
Cash Value Option box, the valuation is on an actual cash basis. Otherwise, the
valuation is replacement cost.
2. Scheduled Limit (and description of property)
Spaces are provided for each scheduled and described tool or item of equipment, its limit of insurance, and for the total scheduled property limit of insurance.
This is an optional coverage. Spaces are provided for a limit of insurance on Non-Owned Tools and Equipment. Coverage applies only if a limit is entered.
This is an optional coverage. Spaces are provided for a limit of insurance on Employee Tools, not to exceed $2,500 for all tools of any one employee.
NOTE: The
prior edition coverage was limited to $100 per tool and no more than $500 per
employee.
A deductible can be added to the schedule. This is a per-occurrence deductible that applies to all coverages.
1. The following is added to the list of Property Not Covered in BP 00 03–Businessowners Coverage Form.
a. Tools and equipment. All accessories of the tools and equipment are also excluded, whether or not they are attached to the tools or equipment. Spare parts designed and intended to maintain and operate the tools and equipment are also excluded.
NOTE: The prior edition applied this to
only such items owned by or in the care, custody, or control of the named
insured.
b. Property that has been sold using an installation agreement.
NOTE: It does not specify who is buying and
who is selling. It is a very wide-open item. There is also no mention as to
when it had to be sold.
c. Materials, supplies, machinery, fixtures, and equipment belonging to the named insured are not covered. Similar property belonging to others and in the named insured’s care, custody, or control is also not covered. This applies only if the items are to be installed by the named insured or at its direction.
d. On-site built/assembled temporary structures. Examples are cribbing, scaffolding, and forms.
2. Item 1 above does not apply if one of the following coverages is selected. However, it applies only to the extent that coverage for the item is available under that coverage.
a. Coverage 1–Contractors' Installation Coverage
BP 00 03–Businessowners Coverage Form, A. 6. Coverage Extensions, b. Personal Property Off Premises, is changed by eliminating coverage under that extension for the property referenced under the following:
NOTE: In
prior editions, earthquake and flood were covered causes of loss but only for
Coverage 2. Under this revision, the causes of loss have been expanded and now apply
to all coverages.
1. Earth Movement
The first four items in the earth movement exclusion are eliminated, but only if the loss or damage is the result of an earthquake. This means that earth movement not triggered by an earthquake is not covered. In addition, all loss or damage due to volcanic eruption remains excluded.
2. Water
The first item in the water exclusion is eliminated.
|
Example:
Plumberly Painters, LLC's
building is damaged when the southern wall collapses due to a mudslide. An
engineering firm conducts a detailed inspection and reports that the weight
of construction vehicles from a nearby highway project caused the retention pond
wall to fail and collapse. These circumstances might call into question
whether the earth movement exclusion applies. |
This coverage is mandatory.
a. The following property is added to A. 1. b. (2) Business Personal Property but only for Coverage 1.
(1) Property being sold under an installation agreement. However, this applies only if the named insured’s insurable interest ends when the purchaser accepts the project.
(2) The following property:
NOTE: These
are the same items that became Property Not Covered earlier in this
endorsement.
(a) Materials, supplies, machinery, fixtures, and equipment that belong to the named insured. Similar property that belongs to other(s) and is in the named insured’s care, custody, or control is also not covered. This applies only if the items are to be installed by the named insured or at their direction.
(b) On-site built/assembled temporary structures. Examples are cribbing, scaffolding, falsework, and forms.
The property listed in (a) and (b) above is covered only when it is in any of the following circumstances:
· At a job site but only if the named insured does not own, lease, or operate the site.
· While waiting to be installed, during installation, and while waiting for the purchaser to accept the project.
· When in transit.
· While at temporary storage locations.
b. Coverage ends at the earliest of:
· The expiration or cancellation date of this coverage.
· When the purchaser accepts the property that this endorsement covers.
· When the named insured's interest in the property this endorsement covers ends.
· When the named insured abandons the project without intending to complete it.
·
Ninety days after the project is complete,
unless the insurance company amends the number of days in writing. (NOTE:
Be aware, the 90-day period is often overlooked.)
|
Example: Commercial
Builders, Inc. is building an office under an installation agreement for
Insurance Agency, LLC. Commercial orders custom cabinets that are delivered
before they are ready to be installed. Until it’s time for installation,
Commercial stores the cabinets at Material Holders, Inc., a local builders’
supplier. Lightning strikes Material's building, a fire ensues, and the
cabinets are destroyed. Commercial has a $25,000 limit for contractors’
installation coverage, and the cabinets are valued at $17,750. This loss is
covered because the loss occurred at a temporary storage location and
involved materials awaiting installation at a job already in progress. |
|
|
Example:
Continuing this example, imagine that Commercial
and Insurance Agency disagree over the quality of the work. After the
cabinets are delivered, Commercial walks off the job and refuses to return.
Once again, fire from a lightning strike destroys the cabinets. In this case,
the contractors’ installation coverage does not insure this loss because
Commercial abandoned the work with no intent to complete it. |
|
c. Property Covered
The following items that are part of items d. and e. in the Property Not Covered portion of the Businessowners Coverage Form are removed, which results in them becoming covered property, but only under Coverage 1.
· Growing crops
NOTE: Lawns
continue to be property not covered.
· Outdoor fences
· Radio or television antennas including any satellite dishes
· Trees, shrubs, or plants
d. Property Not Covered
In addition to items listed and described in Property Not Covered in the Businessowners Coverage Form, Coverage 1 does not apply to:
· Existing structures or buildings where additions, alterations, remodeling, restoration, repairs, or improvements are being made.
· Property at the named insured's owned storage yards or warehouses.
· Designs, blueprints, plans, specifications, or other documents that form the basis for the work.
· Tools, equipment, machinery, and supplies not intended to become permanent parts of the building or structure.
NOTE: The Contractors' Tools and Equipment
section of this endorsement should cover the tools and equipment.
e. This coverage endorsement introduces five exclusions that apply in addition to the exclusions in the Businessowners Coverage Form. There is no coverage for loss or damage due to the following:
(1) Costs to repair, replace, or make good on faulty workmanship or defective materials.
NOTE: There is no coverage if the
contractor does a poor job or uses inferior materials.
(2) Testing, unless it results in fire or explosion, and then only for the loss or damage the fire or explosion causes.
NOTE: Most machinery or processing
equipment must be tested after it is installed to ensure that it operates
properly. Since testing usually involves pushing the system beyond its
recommended limits, losses that result from testing are excluded.
(3) Faulty or defective designs or blueprints or other professional errors or omissions
|
Example:
Construction of the
building is complete, but mold develops almost immediately because the
exterior brick was applied directly over the exterior plywood without a vapor
barrier. Because the contractor followed the plans exactly, this loss is due
to faulty design and professional errors and is excluded. |
(4) Weight of loads that exceed the design capacity of the property that lifts, moves, or supports the load. This property must be covered property under this coverage endorsement for this exclusion to apply.
(5) Damage to tires or inner tubes of property that this coverage item insures when the damage is due to collision, upset, or overturn. However, the damage to inner tubes or tires is covered if the same accident also causes damage to other parts of the item.
f. Coverage 1–Contractors' Installation Coverage Limits of Insurance
NOTE: The
prior edition provided separate limits for Property at Covered Job Sites,
Property in Transit and Property at a Temporary Storage Limit. This update now includes
only a single per-occurrence insurance limit.
The most paid in a single
occurrence for direct physical loss that is covered under Coverage 1 is the
Coverage 1. limit on the declarations. This limit applies in addition to the
limits provided in the Limits of Insurance Section of the Businessowners
Coverage Form.
Related Articles:
AAIS Installation Floater Coverage Forms
NOTE: This
coverage is mandatory.
a. The following property is added to A. 1. b. (2) Business Personal Property but only for Coverage 2.
Tools and equipment the named insured owns or has in its care, custody, or control are covered business personal property. All accessories of the tools and equipment are also covered whether they are attached to the tools or equipment. Spare parts designed and intended to be used to maintain and operate the tools and equipment are also covered.
A statement is made that this property is covered while away from the described premises.
NOTE: Does this indicate coverage only when
away from the premises, or does it mean coverage extends both on and off the
described premises?
b. Property Not Covered, Paragraph A.2.a. in the Businessowners Coverage Form is replaced with respect to this coverage. The replaced item excludes aircraft, automobiles, motor trucks, and any other vehicles that are subject to motor vehicle registration. This item excludes them as well as:
· Watercraft including its/their parts and equipment
· Dealers' demonstration equipment, machinery, and vehicles
· House trailers
· Mobile homes
· Motorcycles
· Dirt bikes
· ATVs
·
Snowmobiles and other vehicles primarily
designed and licensed for road use
c. Property Not Covered
In addition to items listed and described in Property Not Covered in the Businessowners Coverage Form, Coverage 2. does not apply to:
(1) Property used in underground mining, tunneling, or similar operations and underwater construction. This includes property in caissons.
NOTE: Caissons are watertight containers
used in underwater construction. This and similar property are unique and are
usually insured under specialty coverage forms.
(2) Property leased, loaned, or rented to others.
NOTE: Coverage does not apply while tools
or equipment are in the care, custody, or control of others, regardless of whether
monetary fees are involved.
(3) Property that is or is intended to be a permanent part of the building or structure.
NOTE: This wording differentiates
installation coverage from tools and equipment coverage so that the coverage
parts are mutually exclusive and there is no duplication of coverage.
(4) Property held for sale
NOTE: As with other property, other
coverage forms should be used to insure this exposure.
(5) Property being sold under an installation agreement. However, this applies only if the named insured’s insurable interest ends and the purchaser accepts the project.
(6) Materials, supplies, machinery, fixtures, and equipment that belong to the named insured. Similar property that belongs to other(s) and is in the named insured’s care, custody, or control is also not covered. This applies only if the items are to be installed by the named insured or at the named insured's direction.
(7) On-site built/assembled temporary structures. Examples are cribbing, scaffolding, falsework, and forms.
NOTE: Items (5), (6) and (7) above are the
same as the property covered under Coverage 1.
(8) Non-owned tools and equipment the named insured leases or rents from others while in their care, custody, or control, except such property leased for six months or more.
NOTE: This coverage can be purchased as
Coverage 3.
(9) Tools the named insured's employees, temporary employees, and leased employees own.
NOTE: This coverage can be purchased as
Coverage 4.
d. Additional exclusions that apply to Coverage 2:
Loss or damage caused by or that results from the following is excluded:
(1) Theft from unattended vehicles unless they are completely closed, all doors, windows, and other compartments are locked, and there are visible signs of forced entry. This exclusion does not apply if the property is in the custody of a carrier for hire.
(2) Weight of a load that exceeds the designed capacity of any insured equipment to lift, move, or support it
(3) Damage to tires or inner tubes of property that this coverage item insures when the damage is due to collision, upset, or overturn. However, damage to inner tubes or tires is covered if the same accident also damages other parts of the item.
|
Example:
A forklift overturns on the jobsite because the
operator misjudges the ground conditions, and the tires are damaged. Coverage
does not apply to the tire damage unless other parts of the forklift are also
damaged. |
e. Coverage 2–Limits of Insurance
These
limits are in addition to the Businessowners Coverage Form Limits of Insurance
Section.
(1) The blanket limit of insurance on the endorsement schedule is the most paid in any one occurrence for the total of all covered losses for direct physical loss or damage to covered property. There is a per item sub-limit that applies to each covered item within the blanket. That sub-limit can be $500, $1,000, or $2,000 based on the entry on the declarations. This provision does not apply to scheduled tools or equipment that have their own limits of insurance.
(2) Under scheduled limits, the most paid in any one occurrence for direct physical loss or damage to each item scheduled is its limit of insurance.
This is an optional coverage.
a. When a limit is shown on the declarations for this coverage, the following property is added to A. 1. b. (2) Business Personal Property.
Tools and equipment leased or rented from others, but only while they are in the named insured's care, custody, and control.
A statement is made that this property is covered while away from the described premises.
NOTE: Does this indicate coverage only when
away from the premises, or does it mean coverage extends both on and off the
described premises?
b. Coverage 3–Non-owned Tools and Equipment Coverage Limits of Insurance
The most paid in a single
occurrence for direct physical loss that is covered under Coverage 3 is the
Coverage 3. limit on the declarations. This limit applies in addition to the
limits provided in the Limits of Insurance Section of the Businessowners
Coverage Form.
c. Property Not Covered
In addition to items listed and described in Property Not Covered in the Businessowners Coverage Form, Coverage 3. does not apply to:
· Non-owned tools and equipment the named insured leases or rents from any of its employees, temporary employees, or leased employees.
NOTE: This coverage can be purchased as
Coverage 4.
· Other non-owned tools the named insured leases for six months or more.
· On-site built/assembled temporary structures. Examples are cribbing, scaffolding, falsework, and forms.
This is an optional coverage.
a. When a limit is shown on the declarations for this coverage, the following property is added to A. 1. b. (2) Business Personal Property.
Tools and equipment the named insured's employees, temporary employees, or leased employees own and use in the named insured’s business.
A statement is made that this property is covered while away from the described premises.
NOTE: Does this indicate coverage only when
away from the premises, or does it mean coverage extends both on and off the
described premises?
b. Coverage 4–Employees’ Tools Coverage Limits of Insurance
The most paid in a single occurrence for direct physical
loss that is covered under Coverage 4 is the Coverage 4. limit on the
declarations. No more than $2,500
will be paid for any one employee. This amount of coverage is available along
with what is provided by the Limits of Insurance Section of the Businessowners
Coverage Form.
When a deductible is entered on the declarations, no payment will be made for loss or damage in a single occurrence until the loss or damage amount exceeds the deductible. This is the only deductible that applies.
When loss or damage occurs to property that is covered under this endorsement and to property covered under the Businessowners coverage form, each will be subject to its own deductible rules.
The larger deductible will be reduced by the value of the smaller deductible.
|
Example: During
a tornado, Sam’s Carpentry Specialty experienced a tornado at their location
which damaged Sam’s building and also damaged some contractor equipment
inside the building. Due to the mix of property coverage, deductibles will
apply as follows: Policy deductible: $10,000 Endorsement deductible: $5,000 Net deductible: $5,000 |
The Coverage 2. Blanket limit section of the Declarations displays an Actual Cash Value Box. When that box is checked, the valuation of property that is part of that blanket is based on actual cash value.
One definition has been added to the Definitions section of the Businessowners Coverage Form but only for this endorsement's coverage.
Temporary Storage Location – refers to any location where property intended to become a permanent part of a completed project is stored, pending delivery to a job site. The named insured must not own, lease, or operate the job site and work must be in progress or be scheduled to begin in 30 days.