(July 2026)
Early editions of the Insurance Services Office (ISO) Businessowners Program offered coverage under either the Causes of Loss–Basic Form or the Causes of Loss–Special Form. The 2000 edition eliminated the basic option and has since offered only the Causes of Loss–Special Form. However, limited protection can be obtained by endorsing BP 10 09–Named Perils to the BP 00 03–Businessowners Coverage Form.
This endorsement amends Section 1–Property in the Businessowners Coverage Form.
NOTE: This
analysis is of the 07 13 edition of this endorsement. Changes from the 01 10
edition are in bold print.
Section I–Property 2. Property Not Covered b. Money or Securities is replaced.
NOTE: BP
00 03 does not have G. Optional Coverages 5. Burglary and Robbery. BP 10
09–Named Perils H adds it.
BP 00 03–Section I–Property 3. Covered Causes of Loss is deleted and replaced. Direct physical loss or damage, except as excluded or limited, is deleted. The following replaces it.
3. There are twelve covered causes of loss:
a. Fire
Related Article: Fire–A Discussion
b. Lightning
c. Explosion
This includes gases or fuel within any fired vessel’s furnace, flues, or passages that explode. It does not include loss or damage due to the rupture or bursting of pressure relief devices or to the swelling or expansion of contents in any building due to water.
Related Article: Explosion–A Discussion
d. Windstorm or Hail (07 13
change)
Windstorm or hail is covered. It does not include cold weather or frost. In addition, ice that is not considered hail, snow, or sleet is also excluded, even if driven by wind.
Loss or damage to fabric or slat awnings or canopies outside of buildings caused by windstorm or hail is excluded. Loss or damage by windstorm or hail to supports for such awnings and canopies is also excluded.
Damage to the interior of the building or to property stored inside it is covered for loss or damage caused by rain, snow, dust, or sand. However, this coverage applies only when wind or hail first damages the building’s roof or walls and rain, snow, dust, or sand then enter through the resulting opening.
Trees, shrubs, lawns, and
plants that are covered property because they are part of a vegetated roof are
not covered if damaged by hail. (07 13 addition)
Related Article: Windstorm or Hail–A Discussion
e. Smoke
Coverage applies to smoke only when it causes damage that is both sudden and accidental. Smoke from agricultural smudging or industrial operations that causes loss or damage is excluded.
f. Aircraft or Vehicles
Loss or damage caused by aircraft or vehicles that make actual contact with covered property is covered. Coverage also applies if the aircraft or vehicle makes physical contact with the building or structure that contains the covered property. Aircraft includes spacecraft, self-propelled missiles, and items that fall from any aircraft. Physical contact with vehicles includes contact with objects that vehicles throw up. Damage caused by a vehicle owned or operated by the named insured in the course of its business is excluded.
NOTE: Aircraft is not a defined term in the form, so
physical damage due to contact by a drone would be covered.
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Example:
The pickup truck jumped
the curb and landed against Millie’s Knick-Knacks. The impact caused Millie’s
shelving to fall and $15,000 in knick-knacks to break. These items are
covered even though the truck did not actually strike them.
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g. Riot or Civil Commotion (07
13 change)
Riot or civil commotion, including any accompanying looting, is covered. Acts of striking employees, temporary employees, or leased employees who occupy the described premises are also covered.
NOTE: Theft is not mentioned.
h. Vandalism
This is willful and malicious damage to or destruction of covered property. Loss or damage due to theft is excluded. However, coverage applies to building damage caused by burglars while entering or exiting the building.
I. Sprinkler Leakage
This is discharge of any substance from any automatic sprinkler system. It includes the collapse of water storage tanks that are part of such systems. If the building is covered, coverage extends to the cost to repair or replace damaged parts of the automatic sprinkler system that leak or are damaged by freezing. Tearing out and replacing any part of the building to gain access to the damaged system is also covered.
This cause of loss defines an automatic sprinkler system as an automatic fire protection or extinguishing system that is connected to sprinklers. It includes discharge nozzles, ducts, pipes, tanks, pumps, and private fire protection mains. When supplied by such a system, it also includes hydrants, standpipes, outlets, and non-automatic fire protection systems.
j. Sinkhole Collapse
This is land that suddenly collapses or sinks into empty underground spaces or voids that water action on limestone or dolomite creates. Land that collapses or sinks into manufactured spaces (mines) beneath the surface is not considered sinkhole collapse and is excluded. The cost to fill sinkholes is also excluded.
Related Court Case: Earth Movement Exclusion Applied: Collapse Did Not Cause the Damage
k. Volcanic Action
This is direct loss or damage to covered property from a volcanic eruption. However, this coverage applies only to loss or damage caused by airborne blast or shock waves, ash, dust, particulate matter, or lava flow. Costs to remove ash, dust, or particulate matter are excluded unless they first cause actual physical damage.
All eruptions that occur within 168 consecutive hours are treated as a single occurrence.
l. Transportation
Coverage applies to loss or damage to property in transit from the following types of transportation events:
· Vehicles overturning, colliding, or derailing
· Vessels that are stranded or that sink
· Bridges, culverts, piers, wharves, or docks collapsing
All of Section I–Property 4. Limitations is removed because there is no need to limit a cause of loss that is already excluded.
Section I–Property 5. Additional Coverages d. Collapse and
e. Water Damage, Other Liquids, Powder, or Molten Material are deleted.
Paragraph B. Exclusions is amended as follows:
1. The following completely replaces Paragraph 2:
The insurance company does not pay for loss or damage caused by or that results from the following:
a. Electrical Apparatus
There is no coverage for damage, disturbance, disruption, or any type of interference with any electrical or electronic wire, device, appliance, system, or network that uses cellular or satellite technology, caused by or resulting from artificially generated energy.
There is a wide range of artificially generated energy. It can be electrical, magnetic, or electromagnetic. Examples of such energy include electrical currents (including arcing), magnetic fields, electromagnetic fields that produce electrical charge, electromagnetic energy pulses, and waves or microwaves from an electromagnet.
There is an exception. If a fire results, coverage applies to the loss or damage it causes.
Loss or damage to computers due to artificially generated energy is covered only under limited conditions. The loss or damage must be caused by either an occurrence that takes place within 100 feet of the described premises or by a blackout or brownout caused by an occurrence that takes place within 100 feet of the described premises.
NOTE: This exclusion
is the same as Exclusion B. 2. a. in the Businessowners Coverage form.
b. Burst Piping
There is no coverage when water pipes burst or rupture unless the rupture or bursting is caused by or results from an eligible source of loss. This exclusion does not apply to automatic sprinkler systems.
NOTE: This is
similar to Exclusion B. 2. e. Frozen Plumbing in the Businessowners Coverage
Form. However, it does not have the exception when heat is maintained in the
building.
c. Water Discharge
There is no coverage if water or steam leaks or is discharged from any part of a system or appliance that contains it, unless a covered cause of loss first damages the system or appliance. This exclusion does not apply to automatic sprinkler systems.
d. Steam Apparatus
Coverage does not apply if steam boilers, pipes, engines, or turbines the named insured owns, leases, operates, or controls explode. However, if a fire or a combustion explosion results from the explosion, coverage applies to loss or damage the fire or combustion explosion causes.
NOTE: This is
similar to Exclusion B. 2. d. Steam Apparatus in the Businessowners Coverage
Form. However, it has fewer exceptions.
e. Mechanical Breakdown
Centrifugal force that causes bursting, rupturing, or other types of mechanical breakdown, resulting in loss or damage, is excluded. If such breakdowns result in a covered cause of loss, coverage applies to the loss or damage from the covered cause of loss. This exclusion does not apply to breakdown of computers.
NOTE: This is the
same as Exclusion B. 2. l. (6) in the Businessowners Coverage Form.
f. Errors or Omissions
All damage caused by errors or omissions in processing, programming, or storing data is excluded. However, coverage applies to direct physical loss or damage caused by or resulting from fire and/or explosion after such errors or omissions, if this coverage form covers fire and/or explosion.
NOTE: This is the
same as Exclusion B. 2. m., Errors or Omissions in the Businessowners Coverage
Form except that this exclusion does not refer to valuable papers and records.
g. Installation, Testing, Repair
Damage resulting from errors or deficiencies in installing, maintaining, modifying, or designing the named insured’s computer systems and electronic data is excluded. However, coverage applies to physical loss or damage caused by any resulting fire and/or explosion if this coverage form covers fire and/or explosion.
NOTE: This is the
same as Exclusion B. 2. n. Installation, Testing, Repair in the Businessowners
Coverage Form.
h. Electrical Disturbance
Damage due to electrical or magnetic injury (or erasure of) electronic data by electrical disturbance is excluded. The exception is the coverage provided by 5. Additional Coverages in BP 00 03. In addition, coverage applies to direct loss or damage caused by lightning.
NOTE: This is the
same as Exclusion B. 2. o. Electrical Disturbance in the Businessowners
Coverage Form.
i. Continuous or Repeated
Seepage or Leakage of Water
Loss or damage due to repeated or continual seepage or leakage of water that occurs for 14 days or more is excluded. The presence of humidity, moisture, or vapor for 14 days or more is also excluded.
NOTE: This is
identical to Exclusion B. 2. p. in the Businessowners Coverage Form.
2. The following completely
replaces exclusion 6:
6. Accounts Receivable and
Valuable Papers and Records Exclusions (07 13 changes)
BP 10 09–Named Perils has its own approach for handling losses involving this property. These exclusions apply to both Accounts Receivable and Valuable Papers and Records Coverage Extensions.
a. The insurance company does not pay for loss or damage caused by or that results from the following:
(1) Any dishonest or criminal act by the named insured, its partners, employees, temporary employees, leased employees, directors, trustees, authorized representatives, or anyone else with an interest in the property. Coverage does not apply regardless of whether the excluded persons act alone or in collusion with others. It also does not apply to theft by any person entrusted with the property for any reason, or whether the action takes place before or after employment hours.
Carriers for hire are not subject to this exclusion. Acts of destruction by employees, temporary employees, leased employees, or authorized representatives are not excluded. However, coverage does not apply to acts of theft by the named insured’s employees, leased employees, temporary employees, or authorized representatives.
Note: Other crime
coverage forms and policies address some of these loss exposures.
(2) There is no coverage when the named insured or anyone entrusted with property voluntarily parts with it because of a trick or false pretense.
(3) There is no coverage when property is transferred to another person or place based on unauthorized instructions.
b. The insurance company
does not pay for loss or damage caused by or resulting from any of the
following. However, if any of these result in a covered cause of loss, coverage
applies to the resulting loss or damage.
(1) Weather conditions but only if they contribute in any way with excluded causes of loss B. 1. c. Governmental Action, B. 1. d. Nuclear Hazard, or B. 1. f. War and Military Action to produce the loss or damage.
(2) Acts or decisions by any governmental body, person, group, or organization. This also includes failing to act or decide.
(3) Inadequate, faulty, or defective planning, zoning or development, design, workmanship, repair, grading, or compacting, materials used in construction, remodeling, renovation, or maintenance. This applies whether the property is on and off premises.
c. The following exclusions apply to accounts receivable only. Coverage does not apply to loss or damage:
(1) That occurs because records are altered, falsified, concealed, or destroyed in order to conceal that money, securities, or other property have been wrongfully given, taken, or withheld. This exclusion applies only to accounts receivable that are part of the wrongful behavior.
(2) That occurs because of errors or omissions in bookkeeping, accounting, or billing.
(3) That requires an audit
or an inventory calculation to prove that it occurred.
NOTE: These are
identical to the Accounts Receivable exclusions in the Businessowners Coverage
Form.
2. The following completely
replaces D.2. Deductibles:
Regardless of the deductible amount, the most the insurance company deducts from any loss or damage in any one occurrence involving Burglary and Robbery, Employee Dishonesty, Outdoor Signs, and Forgery or Alteration is the Optional Coverage Deductible on the declarations. However, it does not increase the deductible on the declarations. It only satisfies that deductible's requirements.
The following completely replaces Property Loss Condition
E. 8. b. Vacancy Provisions
b. Vacancy Provisions
If the covered building was vacant for 60 or more consecutive days before the covered loss or damage occurred, the insurance company does not pay for any loss or damage caused by vandalism or sprinkler leakage (unless the sprinkler system was protected against freezing).
If the covered building was vacant for 60 or more consecutive days before the covered loss or damage occurred, the insurance company reduces the amount it pays by 15% for any loss or damage caused by any other covered cause of loss.
NOTE: The only difference between this and the
vacancy provisions in the coverage form is that the reference to breakage of
building glass, water damage, and theft or attempted theft is deleted. This is
because these causes of loss are not covered when this endorsement is attached.
Section G. Optional Coverages is amended in many ways.
1. Paragraph 2. Money and Securities is deleted.
2. Paragraph 5. Burglary and Robbery is added as follows:
a. The insurance company pays for direct physical loss of or damage to money and securities and to business personal property at the described premises. Business personal property coverage applies only if there is a limit of insurance on the declarations for the described premises.
The loss or damage must be the direct result of an actual or attempted burglary or robbery.
Burglary is defined. It means a person who enters or leaves the premises unlawfully to take property from inside the premises and leaves marks that evidence forcible entry or exit.
Robbery is defined as taking property from the person who has custody of it by causing or threatening that person with bodily harm, or by committing an unlawful act witnessed by the person who had the property.
b. Coverage for money and securities is extended to include while they are at a bank or savings institution, inside the living quarters of the named insured, its partners, employees, temporary employees, or leased employees who have custody of it, and while in transit between such places.
c. Coverage does not apply to loss or damage:
(1) To household or personal effects in living quarters of the named insured, its partners, officers, directors, stockholders, or relatives of any of these
(2) To manuscripts, deeds, or accounts
(3) To evidences of debt that the definition of securities does not include
(4) To missing property where there is no physical evidence to explain what happened to it
Note: This means
shortages an inventory determines are insufficient to verify a covered loss.
(5) That result from criminal or dishonest acts by the named insured, its partners, directors, employees, temporary employees, leased employees, or authorized representatives, whether acting alone or in collusion with others, or while performing services for the named insured or otherwise
(6) That result from voluntarily parting with property or giving it away to others because of a trick, scheme, or other false pretense
(7) To property transferred to another person or place based on unauthorized instructions
(8) Caused by or that result from loss of use, loss of market, or delay
(9) That occurs during a fire at the described premises
d. Loss Payment
(1) The most the insurance company will pay for loss or damage to money and securities inside or on the described premises, or in a bank or financial institution, is the Inside the Premises limit of insurance shown on the declarations.
(2) The limit on the declarations for Outside the Premises is the most the insurance company pays while the property is anywhere else.
(3) All other business personal property is limited to 25% of the business personal property limit of insurance. However, a $2,500 sub-limit applies to:
· Furs and garments made of and/or trimmed with fur
· Jewelry, jewels, precious and semi-precious stones, bullion, watches, watch movements, platinum, gold, silver, and other precious alloys or metals. This limitation does not apply to jewelry or watches valued at less than $100 each.
· Patterns, dies, forms, and molds
e. Loss or damage that results from a single act, a series of related acts, or the actions of one or more persons is treated as one occurrence.
The definition of specified causes of loss does not apply.