INTRODUCTION

This endorsement should be used when the broader coverage provided by the Insurance Services Office (ISO) CP 10 30–Special Causes of Loss, used with commercial property coverage forms, is either unavailable or considered excessive. It adds coverage for the theft of other property when it is inside the insured premises.

This analysis is of the 06 22 edition. Material changes are bolded, but format changes that do not affect coverage are not highlighted.

ELIGIBILITY

This coverage can be added to any ISO Commercial or Government Crime Coverage Form or Policy.

ANALYSIS

This is an endorsement to the Insurance Services Office (ISO) Commercial Crime or Government Crime Coverage Forms and Policies and is subject to their conditions, definitions, and exclusions. The only changes are those within this endorsement.

INSURING AGREEMENT

Section A. Insuring Agreement of the policy or coverage form now includes the following:

Inside The Premises –Theft of Other Property

· Coverage is provided for loss of or damage to property other than money and securities, while inside the insured premises, and it must result from theft.

· Coverage is provided for property damage to the exterior or interior of the premises as a result of theft or an attempted theft. This coverage applies only if the insured owns the premises or is legally responsible for damage to it.

LIMIT OF INSURANCE

The Limit of Insurance shown in the Declarations is the most the insurance company will pay for any loss.

DEDUCTIBLE

The loss amount must exceed the deductible before any payment will be made.

EXCLUSIONS

With the 0622 editions, all exclusions now have headings.

The following exclusions are added to Section D.2. Additional Exclusions Applicable to Specific Insuring Agreements:

· Changes In Conditions

There is no coverage if a loss happens due to an increased risk within the named insured’s control, but no corrective actions were taken.

Example: One night, a windstorm blows out a window at Felix’s store. A neighbor calls him to tell him about the damage, but he decides to wait until the next morning to go to the store. By then, he discovers that several items were stolen from the store. Because the broken window was not boarded up, the insurance company could deny coverage.

· Exchanges or Purchases

Coverage does not apply to property given as a part of a purchase or exchange.

Example: Marsha sells a new stereo system to Peter, who pays with a check. When the check bounces and Peter cannot be located, Marsha reports to her insurance company that Peter stole the stereo. However, the insurer denies coverage upon learning that the stereo was purchased.

Fire

Loss from fire is excluded regardless of how it is caused.

However, the following two exceptions are covered:

Fire damage to a safe or vault.
Theft that occurs inside the insured premises during a fire.

Inventory Shortages

Coverage does not apply when the only proof of a loss is an inventory computation or a profit-and-loss calculation.

NOTE: This information can be used as evidence to support a claim, but not as the sole proof of loss.

Motor Vehicles or Equipment and Accessories

Coverage does not extend to loss or damage of motor vehicles, trailers, semi-trailers, or any attached accessories.

NOTE: With the 06 22 edition, Transfer or Surrender of Property has been removed due to the new exclusion for kidnap, ransom, extortion, and other unlawful demands in the coverage form and policy.

Vandalism

No coverage is provided for vandalism damage to the covered property, the premises, or the exterior of the premises. Additionally, damage caused by malicious mischief is not covered.

NOTE: Property coverage forms should be used to provide this coverage.

Voluntary Parting of Title to or Possession of Property

Coverage does not apply to loss or damage resulting from fraud, trickery, or schemes that lead the insured or someone acting with the insured's authority to voluntarily transfer property or its title.

Example: George visits Priscilla at her store, where she is asked to stock a new television model from her supplier. Priscilla agrees and allows George to take all her existing inventory. He mentions he will return soon with the new televisions. Three hours later, she calls the supplier to check on her new stock, but the supplier is surprised because it has no new televisions in stock and no representative named George. Priscilla’s loss of $15,000 is excluded because she voluntarily handed over the property.

CONDITIONS

One condition is added to the E.2. Additional Conditions applicable to Specific Insuring Agreements section:

Suspension of Coverage

Coverage is suspended following a loss until the premises or location is restored to its original condition and security level prior to the damage or loss. However, this suspension is waived if at least one watchperson is present on the premises whenever the premises are closed for business.

Example: A car crashes into the front of the building leased to Coffee Café. Thieves then enter through the opening and steal merchandise.

Scenario 1: Coffee Café temporarily repairs the wall using heavy plywood and resets the burglar alarm system. The insurance company finds these repairs acceptable, restoring the premises to their pre-damage condition, and the coverage extends to any subsequent losses.

Scenario 2: Coffee Café opts for only minor repairs, which decreases security levels. Bricklayers and glaziers will fix the building within three days, prompting the owner to stay in the store during off-hours. The alarm system cannot be reset until repairs are finished. Meanwhile, during business hours, thieves disguised as shippers steal merchandise from the storage area, with no coverage for the loss because the security level is lower than before the loss.

NOTE: In the second scenario, it’s important to remember the definition of watchperson and to keep in mind that the business is open and operational, though still at a lower security level.

NOTE: With the 06 22 edition, the second condition for the special limit on precious metals, stones, manuscripts, and drawings has been eliminated. These items are now included under the same limit, deductible amount, and terms as other property.