1. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Insight on Property Issues and Solutions Designed for the Insurance Community Center By Insight Insurance Consulting

2. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 2 Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. This instructional materials provided by Insight is intended as a general guideline and any interpretations provided by Insight do not modify or revise insurance policy language. The authors of these materials, Insight Insurance Consultants is a division of Insight Consulting and Management Inc. In providing these materials, Insight assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials provided. Insight Insurance Consulting (714) 803-5830Fax: (949) 706-6880 Laurie@insightinsuranceconsulting.com www.insightinsuranceconsulting.com www.theinsurancecommunity.com Copyright 2010 All Rights Reserved

3. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 3 What this class will cover 1.Property covered, not covered and how to add back in key categories of property 1.Building 2.Your Business Personal Property 3.Personal Property of Others

4. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com What this class will cover 2.Coinsurance on Property and Business Income 3.Blanket and Margin Clauses 4.Ordinance or Law Issues as it relates to Buildings, Personal Property & Business Income 5.Building Ordinance versus Zoning Laws 4

5. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Building Coverage a.Building, meaning the building or structure described in the Declarations, including: – Note: it says “including” but does not say “including and limited to”. – Remember: any items listed also must be considered for valuation/coinsurance purposes 5

6. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Building Coverage 1.Completed additions 2.Fixtures, including outdoor fixtures 3.Permanently Installed Machinery and Equipment 1.CP 1415 Additional Building Property 6

7. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Building Coverage 4.Personal Property Owned by you that is used to maintain or service the building..including: – Note: it says “including” but does not say “including and limited to”. 7

8. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Building Coverage 5.If not covered by other insurance – Additions under construction, alterations or repairs – Materials, equipment, supplies….used for making additions, alterations – Note: Covered under other insurance, on this policy, another policy in the name of the insured or other insurance not carried by the insured 8

9. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Building Coverage—Property Not Covered d. Bridges, roadways, walks, patios or other paved surfaces f. The cost of excavations, grading, backfilling or filing g. Foundations of buildings, structures, machinery or boilers if their foundations are below k. Bulkheads, pilings, wharves or docks 9

10. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Building Coverage—Property Not Covered l. Retaining walls that are not part of a building m. Underground pipes, flues or drains 10

11. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Building Coverage—Property Not Covered Solution: Additional Building Property CP 1415 11

12. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property Note: “Your” (Named Insured’s). Anyone other then the “named insured’s” is considered property of others Note: “consisting of the following property unless indicated on the declarations page” You could specific something other than those items listed on the Declarations. 12

13. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property Note: Can indicate Business Personal Property on the “Separation of Coverage Form (CP 1910) – Separate based on “Cause of Loss” – Separate out Tenants, Improvements and Betterments (rating, Building Ordinance) Note: Valuation Issues Note: Blanketing ( A & B) 13

14. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property 1.Furniture and fixtures 2.Machinery and equipment 3.“Stock” 4.All other personal property owned by you (named insured) and used in your business 5.Labor, Materials or services furnished or arranged by you on personal property of others 14

15. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property (Stock) Definition and Valuation are the key issues "Stock" means merchandise held in storage or for sale, raw materials and in- process or finished goods, including supplies used in their packing or shipping. 15

16. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property (Stock) Replacement Cost does NOT apply to “Stock” unless the including “Stock” option is shown on the Declarations. "Stock" you have sold but not delivered at the selling price less discounts and expenses you otherwise would have had. 16

17. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property (Stock) Special Exclusions oh CP 1030 Special Cause of Loss Form Any loss caused by or resulting from: (a)Damage or destruction of "finished stock"; or (b)The time required to reproduce "finished stock". Manufacturers Selling Price CP 9930 17

18. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Business Income—Operational Expense and Profit Reimbursement Stock sold but not delivered Business Personal Property Automatic Selling Price Evaluate Unsold “Finished Stock” Manufacturers Selling Price Unsold Merchandise Retail Selling Price Future Value of Production Business Income 18

19. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property 6.Your use interest as tenant in improvements and betterments. Improvements and betterments are fixtures, alterations, installations or additions: (a)Made a part of the building or structure you occupy but do not own; and (b)You acquired or made at your expense but cannot legally remove; 19

20. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Tenants Improvements & Building Ordinance Who Is Responsible What Are You Responsible For?

21. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property Leased personal property for which you have a contractual responsibility to insure, unless otherwise provided for under Personal Property of Others. – CP 1460 21

22. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Your Business Personal Property Leased Property (CP 1460) B. Your Business Personal Property is revised to include personal property of others in your care, custody or control under written leases, as described in the Schedule or in the Declarations. C. If an agreed value is entered for property in the Schedule or in the Declarations, this amount will be considered to be the value of the described property at the time of loss or damage. But this does not otherwise alter the application of the Coinsurance condition. D. Property described in the Schedule or in the Declarations is not included under any Personal Property of Others coverage in this Coverage Part 22

23. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Property Not Covered p. Vehicles or self propelled Machines licensed for use on public roads CP 1410 Additional Covered Property n. & o. Electronic Data EDP Policy a. Accounts, Bills, Currency…Money EndorsementCrime Insurance 23

24. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Coverage Extensions Property Off Premises ($10,000) Fair, trade show or exhibitionIn Storage Temporarily at a location you do not own, lease, or operate Personal Effects and Property of Others…($2,500) Owned by Others in your cccOwned by you, your officers, your partners Your Business Personal Property ($100,000) (30 days) Newly Acquired at described Premises Newly Acquired at new acquired location Newly Acquired any location 24

25. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Personal Property of Others This is “first party” not “third party” coverage – Very Important Distinction – Should consider blanketing B & C – Often an unknown exposure If do not activate the coverage there is an automatic $2500 (see coverage form) extension 25

26. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Personal Property of Others Personal Property of others that is in your care, custody or control The role is that of a bailee/bailor and accordingly the requirements imposed are that of a prudent person principle 26

27. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Warehouseman’s Legal Liability The standard of care is imposed upon a warehouseman by Section 7-204 of the Uniform Commercial Code – Most contracts follow this duty of care

28. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com UCC § 7-204. Duty of Care; Contractual Limitation of Warehouseman's Liability (1) A warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unless otherwise agreed he is not liable for damages which could not have been avoided by the exercise of such care.warehousemangoods

29. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Coinsurance % to Value Building Personal Property Business Income 29

30. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 30 Coinsurance Assists in establishing a rate per $100 of the established insurance limit. Commercial Property for Building and Personal Property – 80%, 90%, 100% Business Income – 0%, 50%, 60%, 70%, 80%, 90%, 100%, 125%

31. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 31 Coinsurance Coinsurance allows insured to insure to a minimum coinsurance. – Example: $100,000 (total value) insured to a 90% coinsurance clause would require $90,000 (90%). – This allows for lowering the amount of insurance carried – There is no room for error.

32. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 32 Coinsurance Coinsurance allows the insured to insure with a minimum coinsurance. – Example: $l00,000 (total value) insured with a 90% coinsurance clause would require $l00,000 (90%)

33. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Coinsurance 80% Published Rate No Rating Credit 80% to Value 90% 5% Credit90% to Value 100% 10% Credit 100% to Value 33

34. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 34 Working With Coinsurance Commercial Property Can suspend coinsurance with the Agreed Value Option for a 5% surcharge. Best combination is the Agreed Value with the 100% coinsurance.

35. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Coinsurance Penalty $250,000 Property Value 80% Coinsurance Requirement $200,000 Required Limit ($250,000 X 80) $100,000 Amount of Insurance Carried $100,000/$200,000 = 50% to Value $40,000 Loss $40,000 X 50% = $20,000 $20,000 - $250 Deductible = $19,750 paid 35

36. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Agreed Value Under this optional coverage, the Coinsurance Clause is suspended for insureds who agree to carry a limit of insurance equal to at least – 80% (for specific insurance) or – 90% (for blanket insurance) of the value of the property. Rate is a 1.05% surcharge 36

37. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Agreed Value If the expiration date for this Optional Coverage shown in the Declarations is not extended, the Additional Condition, Coinsurance, is reinstated and this Optional Coverage expires. 37

38. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 38 Working With Coinsurance Business Owners Policy (BOP) Does not have a Coinsurance Requirement but does have an Insurance To Value Clause. If 80% to value full Replacement Cost minus the deductible is paid. If not 80% to value then the greater of ACV or the 80% coinsurance calculation.

39. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 39 Working With Coinsurance Business Owners Policy (BOP) If, at the time of loss, the Limit of Insurance on the lost or damaged property is 80% or more of the full replacement cost of the property immediately before the loss, we will pay the cost to repair or replace, after application of the deductible and without deduction for depreciation, but not more than the least of the following amounts:

40. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 40 Working With Coinsurance Business Owners Policy (BOP) (b) If, at the time of loss, the Limit of Insurance applicable to the lost or damaged property is less than 80% of the full replacement cost of the property immediately before the loss, we will pay the greater of the following amounts, but not more than the Limit of Insurance that applies to the property:

41. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 41 New Concerns Some BOPs now have insurance to value clauses BOP Actual Loss Sustained Definition (ALS) Now putting on Sub-limits on BI

42. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 42 Working With Coinsurance On Business Income Business Income CAN be written with a coinsurance requirement/clause. – Lowest rating factors applied equals the lowest rate per $l00.00 of value. – Highest amount of insurance required to meet requirements of coinsurance form. – Can suspend coverage with the Agreed Amount option

43. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 43 Working With Coinsurance On Business Income Business Income can be written WITHOUT coinsurance – Monthly Limit of Indemnity – Maximum Period of Indemnity – Higher rating factors – Less insurance required – Or BOP

44. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 44 Coinsurance Rating Factors Business Income Without Extra Expense Coinsurance Percentage MercantileManufacturingRental Properties 125%.55.65.50 100%.60.70.55 90%.65.75.60 80%.70.80.65 70%.75.85.70 60%80.90.75 50%.901.05.85 No Coin2.302.452.10

45. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 45 Coinsurance Rating Factors Business Income WITH Extra Expense Coinsurance Percentage MercantileManufacturingRental Properties 125%.60.70.55 100%.65.80.60 90%.70.85.65 80%.75.90.70 70%.80.85.75 60%.901.00.80 50%1.001.15.90 No Coin2.502.652.30

46. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 46 Definition Of Business Income For Coverage Purposes 1.Business Income means the: a. Net Income *(Net Profit or Loss before income Taxes) that would have been earned or incurred and b. Continuing normal operating expenses incurred, including payroll incurred.

47. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 47 Definition Of Business Income For Coinsurance Purposes E. Additional Condition Coinsurance a. The Coinsurance Percentage shown for Business Income in the Declaration times b. The Sum of: (1) The Net Income (Net Profit or Loss before income taxes) and

48. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 48 Definition Of Business Income For Coinsurance Purposes (2) All operating expenses, including payroll expenses, that would have been earned (had no loss occurred by your “operation” at the described premises for the 12 months following the inception, or last previous anniversary date, of this policy (whichever is later).

49. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 49 Coinsurance Selection PROFIT + CONTINUING OPERATING EXPENSES ___________________________________ PROFIT + ALL OPERATING EXPENSES = PERCENTAGE OF COINSURANCE (Estimated Longest Foreseeable Shutdown) (Estimated Additional Start Up Time & Expenses)

50. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 50 Coinsurance Selection $100,000 (Profit + Continuing Expenses $200,000 (Profit + All Expenses) 50% Coinsurance ($l00,000 @50%)

51. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 51 Business Income And Agreed Value A.Agreed Value Optional Coverage Under this coverage, the Coinsurance Condition of the Business Income Coverage Form is suspended for insureds who agree to carry a limit of insurance equal to at least:

52. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 52 Projection Process A.Begin with the profit and all operating expenses as of the inception based on the previous year’s financial statement. B.Project the previous twelve month figure (A) by the anticipated growth during the twelve month policy period. C.Project annual projected figure (B) by anticipated physical length down. A. $_________ A x 12months = B. $_________ B x loss period = C. $_________

53. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 53 Projection Process D.Increase amount in “C” by any additional time it takes to rebuild/replace to new codes/ordinances over an above like, kind and quality. E.Increase revised figure for “physical restoration” by the additional time for the insured to “financially” restore their operations. Caution: Review any specialty contracts that may cause a protracted period of indemnity. C x B.O. Increase = D. $__________ D x physical = E.$_________ F.+ Extra Expense

54. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 54 Business Income and Agreed Value a. The Coinsurance Percentage shown in the Declarations; times b. The amount of Net Income and Operating Expenses for the 12 months following the inception date of coverage.

55. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 55 Business Income And Agreed Value B.Coinsurance Minimum 50% C. Rate Modification. Multiply the business income rates by l.l0

56. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 56 Blanket and Margin Clauses

57. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 57 Blanketing There is NO definition in the property forms There is ONLY a percentage on the declarations page The CLM manual defines as a rating rule Designed to reduce the amount of insurance TO coinsurance

58. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 58 Blanketing Customary definition of Blanketing is NOT in contract language Proposals when they discuss advantages of blanketing are extra contractual

59. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 59 Blanketing To Blanket or Not to Blanket--that Is The Question Definition of “Blanketing” Blanketing multiple entities (not identical ownership) Blanketing Business Income only Blanketing Business Income and other property coverages Blanketing JUST TO BLANKET

60. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 60 Margin Clause – Typically provides for a fixed % swing or margin above values as stated under the Statement of Values – Can be used in conjunction with a Blanket Policy – Always best to eliminate it – Utilize approved letters to advise clients

61. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Margin Clause (ISO) CP 12 32 06 07 Limitation on Loss Settlement Blanket Insurance (Margin Clause) 61

62. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Margin Clause (ISO) This endorsement applies to loss settlement on property that is subject to a Blanket Limit of Insurance. A Blanket Limit of Insurance is a single Limit of Insurance that applies to any of the following as shown elsewhere in this policy: 1.Two or more buildings; 2.Building and contents; 3.Contents of more than one building; or 4.Contents at more than one premises. 62

63. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Margin Clause (ISO) With respect to property that is subject to a Blanket Limit of Insurance, we will determine a maximum loss payable for each building and for the contents of each building or the contents at each premises. The maximum loss payable is determined by applying the applicable Margin Clause percentage indicated in the Schedule to the value of the property as shown in the latest statement of values reported to us. 63

64. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Margin Clause (ISO) If the statement of values does not state individually the value of each building and the value of contents at each building or premises, we will determine individual values as a part of the total reported values prior to application of the Margin Clause percentage. 64

65. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 65 Margin Clause (Travelers) “The most we will pay for loss or damage in any one occurrence at any one premises location is 120% of the value(s) for each Building or Structure and separately for the total of Personal Property (including but not limited to furniture and fixtures, machinery and equipment, “stock,” all other personal property owned by you and used in your business and you use interest in improvements and betterment's) and Personal

66. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 66 Margin Clause (Travelers) Property of Others at each location as shown on the latest Statement of Values filed with us and at each premises location as subsequently reported to and agreed by us to insure.”

67. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Ordinance or Law 67

68. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 68 Building Ordinances Any building regardless of age can be affected. Regulates HOW buildings are built or re-built. Affects building costs, time to rebuild, demolition and debris removal.

69. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 69 Building Ordinances Municipal and/or County Building Codes – Uniform building codes are emended to reflect needs of communities State Building Codes – Regulates specific industries for usage and building quality such as for hospitals, schools, or public buildings.

70. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 70 Building Ordinances Federal Building Codes – Imposed on federally sponsored housing and governmental buildings. – Americans with Disabilities Act—enforceable July 26, 1992. Not a Building Ordinance Law per se but does contain requirements for building in compliance with the federal act.

71. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Types of Building Ordinances Type of Roof Electrical Plumbing 71

72. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com Types of Building Ordinances Parking Set Back Signage 72

73. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 73 Regulate Everything About “How” A Building Is To Be Constructed Plumbing Electrical Structural support Grading Sloping Roofing Parking Spaces Set Backs Flooring Insulation Landscaping Signs - placement, size and type Materials used vs. Occupancy ADA Miscellaneous

74. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 74 Who Needs The Coverage For Building Owners For Tenants of Buildings who – Have put in tenants improvements and betterments – Are responsible contractually to replace/upgrade tenants improvements and betterments For Tenants that could suffer “extended” business income losses due to the lessor having to bring the business up to current code.

75. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 75 Causes Of Loss - Special Form CP 10 30 06 95 B.EXCLUSIONS 1.We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. a.Ordinance or Law. The enforcement of any ordinance or law: (1) Regulating the construction, use or repair of any property: or (2)Requiring the tearing down of any property, including the cost of removing its debris.

76. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 76 This exclusion, Ordinance or Law, applies whether the loss results from: (1) An ordinance or law that is enforced even if the property has not been damaged; or Causes Of Loss - Special Form CP 10 30 06 95

77. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 77 (2)The increased costs incurred to comply with an ordinance or law in the course of construction, repair, renovation, remodeling or demolition of property, or removal of its debris, following a physical loss to that property Note: the exclusion is for any property not just Building Causes Of Loss - Special Form CP 10 30 06 95

78. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 78 Building Ordinance And Law Coverage Options Ordinance Or Law Endorsement provides direct physical loss coverage for BUILDINGS ONLY. No coverage applicable for increased ordinance or law requirements for machinery, equipment, etc.

79. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 79 Ordinance Or Law Coverage CP 04 05 Coverage A—Coverage For Loss to the Undamaged Portion of the Building Coverage B—Demolition Cost Coverage – If a Covered Cause of Loss occurs to covered Building property and Demolition Cost Limit of Insurance is shown…we will pay…

80. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 80 Coverage C - Increased Cost of Construction Coverage. If a Covered Cause of Loss occurs to covered Building property and an Increased Cost of Construction Limit of Insurance is shown in the Schedule above, we will pay for the increased cost to repair, rebuild or construct caused by enforcement of buildings, zoning or land use ordinance or law if the property is repaired or rebuilt. It must be intended for similar occupancy as the current property, unless otherwise required by zoning or land use ordinance or law. Ordinance Or Law Coverage CP 04 05

81. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 81 Ordinance Or Law Coverage CP 04 05 However, we will not pay for the increased cost of construction if the building is not repaired or replaced. B.We will not pay under this endorsement for the costs associated with the enforcement of any ordinance or law which requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants".

82. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 82 Rate Modification For Building Ordinance Coverage Rate Modification a. Causes of Loss Other Than Earthquake (1) Coverage A—Coverage for loss to the Undamaged Portion of the Building. Multiply the 80% or higher coinsurance building rates by l.l5.

83. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 83 Rate Modification For Building Ordinance Coverage (2) Coverage B—Demolition Cost Coverage. Use the 80% coinsurance building rates without further modification. Multiply the rate by the limit of insurance for Demolition Cost Coverage to obtain the additional premium.

84. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 84 Rate Modification For Building Ordinance Coverage Coverage C—Increased Cost of Construction Coverage. Use the 80% coinsurance building rates without further modification. Multiply the rate by the limit of insurance for Increased Cost of Construction to obtain the additional premium.

85. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 85 Building Ordinance And Law Coverage Options Any policy providing a different set of perils coverages needs to be endorsed with Ordinance coverage. Commercial Property, Business Owners, Boiler & Machinery, Difference in Conditions, Builder’s Risk including Soft Cost, etc. Provides coverage due to direct physical loss by a peril insured against.

86. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 86 Building Ordinance & Business Income

87. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 87 Ordinance Or Law Exclusion For Business Income The Cause of Loss Form is attached to a Business Income Coverage Form. Accordingly the same exclusion for Ordinance or Law applies to the Business Income coverage form that applied to the Building and Personal Property Coverage Form. The loss incurred on Business Income is due to the potential additional “time” it might take to bring a building up to code. Additional time equals additional revenue loss. This situation applies more often in a partial loss than a total loss.

88. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 88 Ordinance Or Law—Increased Period Of Restoration (CP 15 31) A.If a Covered Cause of Loss occurs to property at the premises described in the Declarations coverage is extended to include the amount of actual and necessary loss you sustain during the increased period of suspension of "operations" caused by or resulting from the enforcement of any ordinance or law that:

89. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 89 Ordinance Or Law—Increased Period Of Restoration (CP 15 31) 1.Regulates the construction or repair of any property; 2.Requires the tearing down of parts of any property not damaged by a Covered Cause of Loss; and 3. Is in force at the time of loss.

90. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 90 Ordinance Or Law—Increased Period Of Restoration (CP 15 31) However, coverage is not extended under this endorsement to include loss caused by or resulting from the enforcement of any ordinance or law which requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants".

91. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 91 Ordinance Or Law—Increased Period Of Restoration (CP 15 31) B. The PERIOD OF RESTORATION definition is replaced by the following: 3."Period of Restoration" means the period of time that begins: (1)72 hours after the time of direct physical loss or damage for Business Income coverage; or

92. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 92 Ordinance Or Law—Increased Period Of Restoration (CP 15 31) (2)Immediately after the time of direct physical loss or damage for Extra Expense coverage; caused by or resulting from any Covered Cause of Loss at the described premises; and

93. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 93 Ordinance Or Law—Increased Period Of Restoration (CP 15 31) b.Ends on the earlier of: (1)The date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality; or (2)The date when business is resumed at a new permanent location.

94. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 94 Ordinance Or Law—Increased Period Of Restoration (CP 15 31) "Period of restoration" includes any increased period required to repair or reconstruct the property to comply with the minimum standards of any ordinance or law, in force at the time of loss, that regulates the construction or repair, or requires the tearing down of any property. The expiration date of this policy will not cut short the "period of restoration".

95. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 95 Ordinance Or Law—Increased Period Of Restoration (CLM) A.Ordinance or Law—Increased Period of Restoration 1. Description of Coverage The Business Income…coverage form may be extended to cover additional loss of time necessary to replace or repair the damaged building to conform with current building laws or ordinances.

96. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 96 Ordinance Or Law—Increased Period Of Restoration (CLM) 2. Rate Modification a. Causes of Loss Other Than Earthquake multiply the time element rate by 1.2 b. Earthquake—multiply the time element rate by 2.0

97. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 97 Building Ordinance versus Zoning Laws

98. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 98 Zoning Laws Regulate Everything About “What” Is Built Where – Building height – Parking allowance – Occupancy – Environmental Impact Studies – Building dimensions vs. land size

99. Insurance Community Center A Center For Learning…A Community For Sharing www.InsuranceCommunityCenter.com 99 Manuscript ACV Cap Language When any building(s) and/or structure(s) is affected by zoning laws so that the building’s usage, size (height, total square footage, dimensions) are limited by law, the policy will provide replacement cost for that portion of the building the insured can, by law, replace and will then pay actual cash value (ACV) for the differential in value that the insured can not replace by law.