The ISO Commercial Portfolio Program 1.

In 1986 ISO introduced “Portfolio Program.” 2. Simplified language forms for commercial lines fire insurance plate glass boiler and machinery inland marine crime insurance general liability automobile 3. Modular forms and standard policy conditions

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Commercial Property Coverages 1.

Traditional fields of “fire” and “allied lines” 2.

Provides coverage for Direct and Indirect loss

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Common Policy Conditions 1. Cancellation 2. Changes 3. Examination of Your Books and Records 4. Inspections and Surveys 5. Premiums 6. Transfer of Your Rights and Duties Under This Policy

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Building and Personal Property Coverage Form 1. Standard form for insuring most personal property 2. Used to provide direct damage coverage on buildings and contents or both A. Building B. Business Personal Property - including improvements and betterments C. Personal Property of Others in the insured’s custody

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Causes of Loss Forms 1. Causes of Loss - Basic Form 2. Causes of Loss - Broad Form 3. Causes of Loss - Special Form 4. Causes of Loss - Earthquake Form

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Causes of Loss Basic Form 7.

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Fire Lightning Explosion Windstorm or Hail Smoke Aircraft or Vehicles Riot or Civil Commotion Vandalism Sprinkler Leakage Sinkhole Collapse Volcanic Action

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Causes of Loss Basic Form Exclusions 1. building ordinance 2. earth movement 3. government action 4. nuclear hazard 5. power failure 6. war and military 7. flood and other types of water losses 8. electrical apparatus 9. leakage/discharge of water or steam except from sprinkler systems 10. rupture of water pipes

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Causes of Loss Broad Form Covers all perils of the Basic Form plus 1. breakage of glass ($100 per plate) 2. falling objects 3. weight of ice, snow, or sleet 4. water damage 5.

“collapse” covered as an additional coverage

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Causes of Loss Special Form 1. Open peril coverage for risks of direct physical loss.

2. Provides coverage for Collapse as an Additional Coverage.

3. Property in Transit ($1,000 limit for certain named perils).

4. Subject to standard open-peril exclusions including concurrent causation exclusions.

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Causes of Loss Earthquake Form Earthquake Volcanic eruption, explosion or effusion

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Commercial Property Consequential Loss 1.

Business Interruption (BI) 2.

Extra Expense 3.

Contingent BI and Extra Expense 4.

Leasehold Interest Coverage

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Business Income Coverage Forms 1. Two business income forms in the Portfolio Program: Business Income (With Extra Expense) Business Income (Without Extra Expense) 2. Both forms agree to pay the loss of income

• • • •

due to necessary suspension of operations during the “period of restoration” caused by direct property loss caused by a covered cause of loss

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Business Income Forms (continued) 3. Business Income means

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Net income (net profit or loss before income taxes) that would have been earned during the policy period; and

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Continuing normal operating expenses, including payroll incurred.

4. Subject to a coinsurance requirement of 50%, 60%, 70%, 80%, or 125% of annual earnings for 12 month policy period.

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Business Income Forms (continued) 5. Period of Restoration

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begins with the date of property loss.

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ends on the date the premises should be repaired,, rebuilt, or replaced with reasonable speed.

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The Duties in Event of Loss condition requires the insured to resume operations as soon as possible, even on a reduced scale if possible.

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Business Income - Additional Coverages 1. Extra Expense/Expense to Reduce Loss:

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Extra Expense Additional Coverage (in With Extra Expense Form) pays expenses to continue operations whether or not the expenses incurred reduce the BI loss.

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Expense to Reduce Loss Additional Coverage (in Without Extra Expense Form) pays expenses to continue operations only to the extent the expenditures reduce the BI loss.

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Limited, along with loss of income payments, to the amount of insurance available.

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Business Income Forms - Additional Coverages 2. Alterations and New Buildings

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extends coverage to buildings under construction at described premises

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$100,000 limit, which is additional insurance 3. Extended Business Income

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30 days automatic coverage for continued loss of business after restoration is completed

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may be extended for an added charge

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Extra Expense Insurance 1. Designed for businesses whose income would not be affected by damage to or destruction of facilities, but which would incur additional expenses to continue operations. 2. Pays abnormal expenses to continue operations, subject to a cumulative monthly limit of the face of the policy.

3. Most common monthly limits: 40% of face of policy during first month 80% of face of policy during first 2 months 100% for three months or more

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Contingent BI and Extra Expense Covers business interruption or extra expenses occasioned by damage to or destruction of facilities not owned by the insured.

1.

“contributing property” 2.

“manufacturing property” 3.

“recipient property”

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Boiler and Machinery Insurance 1. Originated from efforts of a group of engineers in Hartford, highly specialized field; requires trained engineers.

2. Insurance applies to many types of installations including boilers, machines, refrigerating systems and electronics.

3. A major benefit of the coverage is the inspection service that is provided by trained insurance company engineers.

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Boiler and Machinery Coverage Form 1. Used with Object Definition forms and time element forms.

2. Four Object Definition forms:

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Pressure and Refrigeration Objects Mechanical Objects

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Electrical Objects Turbine Objects

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Boiler and Machinery Coverage Form 3. Provides one amount of insurance to cover several types of loss. Payment made on sequential basis A: Property of the Insured and Property Damage Liability B: Expediting Expenses

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Boiler and Machinery Indirect Loss Coverages 1.

Business Interruption 2.

Extra Expense 3.

Consequential Damage

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Insurance Against Dishonesty 1.

Broadly divided into two fields:

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employee crime (fidelity) nonemployee crime 2.

Portfolio Commercial Crime Coverages

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15 crime coverage forms, designated Forms A through N, and Form R

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Portfolio Crime Coverage Forms A B C D E F G H Employee Dishonesty Forgery or Alteration Theft, Disappearance and Destruction Robbery and Safe Burglary Premises Robbery Computer Fraud Extortion Premises Theft and Robbery Outside the Premises I R Lessees of Safe Deposit Boxes J K L M Safe Depository Liability N Securities Deposited With Others Liability for Guests’ Property -- Safe Deposit Box Liability for Guests’ Property -- Premises Safe Depository Direct Loss Money Orders and Counterfeit Paper Currency

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Theft, Disappearance and Destruction Form (Form C) 1.

Covers money and securities for theft, disappearance and destruction. 2.

Provides open-peril coverage on money and securities; separate agreements: losses on premises and losses off premises.

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Robbery and Safe Burglary Coverage Form (Form D) 1.

May be written to cover three exposures:

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on premises

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off premises robbery safe burglary 2.

Employee infidelity excluded

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Premises Burglary Coverage Form (Form E) 1.

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Covers merchandise, furniture, fixtures, and equipment Does not cover money or securities Evidence of forcible entry or forcible exit is required Covers damage by burglars Also covers robbery or attempted robbery of a watchperson Employee infidelity specifically excludes

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Package Policies for Business Firms Commercial Package Policy (CCP)

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Uses same forms as monoline coverages

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Package Modification Factor discounts premiums for individual coverages when property and liability coverages are combined

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Package Policies for Business Firms Businessowners Policy (BOP)

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Package policy approach for small businesses

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Independent policy with its own separate forms

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Provides property and liability coverages in a single contract

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Businessowners Policy Liability Coverage Similar to coverage available under a Commercial General Liability (CGL) Coverage Form, including: Liability coverage limit is $300,000 may be increased to $500,000 or $1,000,000

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