CP DS 00-Commercial Property (Time Element) Coverage Part Declarations

CP DS 00–COMMERCIAL PROPERTY (TIME ELEMENT) COVERAGE PART DECLARATIONS

(June 2019)

 

INTRODUCTION

CP DS 00–Commercial Property Coverage Part Declarations is an advisory form that ISO developed in 2000. It has not been updated since then. Most insurance companies modify it to meet their specific needs. However, many items remain as ISO placed them because the coverage form refers to them.

The Declarations provides information that relates directly to coverages and claims payments that are unique to them. However, it is designed for single location accounts. A multi-location risk would require that a CP DS 01–Commercial Property Coverage Part Supplemental Declarations be attached for each additional location.

Related Article: CP DS 00–Commercial Property Coverage Part Declarations

Note: This analysis focuses on only the elements that relate directly to time element coverages.

HEADER

This section contains spaces to enter the policy number and the effective date of coverage. It also contains a box to check if there is more than one location and more than one Supplemental Declarations.

NAMED INSURED

The exact named insured should be listed. Coverage is provided to only the named insured. If the name is not accurate, coverage may be voided because of lack of financial interest.

When there is more than one named insured listed, the first named insured has additional rights and responsibilities. However, the same coverage applies to each named insured. There may not be enough room on the declarations to list all named insureds. In that case, they can be listed on a separate endorsement.

DESCRIPTION OF PREMISES

The description of the insured premises is the starting point and must be as accurate and detailed as possible. Coverage can be denied if the address or description is incorrect or inaccurate. It is an unfortunate fact that claims are denied because of incorrect or mistaken addresses. The insured location's construction and occupancy are important and helpful items of information, but that information alone is not sufficient to establish or verify coverage.

Related Court Case: Business Income Held Not Applicable to Building Not Scheduled for Such Coverage

COVERAGES PROVIDED

The location or premises information and the building numbers that apply are reprinted from the description and the coverage is then listed. The time element coverage options are:

One or more coverages can be provided. Each one selected must have a corresponding limit of insurance entered in order for coverage to apply.

A causes of loss form must be selected for each coverage provided. Different ones can apply to different coverages. For example, the business Income causes of loss form can be different than the causes of loss form for leasehold interest, and it can be different than the one for the building. The causes of loss form that applies must be entered in order to prevent confusion.

 

Certain entries vary by the type of coverage form:

The rate or rates that apply may be entered in the spaces provided but usually are not.

OPTIONAL COVERAGES

The available business income options on the declarations are:

This option requires a signed and dated business income report/worksheet that is valid for only one year. Entries are required for the coverage it applies to, the limit of insurance, and the expiration date. Coverage reverts to a coinsurance basis for the percentage on the declarations if the values are not updated at the end of the period or if a new worksheet is not received as required.

One of three possible fractions must be entered when this option is selected. They are 1/3, 1/4, and 1/6.

An X must be entered in the space provided when this option is selected.

This entry is expressed in multiples of 30-day increments when this option is selected. The lowest number of days that can be entered is 90 because this optional coverage is increasing the Extended Business Income Additional 60 day’s coverage.

Note: Agreed Value, Monthly Limit of Indemnity, and Maximum Period of Indemnity are mutually exclusive. Only one of them applies at any one time to any one location.

HIGHER LIMITS

The Business Income Coverage Extension permits increasing the automatic limit. This increased limit must be entered on the declarations, but CP DS 00 does not provide any space to enter them. This means the insurance carrier that provides coverage must modify its version of CP DS 00 to provide for such entries. However, another approach is to attach the newly introduced CP 04 08–Higher Limits and enter the increased limit that applies.

FORMS APPLICABLE

The first forms listed apply to all coverages. Forms that apply to specific coverages or locations are listed after that. This is also a global section and is not on the Supplemental Declarations.

CP DS 07–LEASEHOLD INTEREST COVERAGE SCHEDULE

This schedule must be attached when CP 00 60–Leasehold Interest Coverage Form is used. It is a supplement to
CP DS 00, not a replacement. Only one lease can be entered. If Leasehold Interest coverage applies to multiple locations, either location specific information must be added to this schedule and multiple schedules attached or another type of form that provides the same information must be used.

Lease Information

The inception and expiration dates of the lease(s) must be entered. The number of months that remain in the lease as of the inception date must also be entered.

Rate of Interest

A rate of interest must be entered. A corresponding CP interest schedule that displays the leasehold interest that applies to any loss settlement must be attached.

 

Example: A 10% interest rate is entered on CP DS 07. CP 60 10–Leasehold Interest Factors for 10.0% must be attached to the policy.

Tenants Lease Interest

The entries are as follows:

This is the difference between what the named insured pays each month for its lease and the current monthly rental value of that lease.

This is the Gross Leasehold Interest multiplied by the Monthly Leasehold Interest Factor as of the inception date.

The premium is developed by multiplying the Net Leasehold Interest at inception by the rate.

Bonus Payments, Improvements and Betterments, Prepaid Rent

The entries are as follows:

This is the original costs of the above divided by the number of months left in the lease when the costs were incurred.

This is the Monthly Leasehold Interest multiplied by the number of months that remain in the lease as of the inception date.

The premium is developed by multiplying the Net Leasehold Interest at inception by the rate.

The Net Leasehold Interest at Inception entries are added together to arrive at a total and the premium entries are added together to arrive at a total.