(December 2019)
The unendorsed Insurance Services Office (ISO) OP 00 01–Capital Assets Program Coverage Form (Output Policy) uses a single deductible. According to Rule 50, the standard deductible is $5,000. Lower deductibles can be negotiated and higher limits up to a maximum of $75,000 are available. This deductible applies on an occurrence basis to direct damage losses. There are exceptions to this within certain additional coverages and coverage extensions. The single deductible approach may not be appropriate in certain situations. Some insureds may prefer larger deductibles on buildings but a lower one on the business personal property. OP 03 01 is a very flexible deductible endorsement that permits an insured to choose the deductible by coverage, by cause of loss and by location. When this endorsement is used, the rating is modified through deficiency points under Deficiency Category M.
The premises and building numbers used must be the same as the ones on the declarations.
Note: This is very important to remember when policy changes are made and on renewal. The numbers must remain in concert or the planned application of the deductible could be compromised.
The deductible amount, one of the seven covered causes of loss options, and the property subject to the deductible must also be entered in the spaces provided. Two or more entries may be required for each location and building because deductibles can vary based on the cause of loss and/or type of property. The options are numbered and either the number or the actual wording can be used to describe the option. The options are:
1. All covered causes of loss
This means the same deductible applies to all covered loss or damage to the specific property at the designated location/building.
2. All covered causes of loss except windstorm or hail
This means all causes of
loss for the specific property have the same deductible applied at the location
or building. However, the deductible does not apply if the loss is due to
windstorm or hail. A separate entry must be made for the windstorm or hail
deductible.
3. All covered causes of loss except theft
This means that theft is subject to a separate deductible but that all other covered causes of loss at the specific location or building are subject to the deductible amount. A separate entry must be made for the theft deductible.
4. All covered causes of loss except windstorm, hail, theft, and vandalism.
This means that windstorm, hail, theft, and vandalism are subject to separate deductibles. All other covered causes of loss at the specific location or building are subject to the deductible amount indicated. A separate entry must be made for windstorm, hail, theft, and vandalism.
5. Windstorm or Hail
If either option 2 or option 4 above is selected, this option must be entered on a separate line with a separate deductible amount or one of the windstorm deductible endorsements must be used. If a location/building is scheduled with option 2 or 4 and does not have an entry for option 5, that location/building is not subject to a windstorm or hail deductible.
6. Theft
If either option 3 or option 4 above is selected, this option must be entered on a separate line with a separate deductible amount entered to reflect the different deductible that applies to theft.
7. Vandalism
If option 4 above is selected, this option must be entered on a separate line with a separate deductible amount entered to reflect the different deductible.
Three items added to the deductible section complete this endorsement.
A. If covered property at more than one location sustains loss or damage in one occurrence from a covered cause of loss, the largest deductible that is shown in this schedule or is elsewhere in the policy for that covered cause of loss, applies.
B. If covered property sustains loss or damage in a single occurrence from more than one covered cause of loss, only the largest deductible applicable to any for those covered causes of loss applies.
C. This endorsement does not apply to deductible provisions elsewhere in the policy for earthquake, flood, windstorm, hail, or vandalism.
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Example: Val’s Emporium has five separate locations. Val selects a $25,000 deductible to apply to buildings but is uncomfortable with that much of a deductible on business personal property. After considering the options, he realizes that the $25,000 deductible is acceptable for all causes of loss except theft and the theft deductible should be $5,000. His deductible schedule reads as follows: |
||||
|
Location # |
Building # |
Deductible |
Covered Causes of
Loss |
Property Deductible applies
to: |
|
1-5 |
All |
$25,000 |
1 |
Buildings |
|
1-5 |
All |
$25,000 |
3 |
Business Personal Property |
|
1-5 |
All |
$5,000 |
6 |
Business Personal Property |