CO 1223–COMMERCIAL OUTPUT PROGRAM FLOOD ENDORSEMENT

(August 2019)

INTRODUCTION

This is not a separate coverage part. It is an endorsement and is subject to all the terms and conditions in CO 1000–Commercial Output Program–Property Coverage Part.

It does not apply to mobile equipment, the Supplemental Marine Coverages or computers. This does not impact coverage for those items because the flood exclusion in CO 1000–Commercial Output Program–Property Coverage Part does not apply to any of these coverages.

Only the following sections in the CO 1000 are modified:

• Definitions
• Perils Covered
• Perils Excluded
• How Much We Pay

SCHEDULE OF COVERAGES

Coverage is activated on either the CO 1050–Schedule of Coverages or the CO 1051–Schedule of Coverages by placing a checkmark beside either Scheduled Flood Coverage or Blanket Flood Coverage. If the Scheduled Flood Coverage is selected, CO 1063–Flood Schedule must also be attached. The CO 1063 restricts coverage to only the scheduled locations and provides a specific occurrence and aggregate limit for each listed location.

ADDITIONAL DEFINITIONS

Three additional definitions apply to coverage provided by this endorsement.

• Aggregate Limit

This is the most paid for all losses at a single covered location in each 12-month policy period. The 12-month policy period may end early because of policy expiration or anniversary date.

• Occurrence Limit
• This is the most paid for a loss at a single covered location in a single occurrence.
• Catastrophe Limit
• This is the most paid for all losses at all covered locations in each 12-month policy period. The 12-month policy period may end early because of policy expiration or anniversary date.

Example: Grant Warehousing has three covered facilities at various locations along the Ohio River. Grant selects flood limits of $10,000,000 for each occurrence, $20,000,000 in the aggregate and $40,000,000 as the catastrophe limit. During a single 12-month policy period the following losses occur:

• Location 1 consists of a number of buildings and one incurs $12,000,000 in covered flood damage. Because the occurrence limit is $10,000,000, $2,000,000 of this loss is not paid.
• A second flood occurs at Location 1 that destroys another building. The building is worth $8,000,000 and the loss is completely covered because the amount of damage is less than the $10,000,000 occurrence limit.
• A third flood occurs at Location 1 that causes $5,000,000 in damage to another building. Because the sum of the previous two losses was $18,000,000, only $2,000,000 of the aggregate is available to apply to the third loss.

In addition, no coverage is available at this location for the rest of the policy period because its aggregate limit is exhausted. $20,000,000 remains available for the other locations for the duration of that policy period.

PERILS COVERED

Flood coverage is added as follows:

Scheduled Flood Coverage

When the Scheduled Flood Coverage option is selected on the CO 1050 or CO 1051, direct physical loss or damage to covered property caused by flood is provided but only for the property and limits provided at the locations entered on CO 1063–Flood Schedule. The flood exclusion continues to apply to all other locations, coverages, and property.

Blanket Flood Coverage

When the Blanket Flood Coverage option is selected on the CO 1050 or CO 1051, direct physical loss or damage to covered property caused by flood applies. There is no limitation to coverage or locations except for the territorial limitations within the property coverage part.

PERILS EXCLUDED

The Flood exclusion in property coverage part is deleted in its entirety.

Note: Remember Exclusion 1.h, Sewer Backup and Water below the Surface continues to apply.

HOW MUCH WE PAY

The following items are added to the How Much We Pay section in the property coverage part:

1. Deductible

This replaces the deductible condition in the property coverage form but only for losses covered by the flood peril. Only the amount of a covered flood loss that exceeds the deductible shown on the Schedule of Coverages is payable. Deductibles can be expressed as specific dollar amounts or as a percentage. When the percentage is selected, the dollar amount of the deductible is determined by multiplying the displayed percentage by the value of the covered property at the time of loss.

Example: The COP written for Foley’s Furniture has a $2,000,000 limit of insurance for stock and a flood deductible of 2%. The value of the stock at the time of loss is actually $5,000,000. The deductible is determined by multiplying the stock value, not the limit, by the deductible percentage. In this case, the stock value of $5,000,000 multiplied by 2% results in a $100,000 deductible amount. The insured must pay $100,000 before the insurance company makes any payment on the rest of the loss.

2. Limits That Apply to Scheduled Flood Coverage

This item applies when Scheduled Flood Coverage is selected on either of the Schedules of Coverage and CO 1063–Flood Schedule is attached. The limits that apply to loss or damage to covered property due to flood are as follows:

• The most paid for a single occurrence at a covered location is the occurrence limit for that location on CO 1063–Flood Schedule. There is no coverage if the location or the property damaged is not listed.
• The most paid during a 12-month period for covered flood losses at a covered location is the aggregate limit on CO 1063–Flood Schedule for that location. There is no coverage if the location or the property damaged is not listed.
• The most paid during a 12-month period for all covered flood losses at all covered locations on CO 1063–Flood Schedule is the catastrophe limit on either CO 1050 or CO 1051–Schedule of Coverages.

3. Limits That Apply to Blanket Flood Coverage

This item applies if Blanket Flood Coverage is selected on either of the Schedules of Coverages. The limits that apply to loss or damaged covered property due to flood are as follows:

• The most paid for a single occurrence at a covered location is the occurrence limit on the Schedule of Coverages.
• The most paid for all loss at a covered location during a 12-month period is the aggregate limit on the Schedule of Coverages.
• The most paid for the sum of all losses at all covered locations during a 12-month period is the catastrophe limit on the Schedule of Coverages.

4. Excess Insurance and Other Insurance

If excess flood coverage is purchased or if this flood protection is purchased as excess coverage, the proportional sharing described in the Insurance under More than One Policy does not apply.

Examples:

Marty has 10 locations. Five are located in a flood plain. The insurance company requires that the maximum coverage be purchased from the NFIP on those locations. It agrees to provide the coverage in this endorsement for all locations as excess over the NFIP covered locations. When a loss occurs, Marty must first receive a settlement from the NFIP before this policy will respond.

Prentice has limits of $50,000,000 over four locations. His company is unwilling to provide coverage for more than $10,000,000 at a single location. He purchases a DIC policy to provide the excess coverage. When a loss occurs, this policy will respond for up to $10,000,000 and the DIC carrier will respond for the remainder.