(August 2019)
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 earth movement exclusion in CO 1000–Commercial Output Program–Property Coverage Part does not apply to these coverages.
The following sections of the CO 1000 are changed but the changes only apply to this endorsement:
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 Earthquake Coverage or Blanket Earthquake Coverage. Three selections are possible. Not covered, Scheduled Earthquake Coverage or Blanket Earthquake coverage.
If the Scheduled Earthquake Coverage is selected, a catastrophe limit and earthquake deductible must be entered and the CO 1062–Earthquake Schedule attached.
If the Blanket Earthquake Coverage is selected an occurrence limit, aggregate limit and catastrophe limit must be entered plus the earthquake deductible.
When the CO 1062–Earthquake Schedule is required, coverage is limited to only the listed locations which are subject to their specific occurrence and aggregate limit.
Three additional definitions apply to coverage provided by this endorsement.
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.
This is the most paid for a loss at a single covered location in a single occurrence.
This is better
defined as an aggregate catastrophe limit. It 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.
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Example: The Prebble Company has 20 covered facilities but purchases earthquake coverage on only eight of them. A limit of $5,000,000 is purchased for each occurrence. Because of the site configurations at each location, $10,000,000 location aggregate is selected. A catastrophe limit of $20,000,000 is selected to apply over the eight locations. Location 1 is a large industrial park with 12 separate buildings. A moderate quake occurs that causes $3,000,000 building and $3,000,000 business personal property damage. The most paid for this event is the $5,000,000 occurrence limit. One month later, but during the same 12-month policy period, a second smaller earthquake occurs at the same location causing $1,000,000 building and $2,500,000 business personal property damage. This loss is completely covered because the amount of damage is less than the $5,000,000 occurrence limit. A third earthquake occurs five months later but also during the same 12-month policy period. This time, there is $1,000,000 building damage and $3,250,000 business personal property damage. Because the sum of the previous two loss payments was $7,500,000, only $2,500,000 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. A total of $10,000,000
remains available for the other seven locations. |
When the term volcanic eruption is used in the following coverages, it means not only eruption but also the volcanic explosion and effusion.
When the Scheduled Earthquake Coverage option is selected on the CO 1050 or CO 1051, direct physical loss or damage to covered property caused by earthquake and volcanic eruption is provided but only for the property and coverage described at the locations displayed on CO 1062–Earthquake Schedule. Earthquake continues to be excluded at all other locations, coverages, and property.
When the Blanket Earthquake Coverage option is selected on the CO 1050 or CO 1051, direct physical loss or damage to covered property caused by earthquake and volcanic eruption applies. There is no limitation to coverage or locations except for the territorial limitations within the property coverage part.
The Earth Movement exclusion in the property coverage part is deleted in its entirety and replaced by the following:
Earth Movement or
Volcanic Eruption
There is no coverage for loss or damage due to the following:
Note: Earthquake coverage on the prior policy should apply for the 168 hours following the start of an earthquake without regard for the policy expiration date.
Note: Earthquake coverage is provided by this endorsement – not earth movement coverage.
The following items are added to the How Much We Pay section in the property coverage part:
This replaces the deductible condition in the property coverage form but only for losses covered by the earthquake peril.
Only the amount of a covered earthquake 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.
Note: This deductible refers to a value not a limit, which can cause quite a variation in the deductible that is applied.
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Example: The earthquake occurrence limit is $6,000,000. The value of the building damaged by the earthquake at the time of the loss is $900,000. The earthquake coverage is subject to a 5% deductible. The earthquake causes $500,000 in damage to the building. The deductible is determined by multiplying the building value by the deductible percentage. In this case, the building value of $900,000 is multiplied by 5%, resulting in a $45,000 deductible amount. The insured must pay $45,000 before the insurance company makes any payment on the loss. |
This item applies when Scheduled Earthquake Coverage is selected on either of the Schedules of Coverage and CO 1062–Earthquake Schedule is attached. The limits that apply to loss or damage to covered property due to earthquake or volcanic eruption are as follows:
This item applies if Earthquake Coverage is selected on either of the Schedules of Coverages. The limits that apply to loss or damaged to covered property due to earthquake and volcanic eruption are as follows:
If excess earthquake coverage is purchased or if this earthquake coverage is purchased as excess, the proportional sharing described in the Insurance under More than One Policy does not apply.