COMMERCIAL OUTPUT PROGRAM SAMPLE INSURANCE PROPOSAL LANGUAGE

(August 2019)

REPRINT PERMISSION

All PF&M subscribers are permitted to reprint the following insurance proposal sample language when preparing insurance presentations for their commercial insurance customers. Other uses require permission by The Rough Notes Company, Inc.

PROPOSAL DISCLAIMER

The following paragraph or similar language needs to be included in all insurance proposals:

Consult the policy for definitions and limitations. The terms of this proposal do not represent contract terms. The policy is subject to company underwriting practices.

TIPS FOR USING THIS PROPOSAL LANGUAGE

This proposal language is not intended to be an entire insurance proposal. A client specific section including the name and address of the insured, the insurance company(s) and the agent, and information about them, a list of locations, limits, deductibles, and similar customer specific items are not included and should be prepared.

The intent of any insurance proposal is not to be a reproduction of the insurance policy, but to give a summary of possible coverages.

Paragraphs explaining coverages unique to this policy form may be the most important addition to your insurance proposal and sales effort. Coverage examples can be tailored to your individual customer. Be careful when altering any proposal language not to expand coverage beyond what the policy intends.

This proposal should be combined with proposals for other lines of business, such as general liability, workers compensation and umbrella liability, for a complete account proposal. A checklist of recommended endorsements could also be helpful as long as you can explain the endorsement and how it is to be used.

AAIS Commercial Output Program Available Endorsements and Their Uses

AAIS Commercial Output Program Endorsements Checklist

SAMPLE PROPOSAL LANGUAGE FOR THE AAIS COMMERCIAL OUTPUT PROGRAM COVERAGE FORM

Introduction

The American Association Insurance Services, Inc. (AAIS) Commercial Output Program is the AAIS version of a Manufacturer’s Output Policy. CO 1000–Commercial Output Program–Property Coverage Part must be included on every AAIS Commercial Output Program policy because it contains the conditions, definitions and other universal elements that apply to the coverage.

CO 1000–Commercial Output Program–Property Coverage Part provides extremely broad coverage on buildings and business personal property. It has seven coverage extensions, 13 supplemental coverages and 11 supplemental marine coverages. The coverages provided are listed on CO 1050 or CO 1051–Schedules of Coverages. These forms have spaces for changing the policy default limits for any coverage provided. The Schedules of Coverages also list the coverage parts and have spaces in which to enter limits, along with a list of coverage extensions and supplemental coverages. Spaces are also available to identify the coverage parts excluded or to which coverage does not apply.

COVERAGE

The insurance company pays for direct physical loss of or damage to covered property situated at a covered location. The loss or damage must be caused by or result from the occurrence of a covered peril during the policy period.

PROPERTY COVERED–BUILDINGS

When there is a limit of insurance for building on the schedule of coverages, the building or structure listed and described is covered. The following is also considered covered building:

Completed additions
Fixtures. This includes outdoor fixtures.
Permanently installed machinery and equipment
Personal property the insured owns and uses to service or maintain the building or premises
Additions under construction, alterations, and repairs that other insurance does not cover. The materials, equipment, supplies, and temporary structures used to make the additions, alterations, or repairs are also building. If any or all are contractor’s property, it is still covered if the insured is contractually obligated to insure it.
Signs and foundations for buildings, structures, boilers and machinery are also considered building.

PROPERTY COVERED–BUSINESS PERSONAL PROPERTY

Business personal property inside a building at a covered location or within 1,000 feet of the building in either the open or in a vehicle is covered. If the insured is a tenant, coverage also applies to its use interest in improvements made to or acquired at its own expense at the covered location. Improvements coverage applies to fixtures, installations, additions and other changes made or added by an insured to a building it occupies but does not own and the value lost because it is damaged or if it not damaged but because of a loss, the lease is voided and the named insured no longer has use of it.
Business personal property also includes leased property the insured is contractually responsible to insure and business personal property of others while in the named insured’s care, custody, and control. It also includes its labor, material and services investments in property of others. Personal property intended to become part of an installation, fabrication or erection project is also covered when at either the job site or while in temporary storage pending delivery to the job site. Computers that are not protected by other insurance are also covered.
Business personal property includes mobile equipment but only if it is not insured elsewhere. Also, property sold under an installation agreement where the insured's responsibility continues is covered until the purchaser accepts the property.

PROPERTY NOT COVERED

Airborne or waterborne property, unless transported by regularly scheduled air or ferry service.

Aircraft and watercraft, including related equipment and accessories. This doesn’t apply to aircraft or watercraft manufactured, processed, or stored by the named insured. It also doesn’t apply while being held for sale. Rowboats and canoes on land at a covered location are also covered.
Animals, except for animals owned by others and boarded by the insured. Animals owned as stock are covered but only when such animals are inside a covered building.

Automobiles and vehicles designed for highway use, including motor vehicles held for sale, lease, loan or rental are not covered. Motor vehicles manufactured, processed, or stored by the insured are covered as is all mobile equipment.
Laptops, palmtops, notebook personal computers or any portable computer while in transit as checked luggage are not covered but only for the peril of theft.

Contraband, illegal property or covered property traded or transported illegally.
Costs of excavating, grading, filling or backfilling, unless required to rebuild, repair or replace a covered loss to covered property below the surface of the ground.

Crops while outside buildings including, but not limited to, hay, grain and straw. The same property inside buildings is covered.

Export and import property while covered by an ocean marine cargo or similar policy.

Land, water and growing crops

Money and securities, accounts, bills and the cost to reproduce, replace or restore valuable papers and other lost information.
Outdoor trees, shrubs, plants, and lawns, except for stocks of this property held for sale. Limited coverage for these items is provided under Supplemental Coverages.

Property better or more specifically insured under another policy or coverage form. This insurance will respond as excess over the other insurance.
Property of others for which the insured is legally responsible as a carrier for hire or an arranger of transportation for the property.
Property sold and delivered, except property sold subject to an installation agreement.

COVERAGE EXTENSIONS

The following items are covered as a sublimit of the limit of insurance. When a limit is provided it is subject to the policy limits of insurance and not in addition to it.

Consequential Loss. This is the loss of value to undamaged personal property because other property has been damaged by a covered peril.

Debris Removal Costs. These are the costs to remove debris caused by an insured loss to covered property. The payment is limited to 25% of the amount of the loss plus $50,000. The maximum payout for debris removal plus the actual loss amount is the limit of insurance plus $50,000.
Emergency Removal. This provides coverage at another location when covered property is moved because of an impending covered peril. No exclusions apply while the property is located at the emergency location. Coverage applies until the policy expires or 365 days whichever time frame is less.

Emergency Removal Expenses. This pays for the expenses incurred by the insured to move property to the emergency location in order to protect it from an impending covered peril. The $5,000 sub-limit is separate from, and not part of, the coverage limit described under Property Covered.
Fraud and Deceit. If covered property is lost because it is given to any persons who represent themselves as authorized persons or present fraudulent bills of lading or receipts this coverage applies but only for $5,000.
Damage from Theft. This applies only if the named insured is a tenant. It covers the contractual obligation that tenant has to the building owner for damage to the building when caused by theft or attempted theft.
Off Premises Utility Service Interruption. This provides up to $50,000 for direct physical loss or damage when caused by an off premises utility interruption. It applies only if the interruption damages covered property and the damage at the utility is caused by a covered peril.

SUPPLEMENTAL COVERAGES

The following items are covered in addition to the limit of insurance for building and business personal property. If no limit is provided, the limit is the full limit for the applicable coverage.

Brands or Labels Expense. A payment of up to $50,000 in any one occurrence is made to cover the costs an insured incurs to stamp salvage on merchandise and also to remove brands or labels from property when damaged in a covered loss. The removal cannot physically damage the merchandise. Re-labeling is also covered but only when required by law.
Expediting Expenses. The costs incurred by the insured to speed up permanent or temporary repairs to or replacement of covered property after an insured loss are covered for up to $50,000 in any one occurrence.
Fire Department Service Charges. Charges the insured is contractually bound to pay for fire department services are covered up to $25,000. These charges are paid only if the contract was in place before the loss and services provided were to save or protect insured property from loss or damage by a covered peril.
Inventory and Appraisal Expenses. These are expenses incurred by the insured to satisfy insurance company’s request for inventory detail and value of the loss are covered up to $50,000.
Ordinance or Law (Undamaged Parts of a Building). This covers the value of the undamaged building that must be torn down because a covered loss has damaged part of the structure and an ordinance requires the remaining portion to be torn down.
Ordinance or Law (Increased Costs to Repair and Cost to Demolish and Clear Site). This covers the cost to remove the debris resulting from the undamaged portion of the building being torn down. It also covers the increased cost to rebuild the structure in accordance with current building ordinances.
Personal Effects owned by the insured, its officers, partners and employees are covered for up to $15,000.
Pollutant Cleanup and Removal covers the insured's expense to extract pollutants from land or water if the pollution event is caused by a covered peril and is reported to the insurance company within 180 days after it occurs. Coverage does not apply to the expenses to test for, monitor or assess the effects of pollutants, except for the costs of testing necessary to extract pollutants from the land or water. The $50,000 aggregate limit applies at each site or covered location during each separate 12-month policy period.
Recharge of Fire Extinguishing Equipment pays up to $50,000 to cover expenses incurred to recharge automatic fire extinguishing equipment or fire extinguishers but only when discharged to fight a fight or done so accidentally. It is also covered if necessitated by a covered peril.
Rewards coverage pays up to $10,000 for information leading to the conviction of a person or persons that caused a covered theft, vandalism or arson loss.
Sewer Backup and Water Below the Surface coverage pays up to $25,000 per occurrence for direct physical loss or damage to covered property when due to water backing up through a sewer or drain or a subsurface water exerting pressure on or flowing through or into covered property.
Trees, Shrubs and Plants pays up to $50,000 in a single occurrence for direct physical loss or damage, including debris removal expenses, to outdoor trees, shrubs, plants and lawns. The only perils covered are fire, lightning, explosion, riot, civil commotion, falling objects and vandalism.
Underground Pipes, Pilings, Bridges and Roadways pays up to $250,000 in a single occurrence or at any one covered location, for direct physical loss or damage due to a covered peril to pilings, piers, wharves, docks, retaining walls, underground pipes, flues or drains, bridges, walkways, roadways and other paved surfaces.

SUPPLEMENTAL MARINE COVERAGES

The following items are covered in addition to the limit of insurance for building and business personal property. If no limit is provided, the limit is the full limit for the applicable coverage.

Accounts Receivable coverage applies up to $50,000 for losses and expenses the insured incurred because of a direct physical loss or damage by a covered peril to records of accounts receivable. It covers not only the money that cannot be collected but also the expenses incurred to recreate financial records; interest charges on loans taken to offset the loss; collection expenses, and other related expenses.
Electrical or Magnetic Disturbance of Computers covers direct physical loss or damage to computers caused by electrical or magnetic disturbance.
Power Supply Disturbance of Computers covers direct physical loss or damage to computers when due to disturbances in the power supply, including interruption, power surge, blackout or brownout.
Virus and Hacking Coverage provides coverage for direct physical loss or damage to covered computers, networks and web sites due to a computer virus or by computer hacking. The limit of coverage is $25,000 per occurrence and a $50,000 12-month policy period aggregate
Fine Arts coverage applies for up to $100,000 in a single occurrence or at any one covered location for direct physical loss or damage by a covered peril to fine arts at a covered location, while temporarily on display or exhibit at other than a covered location and while in transit between such locations.
Off Premises Computers covers up to $25,000 in a single occurrence for direct physical loss or damage caused by a covered peril to computers in the custody of the insured, its officers, partners and employees when away from a covered location and while in transit between where the individual carrying the computer is located and a covered location.
Property on Exhibition coverage applies for up to $50,000 in a single occurrence for direct physical loss or damage due to a covered peril to business personal property temporarily on display or exhibit at locations other than a covered location.
Property in Transit covers up to $50,000 in a single occurrence for direct physical loss or damage due to a covered peril to business personal property while in transit, regardless of the number or types of vehicles involved in the loss. This coverage is extended to business personal property sold and being shipped at the owner's risk if and when the owner rejects the shipment because the shipment is damaged and the owner refuses to pay for it.
Sales Representative Samples provides coverage up to a $50,000 limit in a single occurrence for direct physical loss or damage due to a covered peril to samples of the insured's stock in trade, including containers and similar property of others. Coverage applies only if the samples are in the custody of sales representatives or are in transit between a covered location and a sales representative.
Software Storage provides coverage up to a $50,000 limit in a single occurrence to duplicate and back-up software as the result of direct physical loss or damage by a covered peril to duplicate and back-up software stored at a software storage location.
Valuable Papers coverage pays up to $100,000 for the cost of research and other expenses needed to reproduce, replace or restore lost information caused by or resulting from direct physical loss or damage by a covered peril to valuable papers.

PERILS COVERED

Coverage applies to risks of direct physical loss or damage, unless the loss is limited or is caused by an excluded peril.

PERILS EXCLUDED

The first group of exclusions is essentially absolute. Subject to specific exceptions, each is totally excluded, regardless of any other cause or event that contributes to a loss, either concurrently or in any other sequence. The insurance company does not pay for any direct or indirect loss or damage caused by or resulting from any of these events.

Ordinance Or Law excludes any increased cost of construction due to the enforcement of any building code, ordinance or law regulating the construction, use or repair of any building or structure, its demolition or removal of its debris. The only exception is coverage provided in under Supplemental Coverages.
Earth Movement excludes any loss or damage caused by any earth movement, other than sinkhole collapse, or caused by eruption, explosion or effusion of a volcano. Examples of earth movement are earthquake, landslide, mudflow, mudslide, mine subsidence or the sinking, rising or shifting of the earth. Coverage does apply to direct loss by fire, explosion or volcanic action due to earth movement or the eruption, explosion or effusion of a volcano. This exclusion does not apply to computers, mobile equipment or any of the Supplemental Marine Coverages.
Civil Authority ordered acts that cause loss or damage are excluded. Seizure, confiscation, destruction and quarantine are examples of civil authority actions. An exception is when destruction is ordered by the civil authority as a means to prevent the spread of a fire.
Nuclear Hazard excludes any loss caused by nuclear reaction, nuclear radiation or radioactive contamination. Loss caused by the nuclear hazard is not considered loss caused by fire, explosion or smoke but direct loss by fire resulting from the nuclear hazard is covered.
War and Military Action excludes loss or damage caused by war, undeclared war and civil war, warlike action by a military force. Actions taken by the government to prevent or defend against an expected or actual attack by any government or other authority using military personnel or agents and rebellion, revolution, insurrection or unlawful seizure of power is also excluded. If any of these actions involves nuclear reaction, nuclear radiation or radioactive contamination, this exclusion applies in place of the Nuclear Hazard exclusion.
Flood losses of any kind, as defined in the coverage form, are excluded. Coverage does apply to loss or damage caused by fire, explosion or sprinkler leakage as a result of flood. This exclusion does not apply to damage to computers, mobile equipment or any of the Supplemental Marine Coverages.
Utility Failure to supply electrical power or other utility service to a covered location is excluded if the failure occurs away from the covered location. However, if the failure to provide utility services to a covered location results in the occurrence of a covered peril, coverage applies to the loss or damage caused by that peril. This exclusion does not apply to computers, mobile equipment or any of the Supplemental Marine Coverages. Some other coverage is also provided in the Coverage Extensions.
Sewer Backup and Water Below the Surface that causes loss or damage is not covered. If such an event results in fire, explosion or sprinkler leakage, the loss or damage from those events is covered. This exclusion does not apply to computers, mobile equipment or the Supplemental Marine Coverages. There is also some coverage provided under Supplemental Coverages.

The second group of exclusions applies to loss or damage caused by or resulting from any of the following loss events. Some of these exclusions have exceptions, conditions or limitations that should be noted and reviewed carefully. The insurance company does not pay for any loss or damage caused by or resulting from any of these events.

Animal Nesting, Infestation or Discharge loss or damage is excluded. If any of the above results in breakage of building glass or a specified peril, coverage applies to the loss or damage caused by those events.
Loss or damage caused by collapse is excluded, except as provided under Other Coverages–Collapse. If the collapse results in the occurrence of a covered peril, coverage applies to the loss or damage caused by that covered peril. This exclusion does not apply to computers, mobile equipment or the Supplemental Marine Coverages.
Computer Virus or Computer Hacking that causes loss or damage, whether direct, indirect or resulting from loss of access, use or functionality is not covered, except as provided under Supplemental Marine Coverages–Virus and Hacking Coverage.
Contamination or Deterioration that causes loss or damage is excluded. If contamination or deterioration results in a specified peril or breakage of building glass, coverage applies to the loss or damage caused by any resulting damage. If a covered loss causes the air conditioning system that services the insured’s computer to fail, the resulting contamination or deterioration to the insured’s computer system because of the air conditioning failure is covered.
Criminal, Fraudulent Or Dishonest Acts committed alone or in collusion by the named insured, any party having an interest in the property, any party entrusted with the property, partners, officers, directors, trustees and joint venturers or employees or agents of any of the above, whether at work or not are not covered. Acts of destruction by the insured's employees are covered but not if caused by theft. Covered property when in the custody of a carrier for hire is not subject to this exclusion.
Defects, Errors and Omissions are excluded. Land use, design, specification, construction, installation, or maintenance of property, planning, zoning, development, siting, surveying, grading or compaction or maintenance of property defect, errors or omissions are excluded regardless if on or off location. When the loss is due to defective, weak, inadequate, faulty or unsound construction materials, there is not coverage and the costs of making good on a design error or loss due to data processing or programming errors or giving improper instructions is also excluded. Business personal property losses because of defects or deficiencies in design, specifications, materials or workmanship, or that result from inherent or latent defects, are not covered. If any of the above causes a covered peril to occur, loss caused by that covered peril remains covered.
Loss or damage due to electrical arcing or electrical currents of any kind other than lightning is excluded. This exclusion does not apply to computers. If the excluded arcing or currents start a fire, coverage applies to the fire damage. Any direct loss by a covered peril that occurs at a covered location because of any interruption or power or other utility services is also covered.
Steam Boiler Explosion exclusion applies to loss or damage caused by the explosion of steam boilers, steam pipes, steam turbines or steam engines but only if they are owned, leased or operated by the named insured. If an explosion in one of these objects causes a fire or a combustion explosion, the resulting loss or damage is covered. Loss or damage caused due to the explosion of gas or fuel that accumulates in a firebox, combustion chamber or flue also covered.
Increased Hazard excludes coverage when a hazard materially increases, the named insured is aware of the increase, and a loss occurs. The increase in hazard is not required to be the cause of the loss.
Loss of Use means any consequential loss caused by loss of use, delay or loss of market and all are excluded.
Mechanical Breakdown or the rupturing or bursting of moving machinery parts caused by centrifugal force that results in loss or damage is excluded. However, if any of these events causes a specified peril, breakage of building glass or elevator collision to occur, coverage applies to the loss or damage resulting from those events. This exclusion does not apply to computers.
Neglect on the part of the insured to use every reasonable means available to save covered property during and after a covered loss is not acceptable so any resulting loss because of the neglect is not covered. When an insured does not use every reasonable means available to save and preserve covered property endangered by a covered peril there is also no coverage.
Pollutants. There is no coverage for loss caused by any action of pollutants unless the event is caused by a specified peril. Limited coverage is provided under Supplemental Coverages–Pollutant Cleanup and Removal.
Damage caused by the seepage or continuous leakage of water or steam for 14 days or more is not covered.
Settling, Cracking, Shrinking, Bulging or Expanding loss or damage to pavement, footings, foundation, walls, ceilings or roofs is excluded. If any of these events results in the occurrence of a specified peril or breakage of building glass, coverage applies to the loss or damage caused by those events. This exclusion does not apply to computers or mobile equipment.
Agricultural smudging or industrial operations Smoke, Vapor or Gas that causes loss or damage is excluded. This exclusion does not apply to computers and mobile equipment.
Smog damage or loss caused by or resulting from smog is excluded. If the smog causes a specified peril or breakage of building glass to occur, the loss or damage due to those events is covered. This exclusion does not apply to computers and mobile equipment.
Temperature extremes, humidity, dryness or dampness causing loss or damage to perishable stock is excluded, except as provided under Coverage Extensions–Off Premises Utility Service Interruption. If any of these conditions results in the occurrence of a specified peril or the breakage of building glass, coverage applies to the loss or damage due to those events. Coverage does apply to loss or damage to computers due to direct physical loss or damage by a covered peril to the air conditioning system that services the computers.
When the only loss or damage is wear and tear, marring or scratching, there is no coverage. If any of these cause a specified peril or the breakage of building glass, there is coverage for any resulting damage.
Weather conditions that cause or contribute in any way with a peril excluded in the first group of exclusions to produce loss or damage is excluded. If weather conditions result in a covered peril, coverage applies to the loss or damage caused by that covered peril.
Voluntary Parting with title to or possession of covered property that results in loss or damage is excluded. Coverage does not apply even if the party receiving the property was part of a fraudulent trick or scheme and no value was gained by parting with the property. Some coverage is provided under Coverage Extensions–Fraud and Deceit.

ADDITIONAL PROPERTY NOT COVERED OR SUBJECT TO LIMITATIONS

Accounts receivable losses as a result of bookkeeping, accounting, or billing errors are not covered. If the only proof of loss is from an audit or physical inventory, there is no coverage.
Only animals held for sale are covered. Birds and fish are considered animals. Loss or damage to covered animals is covered only when caused by a specified peril or breakage of building glass. This is further limited to apply only if the animal dies or must be destroyed.
Loss or damage to steam boilers, pipes, turbines and engines caused by a condition or event inside this equipment is not covered. Coverage does apply to loss or damage to this equipment caused by an explosion of gas or fuel in its firebox, flue or combustion chamber. No coverage applies to loss or damage to hot water boilers or heaters caused by any condition or event inside this equipment such as bursting, cracking or rupturing. Explosion in the water heater or boiler is covered.
Contamination of Perishable Stock Due to Release of Refrigerant is not covered. Ammonia is specifically mentioned as a refrigerant, but it is not the only one excluded.
Furs are covered for their full value except for the peril of theft. The sub-limit of insurance for theft coverage on furs is $10,000.
Glassware and Fragile Articles are not covered for loss or damage due to breakage unless the breakage results from a specified peril or breakage of building glass. This limitation does not apply to glass making up part of a building, bottles, or containers held for sale, photographic and scientific instrument lenses. It also does not apply to fine arts that are covered under Supplemental Marine Coverages.
Jewelry, Watches, Jewels, Pearls, Precious Stones and Metals, including watch movements, jewels, pearls and semi-precious stones, are covered under this policy except for the peril of theft. A sub-limit of $10,000 applies to this for any theft loss. This limitation does not apply to any item valued at $100 or less.
Missing Property is not covered if the only proof of loss is a shortage discovered while taking inventory, as an accounting or bookkeeping transaction or by any other circumstance where no physical evidence is present to suggest what happened to it. This limitation does not apply to property in the possession of carriers for hire.
Damage to Personal Property in the Open caused by rain, snow, sleet, or ice is not covered. This limitation does not apply to mobile equipment or to property in the possession of carriers for hire.
Stamps, Tickets, and/or Letters of Credit are covered under this policy except for the peril of theft. A sub-limit of $5,000 applies to this for any theft loss. Lottery tickets held for sale are part of the limitation.
When covered property is transferred via the computer or is delivered to a person or place there is no coverage for any loss or damage to the property if the transaction was the result of unauthorized or false instructions no matter how the instructions were transmitted. The only exception is the limited coverage provided Coverage Extension–Fraud or Deceit.
Valuable Papers losses as a result of errors or omissions in copying or processing them are not covered.

OTHER COVERAGES

Collapse of a building, structure, or personal property is covered if caused by the specified perils, hidden decay, hidden insect, or vermin damage, weight of people or business personal property, or weight of rain that collects on a roof. Collapse caused by use of defective construction material is also covered but only if the collapse occurs during the course of construction, remodeling, or renovation. Collapse must be sudden and unexpected. A building in imminent danger of collapse is not covered until is actually collapses.
Tearing Out and Replacing coverage applies when a covered loss caused by water, other liquids, powder, or molten material occurs and undamaged building must be destroyed in order to repair or replace the system causing the flow. The cost of the undamaged building destruction and its repair is provided by this coverage. The repair of the system itself is not covered. However, if a fire extinguishing system is damaged by its discharge or by freezing this coverage will pay for its repair or replacement.

WHAT MUST BE DONE IN CASE OF LOSS

Notice of a claim must be given to the insurance company by the insured or its agent promptly. A description of the property involved must be part of the notice. The insurance company must state when it requires a written notice be provided. If the loss is the result of the commission of a crime, the police must be notified. In the event of a loss involving a credit card, the credit card company must also be notified.
Protect Property means the insured must take steps to protect covered property from further damage during and after an insured loss. The insured must keep accurate records of these costs and expenses and will be reimbursed for reasonable emergency repairs and expenses. The insurance company does not pay for any anticipatory repairs or emergency measures against an insured peril that has not yet occurred. Emergency repair costs do not increase the limit of insurance.
Proof of Loss, sworn to and signed by the insured and including the required information, must be submitted to the insurance company within 60 days after the company requests it.
Examination means that the insured must agree to be examined under oath and give sworn statements of the answers as often as reasonably requested by the insurance company. The company can request that all involved persons be questioned separately and not in the presence of any others, as a means of preventing collusion.
Records means that the insured must produce any and all records that relate to the loss, value or expense and permit the insurance company to make copies or extracts of them as often as it reasonably requires.
Damaged Property and undamaged property must be shown to the insurance company by the insured as often as the insurance company requires. The insurance company must be reasonable it is requests. The company is permitted to take samples of both to determine the extent of loss to certain property where the amount of loss may not be obvious.
Volunteer Payments can be made the insured but not with any anticipation that the insurance company will reimburse the payment. The only payments the insured can make and expect reimbursement are those for which the insurance company has given written permission. The costs to protect property from further damage, as described above, are the only voluntary payment that will be reimbursed. Any unapproved expenditures are at the insured's own expense.
Abandonment means the insured is not permitted to abandon property to the insurance company without its consent. Because the company decides what property it takes, the insured remains responsible for the damaged property until and if the insurance company decides what it will or will not take.
Cooperation means the insured must cooperate with the insurance company in performing all acts required by the policy. If it does not, the claim may be denied.

VALUATION

Replacement cost valuation applies unless actual cash value is selected on the Schedule of Coverages. Replacement cost is the cost to repair or replace damaged property with similar materials on the same site and used for the same purpose but cannot be more than the amount actually spent for the repairs or replacement. The property is not required to be replaced at the same site.
When Actual Cash Value is selected on the Schedule of Coverages, the value of covered property is its actual cash value on the date of loss. Actual cash value is not defined but common usage of the term is replacement cost with a deduction for physical depreciation.
Separate valuation terms apply separately to Fine Arts, Glass, Hardware, Software, Merchandise Sold, Manufactured Stock, Pairs or Sets, Loss to Parts, Tenant's Improvements, Valuable Papers and Accounts Receivable.

HOW MUCH WE PAY

Insurable Interest. Payment will not be made for more than the insured's insurable interest in the property.
Deductible. Payment is only for the amount of loss exceeding the deductible listed on the Schedule of Coverages. The deductible applies to each occurrence and is applied before any coinsurance or reporting provisions.
Earthquake Period. All loss at a building from earthquakes and volcanic eruptions events during a 168 consecutive hour period is treated as a single occurrence even if the 168 hours extends beyond the policy expiration date.
Loss Settlement Terms means the insurance company pays the least of the amounts determined under Valuation, the actual cost to repair, replace or rebuild with similar materials to the extent possible or the limit that applies to the covered property. This is subject to the other provisions in How Much We Pay.
Insurance Under More Than One Coverage means that if two or more coverages provided by the form apply to the same loss, the insurance company pays no more than the actual amount of the claim, loss or damage incurred.
Insurance Under More Than One Policy. If the insured has other coverage identical to that provided in this form, the insurance company pays only its proportion or share of a covered loss, based on the proportion that the limit for the coverage under this policy bears to the limits for all coverages provided on the same basis. If a different kind of coverage applies to a covered loss, the insurance company pays only the amount of loss that exceeds the amount due from the other coverage, whether it can be collected or not, up to the limit that applies.
Automatic Increase. The limit on the Schedule of Coverages increases automatically every year by the Automatic Increase percentage shown on the Schedule of Coverages.

LOSS PAYMENT

Our Options gives the insurance company four options to use in paying covered losses. It can pay the insured the value of the lost or damaged property, as determined in Valuation and How Much We Pay or pay the insured the cost to repair or replace the lost or damaged property. It can actually rebuild, repair or replace the property with similar property within a reasonable time, to the extent possible, or pay the insured the appraised or agreed value for the property and then take the property. It is entirely the insurance company’s decision.
Your Losses means the insurance company adjusts losses with the insured or any loss payee named and pays them within 30 days after receiving a satisfactory proof of loss. This is after the amount of loss is established by either a written agreement between the insured and the company or by an appraisal award.
Property of Others means the insurance company can adjust losses directly with the insured or with the party that owns the property. If the owner of the property sues the insured, the insurance company has the option to defend the insured at its own expense.

OTHER CONDITIONS

Appraisal is a condition found in all policies and forms that cover property. It establishes a simple method to resolve valuation disputes on covered property between the insured and the insurance company.
Benefit to Others means that insurance coverage does not directly or indirectly benefit anyone having custody of the insured’s property.
Conformity with Statute means if any part of the policy or coverage form conflicts with a law that applies, the form is amended to conform to that law.
Control of Property means the coverage provided by the form is not affected by any act or neglect beyond the control of the insured.
The Death condition applies if the named insured dies. The rights and duties of the named insured pass to the party acting as the deceased’s legal representative. If no legal representative is appointed, the party having proper temporary custody of the property is treated as the insured for the property.
Liberalization means that, if the coverage provided by the form is broadened, without an additional premium charge, during the policy term or within the six months before the coverage effective date, the broadened coverage applies to this form.
Misrepresentation, Concealment or Fraud means that coverage is void if, before or after a loss, any insured willfully concealed or misrepresented a material fact or circumstance relating to the insurance or the interest of the insured party in the insurance or engaged in fraud or false swearing concerning any matter relating to this insurance.
Policy Period means losses must occur during the policy period on the declarations.
Recoveries deals with lost property being recovered after loss payment has been made and the procedures, requirements and steps to follow on the part of both the insured and the insurance company when it occurs.

Restoration of Limits means that payments made for covered loss or damage do not reduce the limit of insurance that applies, and the limit is reinstated. This condition does not apply to Supplemental Coverages–Pollutant Cleanup and Removal and Supplemental Marine Coverages–Virus and Hacking Coverage.
Subrogation means the insurance company has the right to require the insured to assign its rights of recovery against others to the company if it has paid a loss that the others may have caused. The insured must do everything it can to secure those rights for the company and do nothing to impair them or the company has the right to deny payment. However, the insured can waive its rights of recovery against others in writing before a loss occurs.
Suit Against Us means the insured cannot sue the insurance company unless it has complied with all the terms of the coverage form and unless the action is brought within two years of the date the insured first has knowledge of the loss, or within the shortest period permitted by any law that invalidates this condition.
Territorial Limits for covered property is the United States, its territories and possessions, Canada and Puerto Rico.
Mortgage Provisions means the insurance company has specific obligations to the mortgagee named on the policy. If more than one mortgage is involved, losses are paid in the order of precedence. Insurance for the benefit of the mortgagee continues, regardless of any actions by the insured that may void coverage. It does not continue if the mortgagee was aware of changes in ownership or increases in hazard and did not notify or inform the insurance company of them.
Vacancy–Unoccupancy clause restricts coverage by not paying losses caused by theft, attempted theft, glass breakage and sprinkler leakage if the building or structure is vacant or unoccupied more than 60 consecutive days or longer than the normal incidental period of unoccupancy for seasonal property. The amount paid is reduced by 15% for any loss by a covered peril not otherwise excluded. Vacancy means the occupants have moved and the building is empty or contains only limited personal property. Unoccupancy means customary activities are suspended but business personal property is still present in the building and has not been removed. Buildings or structures under construction are not considered vacant or unoccupied.