MSO BUSINESSOWNERS POLICY DECLARATIONS
(August 2019)
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INTRODUCTION
The Mutual Service Office, Inc. (MSO) does not provide filed or advisory declarations for its products. This analysis is based on an example that MSO provided to a member company as an aid to produce its own declarations. It summarizes and combines general policyholder information, property coverages, and general liability coverages. This is only one of a number of possible formats because each insurance company will develop its own declarations. It incorporates all items necessary to provide the coverages the policy provides.
GENERAL SECTION
The following entries are part of the general section:
- Insurance Company Name Area
- Producer/Agent Name Area
- The type of coverage provided.
The options are Basic Plus, Expanded, or Named Perils.
- Businessowners Policy–BU 04 01 is used when Expanded or Basic Plus is selected.
- Named Perils–Businessowners Policy–BU 04 02 is used when Named Perils is selected.
Related Article: MSO Businessowners Policies Analysis
- Named Insured
- Named Insured Mailing Address
- Policy Period
- Form of business
This is needed for the definition of insured in the Liability coverage. It is not needed for Property coverage. If there are multiple named insureds, they may be multiple forms of business.
- Mortgagee name and address
A separate endorsement is needed if there is more than one mortgagee. It is important to clearly align the mortgagee’s name and address with the appropriate location(s) because the mortgagee receives a cancellation notice if one of its locations is deleted or the policy is cancelled.
- Description of the business conducted, or the operation(s) performed
INSURING STATEMENT
The insurance company agrees to provide this policy’s coverage as follows:
- Insurance applies only to premises listed on the schedule.
- Coverage applies for only the policy period on the declarations.
- The only coverage(s) provided are the ones that have a limit of liability on the declarations.
- Insurance is provided in exchange for the premium being paid.
SCHEDULE
Up to three locations can be entered on the declarations. Additional locations must be listed on a separate endorsement.
BASIC COVERAGES
Part I–Business Property and Loss of Business Income
Deductible–Coverages A and B
The deductible that applies to Coverage A and Coverage B for all locations must be entered in the space provided.
Business Property and Loss of Business Income Limits of Liability
A limit of insurance for each coverage desired at each covered location must be entered in the space(s) provided. The coverages available are:
- Coverage A–Building
- Coverage B–Business Personal Property
- Coverage C–Loss of Business Income
- Coverage D–Money and Securities
Coverage D requires the entering of a limit for coverage on premises and a separate limit for coverage off premises. The limits entered apply across all locations, so they are entered only once.
An annual inflation factor can be entered for Coverage A. It is automatically 2% unless another percentage is entered. It is subject to the policy’s terms.
Part II–Business Liability
Five entries can be made in this section.
- The Each Occurrence Limit that applies to Coverage E and Coverage F
- The Medical Payments Limit Per Person that applies to Coverage F
- The General Aggregate/Total Limit that applies to Coverage E, Coverage F, and Personal Injury/Advertising Injury
Note: The General Aggregate/Total Limit does not apply to the products/completed operations hazard. The aggregate limit for the products/completed operations hazard is the occurrence limit.
- Fire Legal Liability Supplemental Coverage Limit
- Personal Injury/Advertising Injury Supplemental Coverage Limit
OPTIONAL COVERAGES
Four Optional Coverages are available. Each is selected by checking a box or entering a limit in the space provided. The optional coverage does not apply if the box is not checked or a limit is not entered.
- Actual Cash Value–Coverage A. This valuation replaces replacement cost valuation when the box is checked.
- Actual Cash Value–Coverage B. This valuation replaces replacement cost valuation when the box is checked.
- Burglary and Robbery
Coverage for Burglary and Robbery requires entering a limit for on premises and a limit for off premise. They are entered only once because they apply to all locations. This option is available only if Basic Plus Coverage applies.
FORMS AND ENDORSEMENTS
This section is used to list all forms and endorsements attached when the policy is issued.
ANNUAL PREMIUM
This section is used to enter the policy annual premium and any surcharges that apply.
DECLARATIONS SUPPLEMENT
Introduction
There are two declarations supplements.
- Declarations Supplement–BU 04 03 is used when Expanded or Basic Plus is selected.
- Declarations Supplement–Named Perils–BU 04 13 is used when Named Perils is selected.
This analysis examines BU 04 03 because the coverage analysis is for Businessowners Policy–BU 04 01.
BU 04 01 has 22 supplemental coverages. No limits are shown in the coverage form. Instead all are shown, by location, on the Declarations Supplement. A space is provided underneath the basic limit for a revised limit to be entered. Any entered Revised Limit replaces the Basic Limit above it. Some Supplemental Coverages use factors that are multiplied by another limit in order to develop a limit. These factors are listed as Basic Factors on the Declarations Supplement and can be revised.
Limits and factors are as follows. Coverages with an asterisk (*) cannot be changed.
Coverage
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Basic
limit
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Basic
Factor
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Accounts Receivable |
$10,000 |
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Building–E. Supplies and Material: Loss by Theft |
$2,000 |
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Building Code/Law Coverages |
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.10 factor |
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Business Personal Property–Customers’ Property |
$1,000 |
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Business Property Extensions |
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Utility Services |
$1,000 |
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Mechanical Breakdown |
$500 (Annual per Location Aggregate) |
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Coverage A |
$5,000 (Over all locations) |
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Coverage B |
$10,000 (Over all locations) |
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$3,000 |
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Credit Card/Forgery/Counterfeit Money |
$2,500 |
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Debris Removal |
$10,000 |
.25 factor |
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Electronic Data |
$10,000 (Annual per Location Aggregate) |
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Employee Dishonesty |
$5,000 (Deductible can be changed) |
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*Fire Expense Coverages |
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$2,500 |
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$5,000 |
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*Fraudulent Transfer of Funds |
$5,000 (Over all locations) |
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$ 500 Deductible |
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*Lock Replacement |
$1,000 |
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Loss of Income–Dependent Property |
$5,000 |
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Loss of Income–Interruption of Computer Services |
$10,000 (Annual per Location Aggregate) |
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Outdoor (Exterior) Signs/Satellite Dish |
$2,500 ($100 Deductible) |
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Pollution Clean Up |
$10,000 (Deductible can be entered) |
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Coverage
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Basic
limit
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Basic
Factor
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*Property Restrictions |
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$3,000 |
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$3,000 |
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*Replacement Threshold |
$2,000 |
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*Trees, Shrubs, and Plants |
$2,500 ($500 any one item) |
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Valuable Papers and Records |
$10,000 |
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Water Damage–Sewer/Drain Backup |
$5,000 (Only when BU 50 03 applies) |
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Fire and Explosion Liability |
$50,000 (If not on basic declarations) |
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Personal Injury/Advertising Injury |
$300,000 (If not on basic declarations) (Over all locations) |
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Note: Accounts Receivable, Business Personal Property– Customers Property, Business Property Extensions–Consequent Loss (Spoilage), Business Property Extension–Personal Effects, Property Restrictions, and Valuable Papers and Records apply only if Coverage B is provided at the specific location.