ISO COMMERCIAL PROPERTY PROGRAM OVERVIEW

(June 2019)

INTRODUCTION

Protecting an insured's real and business personal property must be a primary goal of any insurance program. Regardless of size, most business operations have a large percentage of their assets in the form of tangible property. The Commercial Property Building and Personal Property Coverage form provided by the Insurance Services Office (ISO) is a standard in the industry for providing the needed coverage and therefore should be consulted when evaluating any Commercial Property Coverage offerings.

ELIGIBILITY

The policies, forms, and endorsements developed for the Commercial Property Program may be used to provide coverage under either a monoline Commercial Property Policy or the Commercial Package Policy (CPP). The Commercial Property Program has no eligibility restrictions but the CPP does.

POLICY MAKE-UP

A Commercial Property Policy consists of seven basic parts or forms:

IL DS 00–Common Policy Declarations
IL 00 17–Common Policy Conditions. This contains the conditions common to all commercial lines of insurance. It is a mandatory form for all simplified monoline or multi-line policies.

Commercial Property Declarations

CP 00 90–Commercial Property Conditions

One of the Commercial Property Coverage Forms listed below
One or more of the Causes of Loss Forms. These forms describe the types of losses insured and the exclusions that apply.

Policy Cover or Policy Jacket developed by individual insurance companies. These forms may also include an index or a table of contents to meet requirements that some states impose.

COMMERCIAL PROPERTY COVERAGE FORMS

The goals of all of the Commercial Property Coverage Forms are to identify the subject of insurance; describe basic and extended coverage; provide conditions that apply to specific coverages; and, to list any excluded property. The Commercial Property Coverage Forms are:

The Direct Damage Coverage Forms are:

CP 00 10–Building and Personal Property Coverage Form

CP 00 17–Condominium Association Coverage Form
CP 00 18–Condominium Commercial Unit-Owners’ Coverage Form

CP 00 20–Builders Risk Coverage Form

CP 00 40–Legal Liability Coverage Form
Related Article: CP 00 40–Legal Liability Coverage Form Analysis
CP 00 70–Mortgageholders Errors and Omissions Coverage Form

CP 00 80–Tobacco Sales Warehouses Coverage Form

CP 00 99–Standard Property Policy

The Time Element Coverage Forms are:

CP 00 30–Business Income (and Extra Expense) Coverage Form
CP 00 32–Business Income (without Extra Expense) Coverage Form
CP 00 50–Extra Expense Coverage Form
CP 00 60–Leasehold Interest Coverage Form

CAUSES OF LOSS FORMS

The Cause of Loss Forms are intended to identify eligible sources of loss, describe relevant exclusions; and provide essentially the same package of perils, regardless of the breadth of coverage selected.

One of the following causes of loss forms must be attached in order to complete a policy:

CP 10 10–Causes of Loss–Basic Form provides coverage against fire, lightning, explosion, windstorm, hail, smoke, aircraft or vehicles, riot or civil commotion, sprinkler leakage, vandalism, sinkhole collapse, and volcanic action.
CP 10 20–Causes of Loss–Broad Form is an intermediate-level causes of loss form. It includes the basic causes of loss plus breakage of glass, falling objects, weight of snow, ice, or sleet, and water damage.
CP 10 30–Causes of Loss–Special Form covers direct physical loss or damage caused by all types and causes of loss not specifically excluded or limited.

AVAILABLE ENDORSEMENTS

There are many endorsements available to tailor the ISO Commercial Property Coverage Forms. Some are mandatory for all policies while others are mandatory for specific classifications and types of business. Others are optional and permit a standard form to be customized to meet a specific risk's coverage needs. Endorsements broaden, restrict, delete, modify, or add coverage.

UNDERWRITING

Underwriting commercial property coverage always starts with Construction, Occupancy, Protection and Exposure (COPE). After evaluating the tangible issues, the important intangibles of moral and morale risk must be evaluated. These intangible issues may cause as many or even more losses than the tangibles.

RATING

The ISO Property Manual provides detailed instructions as to how to rate commercial property coverage. While the manual is very specific, some of the details can be extremely confusing. Our Rating Considerations article provides general details on how to rate and also presents some in-depth analyses, examples, and recommendations for specific exposures.