AAIS BUSINESSOWNERS POLICY OVERVIEW

(June 2018)

INTRODUCTION

The American Association of Insurance Services (AAIS) Businessowners Policy takes an approach similar to homeowners coverage to package and rate insurance for eligible classes of business. Selecting an amount of insurance for buildings and/or business personal property automatically triggers a broad set of additional coverages. The result is a package policy with a single premium. The AAIS Businessowners Policy provides an alternative to traditional commercial package coverage forms and policies to insure eligible businesses.

ELIGIBILITY

The following is a summary of eligibility criteria for the AAIS Businessowners Policy:

Most retail businesses that have up to 35,000 square feet of total floor area and $6,000,000 in annual sales per location
One-to four-family dwellings rented to others, small to medium size apartment buildings, condominiums, and offices
A limited number of service/processing classes
Some wholesale operations, self-storage mini-warehouses, convenience stores, and restaurants
Bed and Breakfast dwellings
Motels
Risks with cooking exposures are eligible but are subject to a different rating approach.
Manufacturing and contracting business are generally not eligible.

Individual insurance companies may file their own deviations related to classes and eligibility.

Related Article: AAIS Businessowners Policy Eligibility

POLICY MAKE UP

The AAIS Businessowners Policy consists of three basic forms plus three mandatory forms:

BP 0010–Businessowners Declarations

BP 0100–Businessowners Standard Policy or BP 0200–Businessowners Special Policy

Policy Cover Page or Jacket. Individual insurance companies design this form for their own purposes. It may include a table of contents or index to meet the requirements of some states.
BP 0734–Lead Liability Exclusion
BP 0798–Exclusion – Data Breach Liability
BP 0816–Policy Amendatory Endorsement

Related Article: BP 0816–Policy Amendatory Endorsement

COVERAGES

There are two different AAIS Businessowners Policies:

BP 0100–Businessowners Standard Policy (named perils)
BP 0200–Businessowners Special Policy (direct physical loss or damage except where excluded or limited)

Liability coverage is identical in both policies. The perils covered section is the most significant difference between the policies but there are other minor differences in buildings, business personal property, and available optional coverages.

ENDORSEMENTS

Endorsements tailor the AAIS Businessowners Policy to customize the coverage provided to respond to specific situations. Its broad appeal led to introducing many other endorsements that provide broadened coverage for specific situations. Endorsements are also available that restrict coverage to provide the correct coverage for a particular exposure. Attaching the correct endorsement is like tailoring a suit–it ensures that the coverage fits the insured.

UNDERWRITING

Underwriting the AAIS Businessowners Policy is similar to underwriting any commercial package coverage form or policy. The most important part of underwriting this policy is to be absolutely certain that the risk is properly classified, and that the classification is eligible. The BOP is a very good policy when it matches a client's needs. It is not when the needs exceed (or are not met by) the coverage available.

RATING

The AAIS Businessowners Policy's rating procedures are very exacting and require that a number of steps be performed in a specific sequence. It is important to understand exactly what is expected and the rating method that applies.