Early in 1999, the Insurance Services Office (ISO) introduced the first program entry in a new series of coverage programs designed to meet the unique needs of specific market segments. The new series has been titled Market Segments and will be referred to by ISO under Division 12 of their Commercial Lines Manual (CLM). These new market segment programs will allow insureds to obtain coverage tailored to meet the needs of their industry.
The new Market Segments Programs are advisory only and as such, each individual insurer will have to determine if it will be filing and using the program presented. The forms and endorsements developed for this series of programs will carry the designation "MS."
The coverages and endorsements that form the Market Segments Program are designed to wrap around an existing commercial package policy; they are not stand-alone and do not replace basic commercial property or commercial general liability coverage forms. They act as additional coverages and enhancements to the underlying coverage form.
The Market Segments Programs are optional.
The first of the programs developed under the Market Segment Division is the Auto Service Risks Program.
Eligibility
Underlying Coverages: In order for the Market Segments Program Endorsements to be added to a commercial package policy (CPP), the underlying policy must contain both property and general liability coverage parts.
The property coverage part must contain both the Building and Personal Property Coverage Form-CP 00 10 and the Causes of Loss-Special Form-CP 10 30. The general liability portion must contain the Commercial General Liability Coverage Form-CG 00 01. The forms are required minimums, and all three must be a part of the underlying before attachment of the Market Segments Program.
Specific Auto Operations: The three basic types of risks that are addressed by the Auto Service Risks Program include:
* Repair Shops--operations that primarily are engaged in the repair of autos. This includes shops and services that do body, fender, radiator, ignition service and paint work.
* Service Stations--operations primarily engaged in servicing autos. Included are car wash facilities. The sale and installation of auto accessories are a part of this category as long as they do not do major engine or body repair work.
* Storage garages and other parking places.
Bear in mind that these risks are the generic types of operations that this program is designed for. Not all of the above mentioned operations will qualify for coverage in every case. Individual insurers may apply their own underwriting guidelines and criteria.
AUTO SERVICE RISKS PROGRAM--MS AS 01
In order to provide the enhancements under the Market Segments Program, the endorsement titled: Auto Service Risk-MS AS 01 must be attached to the underlying CPP. What follows is a simple recap of some of the coverages that are provided when this endorsement is attached.
PROPERTY ENHANCEMENTS
The following additional coverages are added:
* fuel tanks and fuel pumps--both above and below ground
* money and securities--limit: $2,500, which may be increased
* fire extinguisher recharge expense--limit: $2,500
* reward payment of up to $2,500 for information leading to the arrest and conviction of anyone committing a crime resulting in a covered loss
* reward payment of up to $5,000 for the return of stolen covered property
* money orders and counterfeit paper currency--limit: $1,500
* forgery and alteration--limit: $5,000
* exterior building glass
* outdoor signs--limit: $5,000
* employee dishonesty--limit: $5,000 which may be increased to $7,500 or $10,000 or decreased to $2,500 per occurrence
* electronic data processing equipment and electronic media and records--limit: $25,000; however, note that date and time losses such as the Year 2000 problem are not covered
* personal effects and property of others--limit: $2,500
* valuable papers and records (subject to limitations)--limit: $5,000 on-premises and $2,500 off-premises; the on-premises limit may be increased to $250,000
* fences--maximum limit increased to: $2,500
* outdoor antennas--maximum limit increased to: $3,000
* trees, shrubs and plants other than stock--maximum limit increased to: $2,500; the per-tree limit is $500
* employees' tools--limit: $2,500, which may be increased to $5,000, $7,500 or $ 10,000; subject to a $500 limit for the tools of any one employee
* accounts receivable (subject to limitations)--limit: $5,000 on-premises and $2,500 off-premises; the on-premises limit may be increased to $250,000
* mechanical breakdown of electronic data processing equipment
* artificially generated electrical current
* paragraph 7.f. of the Valuation Condition in Section E. Loss Conditions does not apply to electronic media and records that are actually replaced or restored
GENERAL LIABILITY CHANGES
The standard Premium Audit requirement is made optional when this endorsement is attached because of the potential low premiums that are normally generated by the types of business eligible for this program.
AVAILABLE ENDORSEMENTS
A limited number of endorsements is available to further amend or tailor the coverage provided under this program. A brief recap of the applicable endorsements includes:
MS AS 02--Auto Service Risks--Loss Or Damage To Customers' Autos (Direct Primary Coverage)
This endorsement provides direct primary coverage for damage to customers' autos under the Building And Personal Property Coverage Form.
MS AS 03--Auto Service Risks--Loss Or Damage To Customers' Autos (Legal Liability Coverage)
This endorsement provides coverage on a legal liability basis for damage to customers' autos under the Building And Personal Property Coverage Form.
MS AS 04--Auto Service Risks--Loss Or Damage To Customers' Autos And Other Customers' Property (Direct Primary Coverage)
This endorsement provides direct primary coverage for damage to customers' autos and other property of customers on the Building And Personal Property Coverage Form.
MS AS 05--Auto Service Risks--Loss Or Damage To Lessors' Property
This endorsement may be used when a service station is leased from an oil company and must provide property coverage on the leased real and/or business personal property.
MS AS 06--Auto Service Risks--Hired Auto And Non-Owned Auto Liability Insurance
This endorsement covers the vicarious liability of a named insured auto service risk for automobiles not owned or hired by the insured.
MS AS 07--Auto Service Risks-Mechanical Breakdown Coverage
This endorsement provides mechanical breakdown coverage on the Building And Personal Property Coverage Form and the Causes Of Loss--Special Form for boiler and pressure vessels and air conditioning units.
MS DS AS Supplemental Schedule
This schedule provides a mechanism to designate the modifications to the Declarations used with the Commercial Property and Commercial General Liability Coverage Parts resulting from the application of the Auto Service Risks Market Segment Program. Insurers may use this schedule or design their own. *
©COPYRIGHT: The Rough Notes Magazine, 1999