How to Complete the Coverage Information in the ACORD 28
There are many different coverages in a commercial property policy. I will try and give you a brief explanation of each with links to more detailed information.
PROPERTY INFORMATION
To the right of the bold print "PROPERTY INFORMATION" are two check boxes. One for BUILDING and one for BUSINESS PERSONAL PROPERTY.
Check either or both.
LOCATION / DESCRIPTION
Enter the physical address of the location or locations for this policy. If you need additional information to describe the location beyond the address enter that also.
If you need more space to list locations use the REMARKS section on the second page of this form.
COVERAGE INFORMATION
Just to the right of the title "COVERAGE INFORMATION" you will see Perils Insured.
PERILS INSURED - check the appropriate box for the type of coverage form you are using for this policy - Basic, Broad or Special. these are mutually exclusive. Just check one.
NOTE: For all the following items you will check one box in the center three columns. The columns are titled "YES", "NO" and "N/A". N/A stands for not applicable - which in turn means this coverage does not apply to this insured.
BUSINESS INCOME / RENTAL VALUE
The IRMI website begins its definition of Business Income insurance with "
Commercial property insurance covering loss of income suffered by a business when damage to its premises by a covered cause of loss causes a slowdown or suspension of its operations. "
Click here to see the rest of its excellent definition.
The same site defines Rental Value coverage as "
Time element property insurance that pays for loss of rental income when a building that is rented out to others has been damaged by a covered cause of loss. Coverage is also provided for the fair rental value of the portion of the premises occupied by the insured. Rental value insurance can be provided by a business income coverage form or a specialized rents or rental value coverage form."
If either of these coverages are being included you need to enter the limit and enter the number of months of coverage.
BLANKET COVERAGE - Blanket coverage is using a single limit of insurance to cover more than one item, more than one location or more than one category of property coverage. An example would be one limit for both buildings and contents coverage.
If coverage is on a Blanket basis you need to indicate the limit of the property listed in the Location/Description section.
TERRORISM COVERAGE - This is defined in large part by the TRIA (Terrorism Risk Insurance Act). Here is a link to a good discussion of the 2007 re-authorization of that act...
http://www.naic.org/cipr_topics/topic_tria.htm
If Terrorism coverage is included you need to attach the Disclosure Notice or the policy declaration page to this ACORD 28 form.
Under this you need to check the appropriate box for the two sub questions..
IS THERE A TERRORISM-SPECIFIC EXCLUSION?
IS DOMESTIC TERRORISM EXCLUDED
LIMITED FUNGUS COVERAGE - There are a large number of search results for this coverage relating to the various FAIR Plans around the country. I strongly encourage you to become familiar with your state's forms.
Here is a
LINK to the ISO BOP policy form and that definition.
If Limited Fungus coverage is included you need to enter the limit of this coverage and the deductible amount.
REPLACEMENT COST - Replacement cost coverage is normally defined as the cost to replace or rebuild the property with same quality and materials without depreciation.
AGREED VALUE -
IRMI defines this as "
A commercial property insurance provision that suspends the coinsurance clause until a specified expiration date. Insurers usually require a statement of property values signed by the insured as a condition of activating or including an agreed value provision in a commercial property policy."
COINSURANCE - Check whether the co-insurance clause is in this policy. If co-insurance does apply to this policy enter the percentage.
Co-insurance percentage is the percentage of the value of the Subject of Insurance - listed in the Location/Description field - which is being insured. A normal amount is 80%. If the amount of insurance falls below this percentage amount your insured will be required to participate in paying any claims.
EQUIPMENT BREAKDOWN (If Applicable) - this coverage is for loss as a result of mechanical or electrical breakdown of more or less any kind of equipment. That means not just a bulldozer but also a desktop computer or a copy machine. Coverage often also includes loss of business income.
If this coverage applies you need to enter the limit of coverage and the amount of the deductible.
ORDINANCE OR LAW - Older buildings are normally Grandfathered in, meaning as the building codes are updated, existing buildings do not have to re-wire, re-plumb, etc to meet the new building codes. However, when there is damage to the building that has to be repaired - for instance a fire - the repair work must meet the existing new building code requirements.
The options on the ACORD 28 form are...
- Coverage for loss to undamaged portion of bldg
- Demolition Costs
- Incr. Cost of Construction - INCR stand for increased
If you check yes for any of these coverages you need to enter the limit of coverage and the deductible amount.
EARTH MOVEMENT (If Applicable) -Earth movement insurance is not Earthquake insurance. Instead it covers many smaller events which can still cause damage to a structure.
If this coverage is included you need to enter the limits and the deductible amount.
FLOOD (If Applicable) - Flood is normally covered under a separate flood insurance policy. If this coverage is included you need to enter the limits and the deductible amount.
FEMA defines a flood as...
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder's property) from:
--Overflow of inland or tidal waters; or
--Unusual and rapid accumulation or runoff of surface waters from any source; or
--Mudflow;or
Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.
Your specific flood policy may not use these same definitions. You need to read your policy.
WIND / HAIL INCL - INCL stands for included. This covers damage from wind and hail. You need to check the YES or NO box to indicate if this coverage is subject to different conditions that the other coverages shown on this form. That is not unusual. Most often the deductible is applied as a percentage.
If this coverage is included you need to enter the limits and the deductible amount.
NAMED STORM INCL - Insurance for Wind and Hail can be purchased for specific named storms. They are also normally subject to different provisions.
If this coverage is included you need to enter the limits and the deductible amount.
PERMISSION TO WAIVE SUBROGATION IN FAVOR OF MORTGAGE HOLDER PRIOR TO LOSS
The Waiver of Subrogation prohibits the insurer from attempting to seek restitution from a third party who causes any kind of loss to the insured. This type of arrangement is allowable under certain circumstances where the insured could be held liable for a claim that is paid.
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