15.3 Section I Additional Coverages

Additional Coverages

Section I of the Businessowners Policy (BOP) automatically includes several Additional Coverages. These coverages add significant value because many are included at no extra cost. Under other commercial property policies, similar coverages often must be purchased separately through endorsements for an additional premium.

Debris Removal

The Debris Removal Additional Coverage pays for the cost of removing debris after a covered loss. Coverage is included within the applicable limit of insurance and is limited to 25% of the covered property loss. If debris removal expenses exceed this 25% limit or exhaust the policy limit, the policy provides up to an additional $25,000. To qualify for coverage, debris removal expenses must be reported within 180 days of the direct physical loss.

The Debris Removal Additional Coverage does not pay to remove property that is not covered by the policy or to remove pollutants.

Pollution Clean-Up and Removal

The Pollutant Clean Up and Removal Additional Coverage pays up to $10,000 per location to remove pollutants from land or water when the pollution results from a covered loss. This limit applies during each 12-month policy period and includes the cost of testing performed as part of the cleanup.

Preservation of Property

The policy covers property that is moved or temporarily stored at another location to protect it from a covered peril. This coverage applies on an open perils basis for up to 30 days.

Fire Department Service Charge

The policy provides up to $2,500 per location for the insured's liability for fire department service charges when the charges are required by a contract or agreement made before the loss or by a local ordinance.

Fire Extinguisher Systems Recharge Expense

The policy pays up to $5,000 per occurrence to recharge or replace discharged fire extinguishers and fire extinguishing systems. It also covers damage to covered property caused by the accidental discharge of fire extinguishing chemicals.

Collapse

Collapse is defined as the sudden falling down or caving in of all or part of a building, making it unsafe or unusable for its intended purpose. Without increasing the applicable limit of insurance, the policy covers direct physical loss or damage caused by collapse resulting from:

• Hidden decay or hidden insect or vermin damage
• Defective construction materials or methods, if the collapse occurs during construction or renovation
• A specified cause of loss
• The weight of rain collected on a roof or the weight of people or personal property

Water Damage and Other Liquids, Powder, or Molten Material Damage

The policy pays the cost to tear out and replace parts of a building or structure necessary to repair a system or appliance from which water or another substance escaped. However, the policy does not cover the cost to repair the defect that caused the leak or escape.

Business Income

The policy covers the actual loss of business income sustained during the period of restoration, for up to 12 consecutive months following the date of direct physical loss or damage. The period of restoration begins 72 hours after the loss and ends when the damaged property should reasonably be repaired or when business resumes at a new permanent location, whichever occurs first.

However, ordinary payroll expenses are covered for only 60 days after the direct physical loss or damage, unless the Declarations specify a longer coverage period.

After damaged business property is repaired or replaced, the business may not immediately return to its pre-loss income. The Extended Business Income Additional Coverage helps cover this continued loss of income for up to 30 days after operations resume, unless a longer period is shown in the Declarations.

This Additional Coverage is not subject to the Section I limits of insurance, meaning it is provided in addition to those policy limits.

Business Income from Dependent Properties

The policy covers the actual loss of business income sustained when a covered physical loss or damage occurs at the premises of a dependent property. A dependent property is property owned by others that the insured relies on to:

• Supply materials or services
• Accept the insured's products or services
• Manufacture products for the insured
• Attract customers to the insured's business

Damage limited only to the dependent property's electronic data does not trigger this coverage.

This Additional Coverage provides up to $5,000 in coverage, which is in addition to the Section I limits of insurance.

Extra Expense

The Extra Expense Additional Coverage pays for necessary expenses the insured incurs to reduce or avoid a suspension of business during the period of restoration, for up to 12 consecutive months following the direct physical loss or damage. Unlike Business Income coverage, the period of restoration for this coverage begins immediately after the loss.

This Additional Coverage is not subject to the Section I limits of insurance, meaning it is provided in addition to those policy limits.

An Insurance Story

A fire causes partial damage to Coffee Café, forcing the business to close while repairs are completed. The repairs are expected to take three weeks, and operating from another location is not feasible.

To reopen as quickly as possible, the owner pays additional costs to accelerate the repairs. These necessary expenses are covered under the Extra Expense Additional Coverage, which begins immediately after the covered loss.

The café also loses income while it is closed, and employees lose scheduled work hours. These business income losses are covered under the Business Income Additional Coverage, which begins 72 hours after the covered loss.

Because repairs are expected to be completed within three weeks, both the Business Income and Extra Expense coverages end when the period of restoration ends.

Civil Authority

This Civil Authority Additional Coverage applies when a civil authority prohibits access to the insured's premises because of a covered loss that occurs within 1 mile of the insured property. The policy covers the resulting loss of business income and any extra expenses incurred. Coverage begins 72 hours after access is prohibited and continues for up to 4 consecutive weeks.

Money Orders and Counterfeit Paper Currency

The policy pays up to $1,000 for losses resulting from the insured's good-faith acceptance of money orders that are not payable upon presentation or counterfeit money received during the normal course of business in exchange for merchandise, money, or services.

Forgery or Alteration

The policy pays up to $2,500 per loss for losses resulting from the forgery or alteration of a check, draft, or similar written promise or order to pay money that is issued by the insured or by someone impersonating the insured.

Increased Cost of Construction

The policy covers the increased costs of repairing, rebuilding, or replacing damaged portions of a covered building to comply with the enforcement of an ordinance or law following a covered loss. The ordinance or law must relate to building construction or repair, or to zoning or land use requirements.

This Additional Coverage provides up to $10,000 per building, which is in addition to the Section I limits of insurance. To qualify for this coverage, the building must be insured on a replacement cost basis.

Glass Expenses

The policy pays the expenses of installing temporary plates or boarding up openings when replacement of damaged building glass is delayed. It also covers the cost of removing and replacing obstructions necessary to replace the damaged glass.

Electronic Data

If electronic data is destroyed or corrupted by a covered cause of loss, the policy provides up to $10,000 in coverage per policy year. Covered causes of loss include the Section I covered perils, as well as computer viruses and other harmful code.

Interruption of Computer Operations

If a covered cause of loss destroys or corrupts electronic data and interrupts computer operations, this Additional Coverage extends Business Income and Extra Expense coverage to the resulting suspension of operations. Covered causes of loss include the specified causes of loss, as well as computer viruses and other harmful code. The policy pays up to $10,000 per policy year for these losses.

Limited Coverage for Fungi, Wet Rot, and Dry Rot

The policy covers direct physical loss caused by fungi, wet rot, or dry rot, including removal costs, the cost to tear out and replace parts of the building needed to access the damaged area, and necessary testing after removal and repairs. Coverage applies only when the fungi, wet rot, or dry rot results from a specified cause of loss, other than fire or lightning. The policy provides up to $15,000 during each 12-month policy period.

Coverage Extensions

The policy automatically includes several Coverage Extensions that broaden protection for certain types of property. These extensions are provided at no additional premium, and their limits are in addition to the other Section I limits of insurance.

Newly Acquired or Constructed Property

Newly acquired or constructed buildings are automatically covered for up to $250,000, and newly acquired business personal property in those buildings is covered for up to $100,000 per building. This temporary coverage applies for up to 30 days after the property is acquired or construction begins.

Personal Property Off-Premises

This Coverage Extension provides up to $10,000 of coverage for property while it is in transit away from the described premises or temporarily located at a premises the insured does not own, lease, or operate. This extension does not apply to money, securities, valuable papers and records, or accounts receivable.

Outdoor Property

This Coverage Extension provides coverage for outdoor fences, radio and television antennas, satellite dishes, detached outdoor signs, trees, shrubs, and plants. Coverage applies only when the loss results from fire, lightning, explosion, riot or civil commotion, or aircraft. The policy provides up to $2,500, including debris removal expenses, with a maximum of $1,000 for any one tree, shrub, or plant.

Personal Effects

This Coverage Extension extends Business Personal Property coverage to personal effects owned by the named insured and its officers, partners, managers, and employees. It does not cover theft losses or any loss to business tools or equipment. The limit of this extension is $2,500.

Valuable Papers and Records

This Coverage Extension extends Business Personal Property coverage to direct physical loss of valuable papers and records, including the cost to research, replace, or restore the lost information. Covered losses are valued based on the cost to restore or replace the damaged information.

This Coverage Extension does not cover samples, property held for delivery after sale, or property stored off the premises. It also excludes losses caused by processing or copying errors.

The policy pays up to $10,000 per occurrence for covered loss to valuable papers and records located at the described premises. For valuable papers and records located off the premises, the limit is $5,000 per occurrence.

Accounts Receivable

This Coverage Extension extends Business Personal Property coverage to direct physical loss of accounts receivable. The policy pays amounts due from customers that cannot be collected, related interest charges, excess collection expenses, and reasonable costs to re-establish the accounts receivable. Coverage is limited to $10,000 per occurrence for on-premises losses and $5,000 per occurrence for off-premises losses.

Business Personal Property Temporarily in Portable Storage Units

This Coverage Extension extends Business Personal Property coverage to property temporarily stored in a portable storage unit located within 100 feet of the covered building or within 100 feet of the described premises, whichever distance is greater. Coverage applies for up to 90 days, with a limit of $10,000.

Optional Coverages

The policy also offers Optional Coverages that allow the insured to add protection for certain losses that are otherwise excluded or subject to limited coverage. These coverages must be selected by the insured, and any applicable limit of insurance will be shown on the Declarations page.

Optional Coverage	Description
Outdoor Signs	This coverage provides insurance for direct physical loss, on an open perils basis, to all outdoor signs at the described premises, up to the specified limit. This allows the insured to have higher limits of insurance for outdoor signs, without being limited to the policy’s sublimit for attached signs or the limit provided by the Outdoor Property Coverage Extension.
Money and Securities	This coverage protects money and securities used in the insured’s business while at a bank or savings institution; within the living quarters of the insured, or the living quarters of the insured’s partners, managers, or employees; at the described premises; or in transit between any of these places. Covered perils are theft, disappearance, and destruction, but accounting errors are not covered. Losses caused by employee theft are also not covered, as a separate Optional Coverage would be required. An Inside the Premises limit is provided for losses in a financial institution or on the described premises, and an Outside the Premises limit is provided for losses occurring elsewhere. Records of all money and securities must be kept.
Employee Dishonesty	This coverage provides insurance for losses to business personal property, including money and securities, resulting from dishonest acts (such as theft) committed by any of the insured’s employees acting alone or in collusion with others.
Equipment Breakdown Protection	This coverage provides insurance for covered property damaged by the breakdown of pressure, mechanical, or electrical machinery and equipment owned by the insured or in the insured’s care, custody, or control, and located at the described premises.

An Insurance Story

Liam may choose to add all four Optional Coverages to the BOP for Coffee Café. These coverages provide additional protection for exposures such as sidewalk signs, money and employee dishonesty losses, and the breakdown of espresso machines. Because Coffee Café has relatively limited exposures, adding these Optional Coverages may be more cost-effective than purchasing separate Equipment Breakdown Protection or Commercial Crime policies.