Commercial insurance policies, for many years, were characterized by a constant evolution of forms, endorsements and extensions of coverage to protect an insured's business exposures. When a new need arose, a new form was created to satisfy that need. Prior to the advent of the Commercial Package Policy (CPP), insurers offered such individual commercial insurance contracts as the General Property form, Comprehensive General Liability form, Business Auto form, Boiler and Machinery form, and Business Crime form, among others. The CPP provides much more flexibility than the previous forms. It has a broader scope of commercial insurance coverage as well.

With a CPP, the insured is not required to carry specific coverages. He/she may choose one coverage part and the contract is monoline. When another is added, the policy becomes a true package policy. Again, the insured is not required to select any particular coverage part that is available. There are several coverage parts available to be added to the policy including, but not limited to liability, commercial property, inland marine, crime, auto, boiler and machinery and farms.

Common Declarations A common declarations page is attached to the CPP. The information in this section applies to any coverage part added to the policy. The common declarations page will typically include the following information: • The name and address of the named insured • The policy period • The policy number • The name of the insurer and agent • A description of the insured business • A list of each coverage part and its premium • The total policy premium • Countersignature of agent • Any other forms added

Common Conditions The CPP also includes a common conditions page to which all coverage parts are subject. This page consists of several conditions that apply to all coverage parts added including: • Cancellation This condition states that the first named insured may cancel the policy at any time by providing written notice to the insurer. Further, if the insurer cancels, it must provide 10 days written notice to the first named insured if the reason for cancellation is non-payment of premium. For any other reason, the insurer must provide 30 days written notice.

• Policy Changes This condition states that the first named insured is authorized to make any policy changes with the insurer's consent. • Examination of Books and Records This states that the insurer has the right to examine or audit the books or records of the insured regarding the coverage provided. This audit may be done at any time during the policy period and up to three years afterward. • Inspection and Surveys The insurer has the right to conduct any inspections or surveys at any time as they relate to coverage provided.

• Premiums This stipulates that the first named insured is responsible for all premium payments. The first named insured will receive any return premiums, if applicable. The reason for the designation "first named insured" is that there may be more than one insured under the policy. However, one individual must be identified as the first named insured. • Transfer of Rights and Duties This is the assignment provision as reviewed earlier. The policy may not be assigned to another without the written consent of the insurer (except if the named insured dies, in which case his interest in the policy is transferred to a legal representative).

Commercial Property Coverage Part This coverage part includes its own declarations and conditions. Several specific coverage forms are available to an insured to add to this coverage part based on the property exposures of the business. Common commercial property coverage forms include: • Building and personal property • Business income • Extra expense • Builder's risk • Condominium association • Condominium commercial unit owners • Glass • Tobacco sales warehouses

Building and Personal Property Coverage Form This is the standard form used for insuring most types of business property. Coverage may be written to cover buildings only, personal property only or both. Coverage A is for the "building" and includes: • The structure identified in the policy • Completed additions • Permanently installed fixtures • Machinery and equipment • Outdoor fixtures • Personal property used to service or maintain the business including fire extinguishers, floor coverings, appliances or outdoor furniture

• Materials and supplies used for additions, alterations or repairs of the covered building as long as they are on or within 100 feet of the described premises. Coverage B covers business personal property and includes: furniture and fixtures, machinery and equipment, stock and all other personal property owned by the insured and used for business purposes. This business personal property must be located in or on the building described in the declarations or within 100 feet of the described premises.

Coverage C covers personal property of others that is in the insured's care, custody or control. Property not covered under the Building and Personal Property Coverage Form includes: • Ledgers, cash or contracts • Sidewalks and patios • Cost of excavations, grading or filling • Foundation of the building • Land (reduction in value of land) • Personal property while airborne • Piers, docks or wharves • Underground pipes, flues or conduits • Retaining walls • Crops or lawns • Masts or wiring while outside the building

Alterations and New Buildings This extends coverage to buildings under construction at the described location. Coverage is also provided for newly acquired locations up to a maximum of $100,000. The insured may extend the insurance on the building to apply to a new building while being built on the described premises and buildings acquired at other locations intended for similar use or as a warehouse. Insurance under this extension for each newly acquired or constructed property will end when: • The policy expires -OR- • 30 days after the insured acquires or begins construction on the property

Reporting Form The coverage amount may increase or decrease during the year in relation to the fluctuating inventories. A final premium is determined at the end of the year when experience is complete. The insured must provide reporting of the changes occurring during the year. The insured must report 100% of the values of the property insured. Late reports or underestimates may result in a penalty at the time of loss. The full reporting value clause states that if the insured under reports, the amount of a loss will be based on the last value reported. For instance, if the insured reports only 1/3 of his/her value, the insurer will only pay 1/3 of the loss.

Business Income This is another available commercial property coverage form which will protect the insured against the loss of earnings sustained as a result of a covered loss. Business income coverage will pay an insured if business operations are suspended due to a direct (covered) physical loss to the insured location. There are two available forms. One form includes extra expense coverage and the other one provides business income coverage without extra expense coverage. Extended Business Income This provides 30 days of automatic coverage for continued loss of business income once restoration is complete.

The thirty day period begins on the date when the property is actually repaired, rebuilt or replaced. Extra Expense Extra expense coverage insures against the necessary extra expenses during the period of restoration that would not have been incurred had there been no underlying property loss. This coverage includes expenses incurred to avoid or minimize the suspension of operations, at either the described location or at a replacement premises or a temporary location.

Builder’s Risk This form pays for damage to structures while they are being built. Any other property or equipment is covered if it is necessary for the maintenance of the structure being constructed. Coverage under this form terminates when the building has been occupied, or 90 days after construction of the new building is concluded. Condominium Association The property of a condominium association would be protected against covered perils under this coverage form.

Difference in Conditions (DIC) Insurance Written to cover certain perils that may otherwise be excluded by the standard fire policy or commercial package policy (usually with large deductible). Spoilage Provides coverage for perishable stock due to power outage, mechanical breakdown or contamination. This coverage applies to losses resulting from change in temperature or humidity, or contamination resulting from a power outage either on or off the premises, or resulting from mechanical breakdown.

Once the desired coverage forms are added, the named insured must determine which cause of loss form to attach to the policy to specify the perils insured against. There are four available forms including: Basic Cause of Loss This form covers loss caused by the same perils that are available to be included in a Dwelling Property Basic form including:  Fire,  Lightning,  Extended coverages (WHARVVES)  Vandalism  Sprinkler leakage  Sinkhole collapse

Broad Cause of Loss This form includes all the perils of the basic form plus:  Glass breakage  Weight of ice, snow and sleet  Falling objects  Water damage The water damage coverage does not include flood damage but does cover damage from leakage or discharge of water or steam from an appliance or the bursting of water pipes. Similar exclusions like those found in the basic form are present in this form.