The Insurance Services Office (ISO) Businessowners Program policy provides a package of insurance coverages to smaller businesses similar to those that the ISO Commercial Package Policy (CPP) offers. This program initially used separate property and liability coverage forms. It was reconfigured into a package approach in July 2002.
The 07 13 edition addresses some of the concerns that inevitably arise when a variety of coverages are combined in one policy. It reflects events and amendments implemented in other coverage forms. Many changes in wording follow the standardized language in other ISO commercial lines coverage forms. This approach is logical. For example, a term used in the Businessowners Coverage Form should have the same definition and meaning as in a commercial property coverage form.
Many retail or wholesale operations, artisan contractors, or convenience stores, grocery stores and supermarkets with or without gasoline pumps are eligible. Small to medium-sized apartment risks, condominium properties, offices, non-manufacturing businesses, and a limited number of service and processing risks are also eligible. Restaurants are also eligible. However, many insurance companies file their own deviations to the eligibility criteria and offer numerous options. It is not unusual for some of them to insure some manufacturing classes and larger retailers under the Businessowners Coverage Form or an enhanced version of it.
POLICY MAKE UP
The ISO Businessowners Policy consists of four basic forms:
- Common Policy Declarations Note: This may be combined with the Businessowners Declarations.
- Businessowners Declarations
- BP 00 03-Businessowners Coverage Form
- 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.
ISO BUSINESSOWNERS COVERAGE FORM
The ISO Businessowners Coverage Form uses the homeowner’s policy approach to package insurance coverages for eligible businesses. By selecting an amount of insurance on building and/or business personal property, the insured automatically receives a broad range of additional coverages with a single indivisible package premium. The classes of business in the latest edition are unchanged from the previous edition. It is designed for the following:
- Small to medium sized apartment complexes and residential condominium associations
- Offices and office condominium associations
- A wide variety of retail risks, motels, processing, and service risks
- Wholesale operations
- Small specialized or artisan contractors
- Restaurants under 7,500 square feet
- Convenience food stores, grocery stores, and supermarkets with gasoline pumps
- Laundries and self-storage facilities
Some insurance companies not affiliated with ISO offer similar programs for certain classes of business under their own independently filed coverage forms and policies. They do so in many cases simply to target a particular niche market or class of business. For smaller eligible operations, the ISO Businessowners Coverage Form is generally preferred to the ISO CPP.
Coverages automatically built in include debris removal, automatic increase in building limit of insurance, seasonal automatic increase, personal property off premises, business income, and extra expense, to name just a few. It also provides replacement cost valuation on real and personal property, subject to certain insurance-to-value requirements.
The ISO Businessowners Coverage Form is made up of three major sections:
- Limits of Insurance
- Property Loss Conditions
- Property General Conditions
- Optional Coverages
- Property Definitions
- Who Is An Insured
- Liability and Medical Expenses Limit of Insurance
- Liability and Medical Expenses General Conditions
- Liability and Medical Expenses Definitions
Section III-Common Policy Conditions
Endorsements tailor the Businessowners Coverage Form to customize the coverage provided to respond to specific situations. Its broad appeal has led to introducing many other endorsements that provide broadened coverage for specific situations. Endorsements are also available that restrict coverage so that it can work with other coverage forms and policies to properly insure a particular exposure. Attaching the correct endorsement ensures that the coverage matches the insured’s situation and needs.
Underwriting the ISO Businessowners Coverage Form begins by determining a given risk’s eligibility. Most insurance companies do not make exceptions to ISO’s eligibility rules but many impose even stricter rules and requirements. However, underwriting involves a number of factors other than eligibility.
Rating businessowners has become more complex as eligibility has expanded. The ISO Commercial Lines Manual publishes the rules, loss costs, and rating method. The first step in the process is classifying the risk. The more information an agent has about a given risk, the closer the rating reflects that risk’s actual exposures.