Utility Services—Direct Damage: Covers property damage from utility service interruption (excludes electronic data).
Utility Services—Time Element: Covers lost income/extra expenses from utility service interruption.
Hired Auto and Nonowned Auto Liability: Covers bodily injury/property damage from hired or nonowned autos.
Identity Fraud Expense Coverage: Covers up to $25,000 for fraud repair expenses and $5,000 for advertising to restore reputation.
Policy Endorsements Overview
Endorsements modify the standard BOP to broaden, limit, clarify, or meet state-specific requirements.
Key Point: State-specific endorsements may adjust cancellation/nonrenewal provisions or define terms per state court rulings or requirements.
Selected Endorsements Details
Protective Safeguards (BP 04 30)
Requires insured to maintain safeguards (e.g., sprinklers) in working order. Excludes fire loss if:
Insured knew of impairment but didn’t notify insurer.
Insured failed to maintain safeguards under their control.
Note: No notification needed for sprinkler impairment (e.g., breakage, freezing) if resolved within 48 hours.
Utility Services—Direct Damage (BP 04 56)
Covers property damage from utility interruption (e.g., power outage ruining perishable goods). Excludes electronic data loss.
Requires damage to utility property from a covered cause (e.g., fire, windstorm).
Overhead transmission lines coverage must be specified in the schedule.
Example: Able Bakery’s inventory is ruined when a windstorm downs a utility pole. Coverage applies if overhead lines are scheduled, but not for generator failures.
Utility Services—Time Element (BP 04 57)
Covers lost income/extra expenses from utility interruption without requiring property damage.
Applies to services like water, communication, or power (on/off premises).
Interruption must result from a covered cause of loss.
Hired Auto and Nonowned Auto Liability (BP 04 04)
Covers bodily injury/property damage from hired (rented, leased, borrowed) or nonowned (e.g., employee-owned) autos used for business.
Excludes damage to rented/borrowed vehicles or property in insured’s care.
Nonowned auto coverage excludes the vehicle owner (e.g., employee relies on personal auto policy).
Identity Fraud Expense Coverage (BP 14 01)
Covers expenses from identity fraud (unlawful use of business identification).
$25,000 limit: Notarizing, mail, credit reports, lost income ($250/day, $10,000 total), loan fees, attorney fees, phone calls.
$5,000 limit: Advertising to restore reputation.
Deductible: $250.
Test Your Knowledge!
Question: How does a hired auto differ from a nonowned auto? Describe an example of each.
Hired Auto: An auto rented, leased, hired, or borrowed by the insured. Example: A business rents a van for deliveries.
Nonowned Auto: An auto not owned by the insured, used for business (e.g., employee’s personal car). Example: An employee uses their personal car to pick up office supplies.