02.09.09 NATIONAL.qxd
2/4/09
12:04 PM
Page 2
Special Report Small Business/BOPs BOPs, continued from page N1
Business Personal Property – Seasonal Increase Limitation One often touted benefit of the BOP is the automatic 25 percent seasonal increase for business personal property. This is appropriate for those insureds subject to periods of foreseeable or even unforeseen increases in business personal property. However, this extension of coverage comes with a caveat — the business personal property limit must equal 100 percent of the average monthly values on hand for the 12 months (or the length the insured has been in business, whichever is less) immediately preceding the loss. This means that the value used for the current year has to include the seasonally increased values of the year prior. If the insured averaged $100,000 for nine of the previous 12 months and $120,000 for the remaining three (within the 25 percent), what limit must they carry to assure the availability of the seasonal increase protection? The insured’s average monthly value is $105,000 [(($120,000 x 3) + ($100,000 x 9))/12]. To qualify
Breakdown, Boiler and Artificial Electrical Damage Limitations Limitation may not be the correct term for System Breakdown, Boiler and Artificial Electrical Damage losses — exclusion is more appropriate. Loss caused by a systems breakdown, steam boiler or artificial electrical damage is specifically excluded in ISO’s BOP coverage form. To pick up coverage for these exposures requires an endorsement be attached. The BP 04 59 “Equipment Breakdown Protection Coverage,” adds back the necessary protection.
intended goal, providing a wide scope of coverage without the need of much agent/policy interaction. However, relying too heavily on the BOP without knowledge of its finer details can leave the client lacking at the time of a loss. This article discusses five limitations or exclusions that may adversely affect clients, but there are others. And the BOP program offers additional endorsements to personalize the policy to fit each client’s need. Even though the BOP looks like a full package of protection, proper time must be devoted to assure the insured is protected. Writer’s Note: This article has focused solely on ISO’s BOP form. Many carriers have developed their own forms. Non-ISO forms must also be carefully analyzed to find their own weaknesses and gaps. A BOP is not a “onceand-done” form — it must be monitored like any other. IJ
ISO BOP BOP policies accomplish much of their
Boggs is the associate editor of MyNewMarkets.com. E-mail: cboggs@mynewmarkets.com. Phone: 619-584-1100 ext. 137.
for the seasonal increase, the insured must carry $105,000 — not the $100,000 that is the most common amount on hand. Many agents fail to account for this policy provision, which potentially leaves their client without the proper protection should a loss occur during the time of a seasonal increase.
TechGuard In today’s increasingly digitized world, technology companies need an innovative insurance product that provides broad coverage for their complex and constantly evolving exposures. NAS’ new TechGuard is our broadest tech policy to date – featuring expansive coverage for Tech E&O, Security/Privacy insurance that includes broad regulatory coverage, multimedia coverage and reimbursement for customer notification costs.TechGuard insures a wide range of technology risks such as hardware manufacturing, IT consultants, software development and more. NAS Insurance Services is an independent Underwriting Manager with full binding authority to underwrite on behalf of highly rated carriers. For over 30 years, NAS has remained a product-oriented company, ever on the leading edge of innovation with a constant commitment to the development of specialty products.
e-MD™ MEDEFENSE™ Plus Miscellaneous E&O Healthcare Technology NetGuard™ NetGuard™ Plus Social Services TechGuard Technology Liability writeNOW! Programs
16501 Ventura Blvd., Suite 200 Encino, CA 91436 www.nasinsurance.com LIC #0677191
N2 | INSURANCE JOURNAL-NATIONAL REGION February 9, 2009
www.insurancejournal.com