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ISO BUSINESSOWNERS POLICY
Introduction
The Insurance Services Office, Inc. (ISO), businessowners policy is a package policy designed to provide both property and general liability coverage for eligible small businesses. It is written on special businessowners policy forms and rated in accordance with special businessowners policy rates and rules.
New ISO businessowners policy forms will become available for use as of July 1, 2002, in a majority of jurisdictions. A single 43-page businessowners coverage form (BP 00 03) will replace the businessowners liability coverage form (BP 00 006), both of the businessowners common policy coverage forms (BP 00 01 and BP 00 02), and the businessowners common policy conditions form (BP 00 09). Under the accompanying rules revision, eligibility has been extended to three previously ineligible types of businesses and a new businessowners classification table has been introduced.
All of the endorsements used with the new businessowners coverage form have July 2002 edition dates. The new businessowners forms portfolio contains 28 new endorsements, 13 substantively revised endorsements, and another 43 endorsements that have been revised to reflect and refer to BP 00 03 (instead of BP 00 01, BP 00 02, BP 00 06, or BP 00 09) but are otherwise unchanged.
The discussion that follows addresses the key eligibility and coverage features of the 2002 ISO businessowners policy program. It also identifies the most important differences between the 2002 form and the prior-edition businessowners forms and compares coverage under a businessowners policy with monocline commercial property and general liability coverage.
Eligibility
In general, the businessowners policy is designed for insuring small businesses. However, eligibility is based on the nature as well as the size of the insured's business.
For a business to be eligible for coverage under a businessowners policy, none of its locations can exceed 25,000 in square footage (excluding basements not open to the public) and $3 million in annual gross sales. The following types of businesses are ineligible regardless of their size.
- Manufacturers
- Auto repair or service stations; auto, motor home, mobile home, and motorcycle dealers; parking lots or garages.
- Bars and pubs
- Places of amusement
- Banks and other financial institutions
- Self-storage facilities that provide outdoor storage of motorized vehicles of any type
Full eligibility criteria for businesses that meet the general size criteria and do not fall into one of these ineligible categories is provided in the ISO
Commercial Lines Manual (CLM). For the 2002 program, this information is provided in Rule 22 of Division 9 of the CLM.
In addition, the newly introduced businessowners classification table in Division 9 of the CLM lists the eligible types of businesses; businesses that are not listed there are ineligible.
Under the 1997 and prior-year programs, eligibility is addressed in Rule 19
of Division 9 and in the classification table section of the CLM (rather
than in a separate businessowners classification table). If the
business type in question is eligible, the classification table will provide
a "BP" class code, rate number, and rate group, entered opposite
the type of business, under the "Multiple Line" heading. If
the business in question is not eligible, there will be no "BPO"
class code, and an "NA" will appear where the rate number and rate
group would otherwise appear.
The 2002 rules extend eligibility to three previously ineligible types of
businesses, provided that they meet certain criteria.
- Combination restaurant/convenience stores/gasoline stores
- Motels
- Self-storage facilities.
Businessowners Policy Structure
In the 2002 ISO businessowners program, a single form - the businessowners coverage form, BP 00 03 - replaces all four of the basic businessowners forms listed below.
- Businessowners Standard Property Coverage Form (BP 00 01)
- Businessowners Special Property Coverage Form (BP 00 02)
- Businessowners Liability Coverage Form (BP 00 06)
- Businessowners Common Policy Conditions Coverage Form (BP 00 09)
The new businessowners coverage form is divided into three sections: property, liability, and common policy conditions. The property section of BP 00 03 is comparable to the businessowners special property coverage form (BP 00 02), in that it provides all risk coverage. Named perils property coverage, such as that provided by the businessowners standard property coverage form (BP 00 01), is available by endorsement (name perils, BP 10 09).
Many of the provisions of the new form are identical to their counterparts in the prior-edition separate forms. However, there have been some changes. Most of the 2002 changes to the businessowners policy mirror changes made in recent years to the monoline ISO commercial property and commercial general liability (CGL) forms.
This discussion outlines the key provisions of the property, liability, and common policy sections of the 2002 businessowners coverage form. A comparison of the businessowners provisions in each section with their monoline form counterparts immediately follows each of the three section discussions.
The most important differences between the provisions of the 2002 businessowners coverage form and the comparable provisions in the prior-edition separate businessowners forms are noted briefly throughout the discussion. In identifying these differences, reference is sometimes made to the prior-edition of "the form". This approach is used to enhance the readibility of the discussion. Since the 2002 edition of the businessowners coverage form is the very first edition of that form, references to the prior editions of "the form" are actually references to prior editions of the businessowners property, liability, or common policy conditions form.
Each businessowners endorsement is discussed briefly in section XIII.F.
An index of businessowners forms and endorsements is provided in section
XIII.C.
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