ISO Revises Commercial Forms, Endorsements

Perhaps not since 1986 have there been so many changes across the board in Insurance Services Office commercial lines forms. Commercial property likely has the greatest number of changes, followed by commercial general liability and business auto. The CGL changes are probably the most dramatic with ISO’s revisions to its industry-standard additional insured endorsements.

The 40-plus commercial property changes include broadenings of coverage for debris removal, business income, entrusted property and water damage originating from off-premises water line breaks.

In addition, a very important option is offered to increase coverage limits in the event of a disaster that drives up labor and material costs. And a major finite restriction of coverage is an option to limit coverage for roof damage to ACV and exclude any “cosmetic” damage.

To read an article on the major commercial property changes, visit the Virtual University.

The CGL changes effective in 2013 amount to about a dozen policy form changes, plus more than 80 endorsement changes.

The biggest CG 00 01 changes are likely a good overhaul of the liquor liability exclusion, including how BYOB establishments may or may not be covered, and the other insurance clause, which clarifies that excess coverage does not require the named insured to be an additional insured by endorsement on another party’s CGL policy.

In addition, the Big “I” National Technical Affairs Committee requested an endorsement change, which clarifies that endorsements for pesticide and herbicide contractors do not buy back all applicable exclusions in the CGL policy.

For a broader look at all of the CGL program changes, visit the Virtual University.

But there are some disturbing changes to ISO’s CGL program involving additional insured endorsements. While there have been some positive changes in the form of new endorsements, ISO also made extensive revisions to its additional insured endorsements that can result in a significant reduction in coverage and limits for additional insureds.

There is a new “Primary and Noncontributory” endorsement that, while not a perfect solution, should be useful in complying with demands by additional insureds for coverage on a primary and non-contributory basis.

In response to case law ruling that additional insured status under the CG 20 33 does not apply with a direct contractual basis, ISO has introduced a new CG 20 38 endorsement. But there are problems with the form because it still appears to require a direct “performance for” requirement for additional insured status.

Another change stipulates that no broader coverage can be provided by the CGL policy than required by the contract that requires the additional insured status. Another says that the policy will pay the lesser of the limit on the policy or the required insurance in the contract requiring additional insured status.

These two changes alone present potentially huge reductions in coverage for additional insureds and increased problems for agents. Agents can learn more at the Virtual University.

In addition, the Big “I” Virtual University offers a one-hour webinar on the additional insured and other CGL changes. Go to independent agent.com and select Education & Events and then Webinars.