AAIS Broadcasting Equipment And Tower Coverage Forms

AAIS BROADCASTING EQUIPMENT AND TOWER COVERAGE FORMS ANALYSIS

(February 2024)

 

Introduction

Eligibility

Policy Construction

Schedules of Coverages

IM 7605–Schedule of Coverages–Broadcasting Equipment and Tower Coverage

IM 7600–Broadcasting Equipment and Tower Coverage Analysis

   Agreement

   Definitions

   Property Covered

   Property Not Covered

   Coverage Extensions

   Supplemental Coverages

   Perils Covered

   Perils Excluded

   What Must Be Done in Case of Loss

   Valuation

   How Much We Pay

   Loss Payment

   Other Conditions

   Additional Coverage Limitations

IM 7606–Schedule of Coverages–Broadcasting Equipment and Tower Coverage–Broadcasting and Data Processing Equipment Form

IM 7601–Broadcasting Equipment and Tower Coverage–Broadcasting and Data Processing Equipment Form Analysis

Endorsements and Schedules

Underwriting Considerations

INTRODUCTION

The American Association of Insurance Services (AAIS) Broadcasting Equipment and Tower Coverage Forms was formerly called Radio and Television Towers and Equipment Coverage. Broadcast towers, transmitting and receiving equipment, media, purchased recordings, and mobile equipment are covered along with similar property of others while in the named insured's care, custody, or control.

Only specific premises are scheduled, not the covered individual items. The items covered are towers, equipment, media, and purchased recordings.

Several income coverage options are also available. Coverage applies to risks of direct physical loss, subject to limitations or specifically excluded perils.

Two broadcasting equipment and tower coverage forms are available. IM 7600–Broadcasting Equipment and Tower Coverage From is analyzed first. The differences between it and IM 7601–Broadcasting Equipment and Tower Coverage–Broadcasting and Data Processing Equipment Form follow.

ELIGIBILITY

Any operation that owns and/or operates radio and television broadcasting towers, cell towers, transmitting and receiving equipment, media, purchased recordings, and mobile equipment is eligible.

POLICY CONSTRUCTION

AAIS Broadcasting Equipment and Tower Coverage require at least these four forms:

Related Article: CL 0100–AAIS Commercial Lines Common Policy Conditions

SCHEDULE OF COVERAGES

IM 7605–SCHEDULE OF COVERAGES–BROADCASTING EQUIPMENT AND TOWER COVERAGE (01 12 changes)

This Schedule of Coverages is used with IM 7600–Broadcasting Equipment and Tower Coverage. IM 7605 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Described Premises

All covered premises must be listed. Unlisted locations are not covered. IM 7614–Additional Premises Schedule–Broadcasting Equipment and Tower Coverage is used to list locations that cannot fit on IM 7605.

Limits

The following information must be entered for each covered premises:

The Off-Site Coverage limit is the most paid in a single occurrence when a covered peril causes loss to equipment and software temporarily away from a covered location.

Coverage Extensions

The 01 12 edition added “Limits” in two places for clarification and because Limit is a defined word.

The limits on the Schedule of Coverages for the following coverages apply to all covered locations:

The limit is $5,000 unless a different limit is entered.

The number of days is 365 unless a different number of days is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

The limit is $5,000 unless a different limit is entered.

The limit is $100,000 unless a different limit is entered.

The limit is $100,000 unless a different limit is entered.

The limit is $100,000 unless a different limit is entered.

The limit is $10,000 unless a different limit is entered.

A limit or the words "not covered" must be entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for the property per building or structure and a catastrophe limit must be entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for the property per building or structure and a catastrophe limit must be entered.

Note: Earthquake, Flood, and Sewer Backup coverages do not have a default limit. Coverage applies only when the Coverage Provided box is checked and a limit entered.

Deductible

A deductible amount must be entered for All Covered Perils.

Other deductibles can be entered for the following and supersede the all covered perils entry:

Notes:

The deductible entered applies to all covered locations.

Under Supplemental Coverages, if the Earthquake or Flood Coverage Provided boxes are checked, a deductible that applies specifically to that selected coverage must be entered. That deductible applies instead of the deductible that applies to all covered locations.

Coinsurance

One of the following coinsurance options must be selected:

Valuation

The value of broadcast equipment, towers, and satellite dishes is either Actual Cash Value or Replacement Cost.

Income Coverage Part

Note: IM 7611–Equipment and Towers Income Coverage Part must be attached when the following items are completed.

Coverage Options

One of the following income coverage options must be selected:

Income Coverage Extensions

The number of days is 30 unless a different number is entered.

The number of days is 30 unless a different number is entered.

Supplemental Income Coverages

The limit is $50,000 unless a different limit is entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for the property per building or structure and a catastrophe limit must be entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for the property per building or structure and a catastrophe limit must be entered.

A box must be checked for Coverage Provided or Coverage Not Provided. If the Coverage Provided box is checked, a limit must be entered.

Income Coverage Options

A box must be checked to indicate whether or not a waiting period applies. If there is a waiting period, it is 24 hours unless a different number of hours is entered.

There is a 24-hour waiting period unless a different number of hours is entered.

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7600–BROADCASTING EQUIPMENT AND TOWER COVERAGE FORM ANALYSIS

This analysis is of the 06 04 edition.

Agreement

The insurance company agrees to provide the coverage described in the coverage form and in the schedule of coverages, and the named insured agrees to pay the premium. Both agreements are subject to all the coverage form's terms, conditions, and endorsements. The coverage form contains a number of terms that are explained in the Definitions Section. These should be reviewed carefully to understand the coverage that is being provided.

Definitions

Defined terms are used throughout the coverage form. These definitions may restrict or broaden the common usage of the word, so reviewing them is very important in order to understand the coverage being provided. Twenty-five terms are defined:

1. You and your

The party(ies) named on the declarations as the insured.

2. We, us and our

The insurance company that agrees to provide the coverage.

3. Broadcast equipment

Equipment designed and used to receive, record, or transmit radio or television signals. Computer equipment or broadcast software are not included within this definition.

4. Broadcast recordings

Recordings that the named insured developed in-house or purchased from others.

5. Broadcast software

Operating programs that the named insured purchases, proprietary programs it develops for its own specific use, and recording media. This term applies only if it was all designed to be used with broadcast equipment and used in that manner.

6. Computer equipment

Any network of electronic machines and components capable of accepting information and processing it in such a way that the desired results are produced. Mainframe computers, servers, personal computers and the many types of small or mobile devices, including multimedia projectors and peripheral data processing equipment, are examples of computer equipment but not limited to these.

Note: This form was written in 2004, so it is important to extrapolate to other types of devices that became available after 2004.

7. Earth movement

Earthquake, landslide, mudflow, mudslide, mine subsidence, sinking, rising, or shifting of earth are examples of earth movement. The definition is not limited to only these because it states that ANY movement or vibration of the earth’s surface is earth movement. The only earth movement that is not included is sinkhole collapse.

8. Electrical disturbance

This definition lists three items considered electrical disturbance and does not expand beyond these three:

9. Flood

Flood is flood. Surface water, waves, tidal water, or overflow of bodies of water is also flood. Spray that results from any of the above is also considered flood. Whether or not the spray is driven by rain is irrelevant.

Note: Wind-driven rain is a major issue because wind claims are more often covered than flood claims. Therefore, to avoid a loss being denied, a claim may be submitted as wind even though the cause of the loss was the water driven by the rain.

10. Hacking

An intrusion into broadcast equipment, website, or a computer system that is not authorized. The intrusion must cause damage, destruction, malfunction, or other negative effects before it is considered hacking. Although damage and destruction are the primary examples, observation of data without any willful damage is also considered hacking.

11. Limit

The amount of coverage that applies to the insured property.

12. Mechanical breakdown

The failure or malfunction of moving or electronic parts. Component failure, faulty installation, and blowout are all considered mechanical breakdown.

13. Pollutant

This is a broad and expansive term. It is solids, liquids, thermal or radioactive contaminants, and irritants. It includes, but is not limited to, acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. Waste includes materials intended for recycling, reclamation, and reconditioning, as well as for disposal. Visible and invisible electrical or magnetic emissions and sound emissions are also considered pollutants.

14. Power supply disturbance

The types of disturbances within this definition are power surge, blackout, and brownout, along with the more generic types of power supply interruption.

15. Proprietary recordings

Radio or television recordings or audio-visual special effects that the named insured made or had developed for its own use. They must be stored on recording media.

16. Purchased recordings

Readily available recordings that the named insured purchases and then stores on recording media.

17. Recording media

Films, tapes, and discs used with broadcast software.

18. Schedule of coverages

Any page labeled as such that contains coverage information, including declarations or supplemental declarations.

19. Sinkhole collapse

The earth’s surface suddenly settling or collapsing into an underground opening created by water acting on limestone or some other rock formation. Neither the collapsing lands value nor the cost to fill the sinkhole is considered sinkhole collapse.

20. Specified perils

The named perils of aircraft, civil commotion, explosion, falling objects, fire, hail, fire extinguishing equipment leakage, lightning, riot, sinkhole collapse, smoke, sonic boom, vandalism, vehicles, volcanic action, water damage, the weight of sleet, snow or ice and windstorm. Two terms need further explanation.

Falling objects does not include loss to personal property stored in the open. It also does not include damage to the interior of buildings or personal property stored in buildings unless a falling object first breaches the building's exterior.

Water damage starts with the breaking or cracking of a system or an appliance holding water or steam. The damage occurs when the system or appliance suddenly or accidentally discharges or leaks water or steam.

21. Terms

All of the provisions, limitations, exclusions, conditions, and definitions that apply to this coverage.

22. Towers

Radio or television broadcast towers. The permanently attached antennas and dishes and lead-in wiring, guy wires, and foundations that are apart of these towers are also included in this definition.

23. Virus

Any destructive electronic data processing code introduced into broadcast or computer equipment or broadcast or equipment software. The intent of the code must be to cause damage, destruction, malfunction, or other negative effects. Denial of access to or from equipment or the network may be one of the negative effects.

24. Volcanic action

An airborne volcanic blast or shock waves, ash, dust, and particulate matter. The cost to remove dust, ash, or particulate matter from the covered property is not included unless there is first direct damage to that property. Lava flow is also considered volcanic action.

25. Web site server

Any server that is used for the named insured's website. It can be either on site or off.

Property Covered

1. Broadcast Equipment

Coverage applies to direct physical loss by a covered peril to broadcast equipment. This coverage is extended to similar property of others in the named insured's care, custody, or control. The equipment is only covered while at a described location and only when a limit for this coverage is displayed on the schedule of coverages.

2. Towers and Dishes

Coverage applies to direct physical loss by a covered peril to towers and satellite dishes. This coverage is extended to similar property of others in the named insured's care, custody, or control.

The towers and dishes are covered only while at a described location and only when a limit for this coverage is displayed on the schedule of coverages.

3. Off-Site Coverage

The Broadcast Equipment above is covered while temporarily away from a location listed on the schedule of coverages, but only when there is a limit for off-site coverage on the schedule of coverages.

Property Not Covered

Nine specific types of property are excluded:

1. Accounts, Bills or Documents

Documents such as accounts, bills, evidence of debt, records, abstracts, deeds, manuscripts, and program documentation are not covered.

2. Aircraft or Watercraft

Aircraft and watercraft should be covered under coverage forms specific to them. They are not covered under this coverage form.

Note: Drones are considered aircraft.

3. Broadcast Recordings

The items defined as broadcast recordings in the Definitions section are not covered.

4. Computers and Web Site Servers

The Definition section must be consulted to see all of the items not covered under this item.

5. Contraband

Property that is illegal to possess is not covered. Property that is legal to possess but being used as part of an illegal trade or transported illegally is also not covered.

6. Furniture and Fixtures

Office supplies, furniture, and fixtures are not covered because they should be covered under a commercial property coverage form.

7. Loaned, Leased, or Rented to Others

Any property that has been loaned, leased or rented to others and in their care, custody, or control of others is not covered. It should be covered under that “other” coverage form.

8. Money and Securities

This is coverage for broadcasting towers and equipment, so currency, food stamps, and lottery tickets not held for sale are not covered, as well as money and securities.

Note: This property is more correctly insured under commercial crime coverage forms.

Related Article: Commercial Crime Coverage Analysis

9. Vehicles

Any automobile or self-propelled vehicle designed or intended for use on public highways.

Note: This property is more correctly insured under commercial automobile coverage forms.

Related Article: CA 00 01–Business Auto Coverage Form Analysis

Coverage Extensions

Provisions That Apply To Coverage Extensions

There are two coverage extensions. The limit for each is either the limit on the schedule of coverages or the default limit included in the coverage form. These limits are part of the applicable limit for covered property and not in addition to it unless otherwise indicated. These limits are not added to or combined with limits for any other coverage extension or supplemental coverage and are not subject to any coinsurance provisions that apply elsewhere in the coverage form.

1. Debris Removal

a. When a covered peril damages or destroys covered property, the cost to remove any created debris is covered under this extension.

b. Debris removal does not include any costs for removing, restoring, or replacing polluted land or water or extracting pollutants.

c. There are two parts of the Limit section. The first is restricting any debris removal payment to no more than 25% of the amount paid for the actual direct physical loss. The second part is that when the debris removal and the physical damage loss are added together, no more than the limit of insurance is paid.

d. An additional $5,000 (or a higher amount entered on the schedule of coverages) is available if the debris removal expense is more than 25% of the loss amount or if the combined cost of loss and debris removal is more than the limit of insurance for the covered property.

e. The named insured must report debris removal expenses to the insurance company within 180 days of the date of the loss for this coverage extension to apply.

2. Emergency Removal

This covers direct physical loss to covered property removed from the scheduled location to avoid loss or damage from an impending covered peril. The loss can occur while in transit between the scheduled and sanctuary locations. This coverage is unique because the property that is being moved is not subject to any exclusion while in transit or at a sanctuary location. However, the reason for moving the property must be due to a covered peril.

Coverage applies for up to 365 days after the property is first moved but does not extend past the policy’s expiration date.

Note: Coverage does not extend past the expiration date, which means that if the insured, has property at a sanctuary location when coverage renews, the sanctuary location must be listed as a premises, or coverage no longer applies.

Supplemental Coverages

Provisions That Apply To Supplemental Coverages

There are eight supplemental coverages. Each has its own default limit that can be increased by entering a higher limit on the schedule of coverages. Limits for any supplemental coverage are separate from the applicable limit for covered property, not part of it.

The limit available for coverage described under a supplemental coverage is the only limit available for it. It is not the total of the limit for a supplemental coverage and the limit for covered property. The limits are not added to or combined with limits for any other supplemental coverage or coverage extension. They also are not subject to any coinsurance provisions that apply elsewhere in the coverage form.

1. Broadcast Software

Broadcast software is covered for direct physical loss by a covered peril only when at a premises on the schedule of coverages. There is a significant restriction of coverage for the named insured's owned programs or applications. These items are coverage ONLY if they have been duplicated and those duplicates stored at least 100 feet away from a listed premises.

The most paid in a single occurrence is $5,000. This limit can be increased.

Example: BYFZ hired a consultant to develop its broadcast software, and soon, that software became an integral part of BTFZ’s operations. Ten years later, a windstorm destroyed the main computer and the software on that computer. Only then did current management discover that the proprietary software had never been duplicated. The cost to recreate the software was over $65,000, and none of the cost was covered because of this condition.

2. Damage to Buildings and Personal Property

Damage to a transmission or reception building and its personal property is ONLY covered when a covered tower collapses on the building. However, the collapse must be due to a covered peril.

One exception is that personal property in that transmission or reception building that is otherwise considered covered property is not subject to any of the restrictions within this supplemental coverage.

The most paid in a single occurrence is $100,000. This limit can be increased.

3. Earthquake Coverage

Direct physical loss to covered property caused by earthquake and volcanic eruption is covered when the box on the schedule of coverages is checked, and a limit entered on the schedule of coverages.

Notes: This coverage does not have a default limit. Coverage only applies if there is a limit on the schedule of coverages. This could be confusing. If earthquake coverage is not provided, the word "none" should be entered in the limits space on the schedule of coverages.

This coverage is for only earthquake and volcanic eruption. The earth movement exclusion continues to apply for all other types of earth movement.

4. Flood Coverage

Direct physical loss to covered property caused by flood is covered if the box on the schedule of coverages is checked and a limit entered on the schedule of coverages.

Note: This coverage does not have a default limit. Coverage applies only if there is a limit on the schedule of coverages. This could be confusing. If flood coverage is not provided, the word "none" should be entered in the limits space on the schedule of coverages.

5. Newly Acquired Premises

When the named insured acquires a new premises during the policy term, coverage is automatically provided for that location for a maximum of 60 days. The limit is $10,000 per premises, allowing the named insured time to report it to the insurance company. Coverage ceases when the property is reported, when the policy expires or after 60 days, whichever occurs first. This is not free coverage since additional premium for the coverage must be paid starting from the acquisition date. The $10,000 limit can be increased.

6. Newly Purchased or Leased Equipment

When the named insured acquires or leases broadcast equipment during the policy period, coverage is automatically provided for up to 60 days after acquisition, when reported to the company, or until the expiration date, whichever is first.

The most paid in a single occurrence is $100,000, but can be increased. This is not free coverage since additional premium for the coverage must be paid starting from the purchase or lease date.

7. Pollutant Cleanup and Removal

a. The insurance company pays the named insured's expenses to extract pollutants from land or water if a covered peril that occurred during the policy period caused the pollutants to be released or discharged.

b. This is immediate coverage, so any expenses to extract pollutants are paid only when reported to the insurance company within 180 days of the date of loss.

c. Costs related to testing, evaluating, observing, or recording pollutants are excluded except for those costs of the extraction process.

d. The most paid at any one location is $10,000 for all such expenses during each separate 12-month policy period causes. This limit can be increased.

 

Example: WXYZ does everything it can in the face of the oncoming storm but cannot do everything. The small metal building on the premises that contains small tanks of solvents, motor oil, and lubricants for work servicing its fleet of new vehicles is blown away by the storm's force. The tanks overturn, and their contents pour out onto the ground. The spill spreads and pollutes the land, but the volume of spilled liquid and the affected area are fairly small. WXYZ's employees are able to control the area and keep it from spreading any further. This additional coverage pays the costs to clean up the spilled pollutants and extract them from the affected land area. However, WXYZ bears the costs of subsequent testing for any lingering effects from the spill.

8. Sewer Backup Coverage

Direct physical loss to covered property that is caused by water damage from a sewer or drain that backs up and loss from sub-surface water pressure on or leakage through or into a covered building or structure is covered if the box on the schedule of coverages for this coverage is checked and a limit entered in the space provided.

Note: This coverage does not have a default limit. Coverage applies only if there is a limit on the schedule of coverages. This could be confusing. If sewer backup coverage is not provided, the word "none" should be entered in the limits space on the schedule of coverages.

Perils Covered

Coverage applies to risks of direct physical loss unless the loss is limited or caused by an excluded peril.

Perils Excluded

1. Primary Exclusions

The first group of exclusions is essentially absolute. Subject to specific exceptions, loss or damage by each is totally excluded, regardless of any other cause or event that contributes to a loss, either concurrently or in any other sequence. The insurance company does not pay for any direct or indirect loss or damage caused by or resulting from these events.

Related Article: Concurrent Causation and Anti-Concurrent Causation Clauses–A Discussion

a. Civil Authority

There is no coverage for a loss that results from an order any civil or government authority issues. These orders may include seizure, confiscation, destruction, or quarantine of property, but this exclusion is not limited to only these. The only exception is when the loss or damage is caused by a civil authority destroying property as a means of controlling a fire. This exception applies only if the fire is the result of a covered peril.

b. Earth Movement or Volcanic Eruption

Earth movement is not covered except for the following five exceptions:

Note: There is another exception that is not listed here. The box beside Earthquake Coverage on the schedule of coverages can be checked. However, Supplemental Coverages 3. Earthquake Coverage that applies when the box is checked provides coverage for only earthquake and volcanic eruption. All other types of earth movement remain excluded.

c. Flood

The insurance company does not pay for loss or damage caused by flood.

There are two exceptions:

Note: Flood coverage applies if the box is checked and a limit entered on the schedule of coverages for Supplemental Coverages 4. Flood Coverage.

d. Nuclear Hazard

The insurance company does not cover loss caused by or that results from any nuclear reaction, radiation, or contamination, whether the nuclear incident was controlled or not or was caused by any means. Any loss the nuclear hazard causes is not treated as a loss that fire, explosion, or smoke causes. However, coverage applies to direct loss or damage caused by a fire that results from the nuclear hazard.

e. Sewer Backup and Water below the Surface

This exclusion applies to the following except to the extent of the coverage that Supplemental Coverages 8. Sewer Backup Coverage provides.

Coverage does not apply to loss or damage that any of the following causes:

There are two exceptions:

Note: Sewer backup coverage applies when a check is placed in the box for sewer backup coverage, and a limit is entered on the schedule of coverages for Supplemental Coverages 8. Sewer Backup Coverage.

f. War and Military Action

The insurance company does not pay for loss or damage caused by any act of war. Undeclared and civil war or warlike action by a military force is all considered war. All actions taken to hinder or defend against an actual or expected attack by any government or sovereign authority that uses military personnel or other agents are also considered war and excluded. In addition, acts of insurrection, rebellion, revolution, or unlawful seizure of power and any action any government authority takes to prevent or defend against any such acts are excluded. If any action within the terms of this exclusion involves nuclear reaction, radiation, or contamination, this exclusion applies in place of the nuclear hazard exclusion.

Note: This means that the exception for resulting fire under the nuclear hazard is not covered when it results from war.

2. Secondary Exclusions

The second group of exclusions applies to loss or damage caused by or resulting from any of the following loss events. Some of these exclusions have exceptions, conditions, or limitations that should be noted and reviewed carefully. The insurance company does not pay for any loss or damage caused by or that results from any of these events.

a. Contamination or Deterioration

Loss or damage that is caused by contamination or deterioration is excluded. This applies to corrosion, decay, fungus, mildew, mold, rot, and rust. It also applies to any quality, fault, or weakness in covered property that causes it to damage or destroy itself. However, this exclusion is not limited to only these described causes.

b. Criminal, Fraudulent, Dishonest, or Illegal Acts

Coverage does not apply to loss caused by, or that results from criminal, fraudulent, dishonest, or illegal acts that any of the following commit alone or in collusion with another:

Coverage applies if employees destroy property. It does not apply if employees steal.

This exclusion does not apply to covered property in the custody of carriers for hire.

c. Defects, Errors, and Omissions

When an act, defect, error, or omission causes a loss, there is no coverage even if no negligence was involved. The defects, errors, or omissions can be in design, specifications, and workmanship, as well as materials, installation, renovation, remodeling, or repair. This also applies when the materials are unsound, defective, weak, or inadequate. Any of the above may result in a covered peril occurring. Any damage that is the result of that resulting covered peril is covered.

Example: The WKAP radio tower was built to withstand winds up to 75 miles per hour. The tower fails and collapses after it is subjected to winds of only 40 miles per hour. An investigation determined that the tower construction contractor used the wrong kind of lead-in wires. The collapsing tower falls onto the transmission building. There would be coverage as part of the Damage to Buildings or Personal Property Supplemental coverage, but because the collapse was due to an excluded peril, the loss to that building is also excluded.

d. Electrical Currents, Electrical Disturbance, and Power Supply Disturbance

Loss that is the result of artificially generated electricity damaging wiring or electrical devices that are inside covered property is excluded. Losses due to either an electrical or a power supply disturbance are also excluded.

Note: To fully appreciate this exclusion, reviewing the definitions of electrical disturbance and power supply disturbance in the Definitions section is important.

If any of the above excluded losses results in a covered peril occurring, any resulting loss or damage from that covered peril is covered.

A very important part of this exclusion is that ONLY loss to property generating the current or through which that current travels is subject to this exclusion.

e. Exposure to Light, Breakage

This unusual exclusion applies to loss when exposed to light and loss caused by the breaking of glass objects such as tubes, bulbs, lamps, or other objects made primarily of glass.

If these excluded events result in a covered peril, resulting loss or damage caused by that covered peril is covered.

Cameras or photographic lenses are an exception to this exclusion.

f. Loss of Use

There is no coverage for loss that results from delay, loss of use, or loss of market.

g. Mechanical Breakdown

Loss that is due to mechanical breakdown is excluded. The only exception is that when such an excluded loss causes covered peril, the resulting loss from that covered peril is covered.

h. Missing Property

The unexplained or mysterious disappearance of covered property is excluded when no physical evidence suggests what happened to it. The only proof that a loss occurred is based on an audit or physical inventory. This exception is that covered property in the custody of carriers for hire is covered.

i. Pollutants

There is no coverage for loss caused by or that results from any release, discharge, seepage, migration, dispersal, or escape of pollutants unless a specified peril causes the event, except for the coverage under Supplemental Coverages 7. Pollutant Cleanup and Removal provides. Coverage also applies to the resulting loss to covered property that a specified peril causes.

j. Processing Work

Damage that occurs to property while it is being worked on is not covered. There is an exception. If the uncovered damage to the property results in a covered peril, damage caused by that covered peril is covered.

Example: Jill is 15 feet up, repairing the outside of the tower. She makes a mistake that results in electric arcing. She is so surprised she drops her screwdriver. That screwdriver fell into the equipment below and damaged it. The electric arcing loss is not covered, but the damage to the equipment caused by the falling screwdriver is.

 

k. Tuning and Retuning

Losses that occur because of the tuning or retuning of either towers or antennas are excluded. There is coverage for any loss caused by a covered peril resulting from such tuning or retuning, though.

 

Example: Radio station WDUD’s engineer is certain he can crank out more power if he just "tweaks" the station's ancient equipment. His "tweaking" destroys an auxiliary transmitter. This loss is excluded because the equipment was destroyed because of retuning.

l. Virus or Hacking

Direct or indirect loss or damage resulting from computer virus or hacking is not covered. Loss resulting from any loss of access, use, or function because of that computer virus or hacking is also not covered.

m. Voluntary Parting

When covered property is voluntarily given to others, and a loss occurs, there is no coverage even if the surrender was due to a fraudulent scheme, trick, or false pretense.

 

Example: Grace received a phone call from individuals from the FCC demanding that she meet them at the YTDC tower. When she arrives, the individuals produce credentials and demand that she allow them access to the tower. They identify certain equipment on the tower as not complying with FCC standards and demand that they are allowed to remove it immediately. They take the equipment and leave Grace with a receipt and a letter explaining the reason for the seizure.

Grace is very upset and contacts her attorney. The attorney calls the number provided in the letter, which turns out to be fictitious. Grace has no coverage under this policy because she gave the equipment away voluntarily.

n. Wear and Tear

Loss caused by wear, tear, marring, or scratching is excluded.

What Must Be Done In Case Of Loss

1. Notice

The named insured must promptly notify the insurance company or its agent of a loss. The notice must include a description of the property lost or damaged. If a criminal act caused the loss, the appropriate law enforcement agency must also be notified. The insurance company has the right to require that the notice is in writing.

2. You Must Protect Property

During and after a loss, the named insured must take all reasonable steps to protect covered property from further loss. The insurance company pays reasonable costs the named insured incurs but, to do so, the named insured must maintain accurate records to substantiate the costs. Paying these costs is not in addition to the policy limits. There is no coverage for any repairs or emergency measures performed on property not already damaged by a covered peril.

Note: It is important to realize that any such costs incurred will reduce the amount available to pay the actual loss.

3. Proof of Loss

The named insured must complete and return the insurance company's prescribed proof of loss forms within 60 days after the company requests it. The information provided must include the time, place, and circumstances involved with the loss and information on any other insurance coverage that may apply. It must also include the named insured’s interest and the interest of others with respect to the property involved, including lienholders, loss payees, and mortgagees. Any changes in the title to the property during the policy period must be disclosed, in addition to providing any other reasonable information the company may require to adjust and settle the loss.

4. Examination

Examination under oath may be required in matters that relate to the loss. The insurance company may request these examinations more than once, but such requests must be reasonable. If multiple persons are examined, the company has the right to examine each individual separately.

5. Records

The named insured must produce any records related to the loss. The insurance company must be allowed to make copies and take extracts of them as often as it reasonably requests. Records include tax returns and bank microfilms of all related cancelled checks but records are not limited to just these.

6. Damaged Property

Both damaged and undamaged property must be made available for the insurance company's inspection as often as reasonably necessary. It must also be allowed to take samples of the property to the extent necessary to adjust and settle the loss.

7. Volunteer Payments

The named insured may not voluntarily make payments, assume obligations, pay or offer rewards, or incur other expenses without the insurance company's express approval. If it does, it does so at its own expense. The only exceptions are those costs incurred to protect property, as item 2. above describes.

8. Abandonment

The insurance company decides when and if they will take ownership of the damaged property, which will be communicated in writing. The named insured has no right to abandon any property to the insurance company.

9. Cooperation

The named insured must cooperate with the insurance company. Any actions required of the named insured within this policy must be performed.

Valuation

1. Equipment, Towers, and Satellite Dishes

Valuation can be on either a replacement cost basis or an actual cash value basis. The valuation selected must be entered on the schedule of coverages.

a. When valuation is on a replacement cost basis, the value of the property is based on its replacement cost. However, the valuation is limited by the following:

b. When valuation is on an actual cash value basis, the value is based on the property’s actual cash value at the time of loss. This includes a deduction for depreciation.

2. Broadcast Software

a. Programs and applications are valued at the cost to reinstall them from the licensed discs originally used to install them. If the original licensed discs are not available, the value is based on the cost to purchase the most current version of the programs or applications.

b. Proprietary programs are valued at the cost to reproduce them from duplicate copies. The cost of labor to copy or transcribe from duplicate copies is part of that cost.

Note: There is a requirement under the Broadcast Software Supplemental Coverage that proprietary programs are covered only when duplicates of the software are made and then stored at least 100 feet away from a listed premises.

 3. Recording Media

Media is valued at the cost to repair or replace it with material of the same kind and quality.

4. Pair or Set

The value of a loss that involves damage to or loss of one part of a pair or set is based on a reasonable proportion of the value of the entire pair or set. However, the loss of one part of a pair or set is not considered a total loss.

Note: This recognizes that the value of the whole is greater than the value of individual parts but that the remaining parts still have value as separates.

5. Loss to Parts

The value of a lost or damaged part of the property that consists of several parts is the cost to repair or replace only the lost or damaged part.

How Much We Pay

1. Insurable Interest

The named insured's insurable interest in the covered property at the time of loss limits the amount of loss that is paid.

Note: Insurance is meant to restore a person’s pre-loss financial position, not to improve or enhance it.

2. Deductible

The insurance company pays only the amount of loss that exceeds the deductible amount on the schedule of coverages.

3. Earthquake Period

All earthquakes, tremors, or volcanic eruptions that occur within a 168-consecutive hour period are considered a single loss. This time period is not limited by the policy’s expiration date.

4. Loss Settlement Terms

Subject to the other items in this section, the insurance company pays the least of the following:

5. Coinsurance

a. When coinsurance applies to a coverage provided, the insurance company pays only part of the loss if the limit is less than the percentage of the value of the covered property on the schedule of coverages.

b. The following are the three steps to determine the amount of the loss to be paid:

Step 1. Multiply the percentage on the schedule of coverages by the covered property’s value at the time of loss.

Step 2. Divide the covered property’s value by the result determined in Step 1.

Note: There is no coinsurance penalty if the result is 1.00 or higher.

Step 3. There is a coinsurance penalty when Step 2. is less than 1.00. Subtract the deductible from the amount of loss and then multiply the total amount of loss by the percentage determined in Step 2.

The insurance company does not pay more than the amount determined in Step 3. or the limit, whichever is less. It does not pay any remaining part of the loss.

c. If there is more than one limit on the schedule of coverages, this procedure applies separately to each limit.

d. If there is only one limit on the schedule of coverages, this procedure applies to the total of all covered property insured under that limit.

e. This coinsurance provision does not apply unless there is a coinsurance percentage entered on the schedule of coverages.

6. Insurance under More Than One Coverage

Two or more coverages in the coverage form may apply to the same loss. In that case, the insurance company does not pay more than the value of the actual claim, loss, or damage sustained.

7. Insurance under More Than One Policy

a. Proportional Share

The named insured may have other coverage subject to the same terms as this coverage form. In that case, this coverage form pays only its share of the covered loss. That share is the proportion that its limit of insurance bears to the limits of insurance of all insurance that covers on the same basis.

b. Excess Amount

There may be other coverage available to pay for the loss other than as described in 7. a. above. In that case, this coverage form pays on an excess basis. It pays only the amount of covered loss that exceeds the amount due from the other coverage, whether collectible or not. Any payment is subject to the limit of insurance that applies.

Loss Payment

1. Loss Payment Options

a. Our Options

The insurance company has the following four loss payment options if a covered loss occurs.

b. Notice of Our Intent to Rebuild, Repair, or Replace

The insurance company must notify the named insured of its intent to rebuild, repair, or replace within 30 days after it receives a properly completed proof of loss.

2. Your Losses

a. Adjustment and Payment of Loss

The insurance company adjusts all losses with and pays the named insured unless another loss payee named in the policy is involved.

b. Conditions for Payment of Loss

The insurance company pays a covered loss within 30 days after it receives a properly prepared proof of loss and the amount of loss is established. The amount of loss is determined either through a written agreement between the company and the named insured or after an appraisal award is filed with the company.

3. Property of Others

a. Adjustment and Payment of Loss to Property of Others

The insurance company has the option to adjust and pay losses that involve property of others either to the named insured acting on the property owner’s behalf or to the property owner.

b. We Do Not Have to Pay You if We Pay the Owner

The insurance company is not obligated to pay the named insured when it pays the property owner. In addition, if the property owner sues the named insured, the company has the option to defend the named insured in that suit.

Other Conditions

1. Appraisal

The insurance company and the insured may not always agree on a covered claim’s value. This condition provides one method to resolve disputed claims.

Either party can request an appraisal to determine a disputed claim’s value. Once requested, the parties have 20 days to obtain their own independent and competent appraisers and give their appraiser's name to the other party. The two appraisers then have 15 days to select a competent impartial umpire. If they cannot agree on an umpire within that time period, either can request that a judge in the court of record in the state where the property is located appoint one.

The appraisers then determine the claim’s value. They submit any differences to the umpire. Once any two of the three parties agree, the amount of loss is set.

Each party pays its own appraiser. Both parties share the umpire’s cost and other expenses equally.

2. Benefit to Others

The insurance provided does not directly or indirectly benefit any party with custody of the named insured's property.

3. Conformity with Statute

Any condition in this coverage form that conflicts with any applicable law is amended to conform to that law.

4. Estates

Note: This condition applies only if the named insured is an individual.

a. Your Death

If the named insured dies, the person who has custody of the named insured's property is an insured until a qualified legal representative is appointed. The named insured’s legal representative becomes an insured once he or she is appointed. Both are insureds, but only with respect to the property this coverage form insures.

b. Policy Period Is Not Extended

This coverage does not extend past the policy’s expiration date.

5. Misrepresentation, Concealment, or Fraud

This coverage is void if any insured at any time willfully concealed or misrepresented a material fact related to the insurance provided, the property covered, or its interest in the property. It is also void if fraud or false swearing by any insured took place concerning the insurance provided or the property covered.

Note: The named insured must deal with the insurance company honestly. Its rights of recovery may be voided if it intentionally misrepresents or conceals a material fact or information. This means the insurance is treated as simply having never existed versus denying a particular claim.

6. Policy Period

Only covered losses that occur during the policy period are paid.

7. Recoveries

Paying the loss does not end the obligations of the named insured and the insurance company toward one another. Additional provisions apply if the insurance company pays a loss and the lost or damaged property is subsequently recovered, or the parties responsible for the loss pay for it.

Either party that recovers property or payment must inform the other. Recovery expenses that either party incurred are reimbursed first. If the named insured keeps the recovered property, it must refund the amount of the claim the insurance company paid unless the company agrees to a different amount. If the claim paid is less than the agreed loss due to applying a deductible or another limitation, any recovery is prorated between the named insured and the insurance company based on the company's respective interest in the loss.

8. Restoration of Limits

Payment of a claim does not reduce the limit available for future claims.

9. Subrogation

The insurance company acquires the named insured's rights of recovery from third parties after it pays a loss. The named insured must help the insurance company secure those rights. The company is not obligated to pay a loss if the named insured hinders or impairs the company's rights of subrogation. However, the named insured can agree in writing to waive recovery rights from others before a loss occurs.

10. Suit against Us

The insurance company cannot be sued by anyone for any coverage until all the terms of the coverage form are met. Suits must be brought within two years after the named insured first knew about a loss. If a state law invalidates this condition, any suit brought must comply with the provisions of that law and begin within the shortest period of time allowed by law.

Note: It is normal for a basic coverage form to be modified by mandatory state-specific endorsements that address issues related to that specific state.

11. Territorial Limits

Covered property must be located in the United States, its territories and possessions, Canada, or Puerto Rico for coverage to apply.

Additional Coverage Limitations

Tower Modification

A tower cannot be materially changed or modified from its original design or construction characteristics unless the insurance company is first advised of the change and approves that change in writing. Without such notification, the modified tower is no longer covered. This limitation applies to permanent but not temporary changes but only those temporary changes made during normal tower maintenance and repair activities.

Note: This unique limitation is required because tower underwriting is based on its size and capacity.

Example: BYKZ Television has problems with its signal reaching its customers because a boom in commercial construction in the area around the station causes increased interference. The station’s owner decides to add a 10-foot antenna to the tower to boost the signal. The alteration has been made, but BYKZ has not notified its agent or the insurance company. A loss occurs, and the claims adjuster notices the tower modification. He denies the claim because the named insured modified the tower without notifying the insurance company and getting its approval.

IM 7606–SCHEDULE OF COVERAGES–BROADCASTING EQUIPMENT AND TOWER COVERAGE–BROADCASTING AND DATA PROCESSING EQUIPMENT FORM
(01 12 changes)

This Schedule of Coverages is used with IM 7601–Broadcasting Equipment and Tower Coverage–Broadcasting and Data Processing Equipment Form. IM 7606 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Described Premises

All covered premises must be listed. Unlisted locations are not covered. IM 7614–Additional Premises Schedule–Broadcasting Equipment and Tower Coverage is used to list locations that cannot fit on IM 7606 because of space considerations.

Limits

The following information must be entered for each covered premises:

The 01 12 edition added “Limits” in three places for clarification and because Limit is a defined word.

Off-Site Coverage is the most paid in a single occurrence for loss to equipment and software temporarily away from a covered location.

Coverage Extensions

The limits on the Schedule of Coverages for the following coverages apply to all covered locations:

The limit is $5,000 unless a different limit is entered.

The 500-foot limitation may be removed by checking the box.

The number of days is 365 unless a different number of days is entered.

The limit is $5,000 unless a different limit is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

The limit is $50,000 unless a different limit is entered.

The limit is $100,000 unless a different limit is entered.

The limit is $100,000 unless a different limit is entered.

The limit is $50,000 unless a different limit is entered.

The limit is $10,000 unless a different limit is entered.

The limit is $1,000 unless a different limit is entered.

A limit or the words "not covered" must be entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for the property per building or structure and a catastrophe limit must be entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for the property per building or structure and a catastrophe limit must be entered.

Note: Earthquake and Flood coverages do not have a default limit. Coverage applies only when the box is checked, and a limit is entered.

Deductible

A deductible amount must be entered for All Covered Perils

Other deductibles can be entered for the following and supersede the entry for all covered perils:

Notes:

The deductible entered applies to all covered locations.

Under Supplemental Coverages, if the earthquake or flood coverage provided boxes are checked, a deductible that applies specifically to that selected coverage must be entered. That deductible applies instead of the deductible that applies to all covered locations.

Coinsurance

One of the following coinsurance options must be selected:

Valuation

The value of broadcast equipment, computer equipment, telecommunications equipment, towers, and satellite dishes must be selected. The options available are either Actual Cash Value or Replacement Cost.

Income Coverage Part

Note: IM 7611–Equipment and Towers Income Coverage Part must be attached when the following items are completed.

Coverage Options

One of the following income coverage options must be selected:

Income Coverage Extensions

The number of days is 30 unless a different number is entered.

The number of days is 30 unless a different number is entered.

Supplemental Income Coverages

The limit is $50,000 unless a different limit is entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for property per building or structure and a catastrophe limit must be entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for property per building or structure and a catastrophe limit must be entered.

A box must be checked for Coverage Not Provided or Coverage Provided. If the Coverage Provided box is checked, a limit for property per building or structure and a catastrophe limit must be entered.

Income Coverage Options

A box must be checked to indicate whether or not a waiting period applies. If there is a waiting period, it is 24 hours unless a different number of hours is entered.

There is a 24-hour waiting period unless a different number of hours is entered.

One of the following must be selected.

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7601–BROADCASTING EQUIPMENT AND TOWER COVERAGE–BROADCASTING AND DATA PROCESSING EQUIPMENT FORM COVERAGE FORM ANALYSIS

This analysis is of the 04 04 edition.

This coverage form is an expansion of the IM 7600–Broadcasting Equipment and Tower Coverage analyzed above. It provides coverage to data processing equipment that is quite common in the broadcasting industry and thus allows two coverage needs to be handled with a single form. Seven sections are changed to make this happen, and those differences are identified as follows.

Definitions

Three definitions are added, and three are changed.

The following are the definitions added:

This is recording or storage media used for computer software, limited to films, tapes, or discs.

There are a number of different types of property used with computer equipment. It includes operating programs and applications the named insured purchases as well as proprietary ones, files, documents, information in an electronic format, and computer media.

This is telephone equipment and component parts used to transmit communications. Examples are telephone switchgear, PBX systems, telephone operating programs and related software, facsimile and video conferencing equipment, and other telephone hardware, such as computers used in conjunction with voice mail.

The following are the definitions changed:

In addition to the broadcast software and computer equipment, the definition in IM 7600 excludes broadcast recordings, computer equipment, and telecommunications equipment, which are not considered broadcast equipment.

This adds recording media to its definition.

This definition eliminates computer software, telecommunications equipment, broadcast equipment, broadcast software, and Web site server.

Property Covered

Two types of property covered are added and two are changed.

The following are the types of property added:

This property is covered at a premises listed and described on the schedule of coverages if there is a limit for this coverage at that location. This software is covered for direct physical loss by a covered peril at such premises. Coverage for the named insured's owned programs or applications and those that others develop specifically for it applies only if they are duplicated and the duplicates are stored at least 100 feet away from a premises listed and described on the schedule of coverages.

This property is covered at a premises listed and described on the schedule of coverages if there is a limit for this coverage at that location. Coverage applies to both the named insured's telecommunications equipment and similar property of others in its care, custody, and control.

The following are the types of property changes:

This property is covered property instead of just Broadcast Equipment.

This property is included as covered property under off-site coverage.

Property Not Covered

One type of property not covered is added, one is changed, and one is removed.

The following type of property not covered is added:

This means theft or disappearance of any type of portable computer is excluded, but only when the loss occurs in the course of transit and the computer is checked as luggage.

 

Example: Peter was traveling from Lexington, KY, to Indianapolis, IN, on a small plane. Carry-on luggage was not permitted, so he was forced to check his laptop computer. When he arrived in Indianapolis, the laptop computer could not be located. This loss is not covered.

 

The following type of property not covered is changed:

This is changed to only Web Site Servers. This means that computers are covered property subject to other terms in the coverage form.

The following type of property not covered is removed:

This means that Broadcast Recordings are considered covered property subject to other terms in the coverage form.

Coverage Extensions

There are two additional Coverage Extensions:

This coverage pays for direct physical loss to covered property from either of these disturbances. Coverage applies only if the cause of the disturbance is within 500 feet of the premises where the loss occurred. This 500-foot limitation can be deleted. The most paid in a single occurrence is $5,000.

This coverage pays the expenses the named insured incurs to move or store covered property to protect it from loss or damage by a covered peril. It also pays for the storage fees incurred to keep it a safe location up to ten days after the property is first moved. The most paid in a single occurrence is $5,000. Coverage does not extend past the policy’s expiration date.

Example: Paris heard that a tornado was on the way. He moved his broadcasting equipment to a friend’s office for safekeeping. The tornado destroyed Paris’s building, and he kept his equipment at his friend’s office until the building was rebuilt. The cost to move the equipment was $2,000. His friend did not charge him to store the equipment until it was obvious it would be there for a while, and then the charge was only $500 per month. The cost to return the items was $2,000.

Emergency Removal Expense coverage paid the $2,000 to move the equipment. It did not pay for the storage rental because the charge was beyond the initial ten days. It also did not pay the $2,000 to return the property because that cost was incurred after the policy expired.

Supplemental Coverages

Three Supplemental Coverages are added, two are changed, and one is eliminated.

The following are the three added:

The insurance company covers direct physical loss by a covered peril to broadcast recordings in the named insured's library but only at locations on the schedule of coverages. This coverage applies only if the broadcast recordings are duplicated and the duplicates are kept in a different building at least 100 feet away from the library location. The most paid in a single occurrence is $5,000.

The insurance company pays a reward for information leading to a conviction for arson, theft, or vandalism if the conviction involves a covered loss caused by arson, theft, or vandalism. The most paid in a single occurrence for a reward for information is $1,000, regardless of the number of persons who provide information.

Coverage applies to direct physical loss or damage to broadcast and computer equipment and software from hacking, subject to specific exclusions and limitations. The most paid in a single occurrence is $5,000. The most paid for all covered losses during each separate 12-month policy period is $10,000.

The following are the two changed:

The limit is reduced to $50,000.

The title is broadened to include Software and applies to broadcast and computer equipment and software and telecommunications equipment. The limit is reduced to $50,000.

The Supplemental Coverage eliminated is Broadcast Software. However, it is not actually eliminated. It is now part of Broadcast and Computer Software Coverage Property.

Perils Excluded

The following two exclusions are changed:

Coverage Extensions 2. Electrical and Power Supply Disturbance provides some coverage. This coverage extension is not in IM 7600.

Supplemental Coverages 10. Virus and Hacking Coverage provides some coverage. This supplemental coverage is not in IM 7600.

Valuation

Two valuations are added, two are changed, and one is eliminated.

The following are the two valuations added:

This consists of both proprietary recordings and purchased recordings. Purchased recordings are valued based on their actual cash value. Proprietary recordings are valued based on the cost to reproduce them from duplicate copies.

This consists of both recording media and computer media. Media is valued based on the cost to repair or replace media with similar material.

The following are the two valuations changed:

Valuation for this property also applies to computer and telecommunications equipment.

This valuation also applies to computer software.

The valuation eliminated is Recording Media.

ENDORSEMENTS AND SCHEDULES

AAIS has developed the following endorsements and schedules for use with the various Broadcasting Equipment and Tower Coverage forms.

IM 7611–Equipment and Towers–Income Coverage Part

This endorsement provides coverage for earnings and extra expense that result from loss or damage by a covered peril to covered property.

IM 7614–Additional Premises Schedule–Broadcasting Equipment and Tower Coverage (01 12 change)

(Use with IM 7600)

This schedule lists additional locations of described premises, coverages, and limits for each location. The 01 12 edition added a space to enter the policy number.

IM 7615–Additional Premises Schedule–Broadcasting Equipment And Tower Coverage–Broadcasting and Data Processing Equipment Form (01 12 change)

(Use with IM 7601)

This schedule lists additional locations of described premises, coverages, and limits for each location. The 01 12 edition added a space to enter the policy number.

UNDERWRITING CONSIDERATIONS

Broadcasting towers and equipment are at fixed locations and are exposed to the common causes of loss that affect fixed or permanent locations. Underwriting requires evaluating the physical features and considerations at such fixed locations and the necessary steps management has taken to maintain and protect the property. This property presents both high values in the towers and in the equipment that is sensitive and subject to damage from numerous causes of loss. Evaluating the causes of loss must be combined with a review of the protective devices and services used to protect the equipment from loss.

 Related Article: Commercial Property Underwriting Considerations

Towers, especially taller towers, are broadcast facilities' most visible elements. Towers are subject to wind and windstorm, collapse, lightning strikes, and accumulation of ice that could lead to collapse. The tower's age, the support and grounding, the materials used in the construction, the maintenance, and upkeep over the years, and the number and type of additions to it, such as antennas and dishes, are critical elements that must be examined and evaluated.

There are different types of towers.

Broadcast towers are the largest single underwriting concern. Tall towers are more susceptible to climatic conditions that can lead to collapse. The age of the tower, coupled with metal fatigue that occurs over time, are other factors that must be considered. Regular painting, metal stress testing, repair and replacement, as needed, are essential. If additional property such as antennas and satellite dishes are added to a tower, the additional weight and imbalance can affect its structural integrity. Such common "add-ons” must not exceed the design and weight-bearing capacity of the tower. If the "add-ons" belong to others, the contractual arrangements between the parties must be reviewed to determine responsibility for insuring them.

Isolated "repeater" towers (those that simply retransmit a signal from an originating tower) and the equipment building typically found at the base of such towers present other issues and concerns because they usually do not have persons or operators on the premises and are basically vacant buildings. The owner must arrange regular and frequent visits to identify and resolve problems quickly. The tower property should be completely fenced, and the building should be properly constructed, locked, and secured against break-ins, theft, and vandalism. All steps needed to deter unauthorized access to the premises should be taken. The building that houses the transmitter equipment must be evaluated from the standpoint of fire. Construction should be better than average, automatic sprinklers should be provided, and an adequate number of dry chemical extinguishers should be on hand. Water can seriously damage transmitter equipment, and this equipment should be located above grade level. Smoke, dust, and electrical arcing and other damage can also cause serious damage to this equipment.

Mobile, sophisticated electronic equipment is very susceptible to both damage and theft. Equipment should never be left in an unlocked and unattended vehicle. Equipment should be individually assigned to employees who are held financially responsible for loss or damage to it. Equipment should never be loaned or leased to outsiders unless the terms of the arrangement require that they provide suitable insurance coverage on it. If the equipment is part of an equipment pool, there must be a reliable sign-out and tracking procedure in place to monitor the location and status of all equipment and hold employees responsible for property that is stolen or damaged.

Adequate financial strength for enterprises in this class of business is essential. Regular preventive and other maintenance is needed on towers and equipment. Lack of sufficient financial resources could mean deferred maintenance, leading to a catastrophic tower collapse or electrical failure of state-of-the-art equipment.