ISO SIGNS COVERAGE FORM ANALYSIS

This is a little confusing. The Insurance Services Office (ISO) has two different Signs Coverage Forms and both have the same name. The CM 00 28–Signs Coverage Form is a filed coverage form. It is used to cover neon, mechanical and electrical signs, lamp or street clocks.

Related Article: ISO Signs Coverage Form

The second available form is IM 00 67–Signs coverage. It provides extremely broad property coverage for the named insured's signs and street clocks on a non-filed basis. It cannot be used to cover neon signs or automatic/mechanical signs. Because of the similarity of the two forms, it is important to make sure the correct coverage form is being used for the property being covered.

POLICY CONSTRUCTION

Signs Coverage requires at least the following six forms:

IL DS 00–Common Policy Declarations
IL 00 17–Common Policy Conditions

CM DS 02–Commercial Inland Marine Declarations
CM 00 01–Commercial Inland Marine Conditions

IH DS 67–Signs Declarations
IH 00 67–Signs Coverage Form

IH DS 67–SIGNS DECLARATIONS

The advisory Signs Declarations does not have spaces for the named insured, its mailing address and other named insured information, the policy period, or the description of the insured business. That information is on the Common Policy Declarations. IH DS 67 contains the following information:

Insurance Company and Producer Name

The name of the insurance company that provides the coverage and the name of the agent or broker that produces the business are entered in the spaces provided.

Description of Property and Limits of Insurance

This section has spaces to enter the following information for each covered sign:

· Description of Property (Type of Sign)

· The lettering that is on the sign

· The location of the sign

· Limit of Insurance of the sign

There is also a space to enter the aggregate limit of insurance for All Covered Property in Any One Occurrence.

Coinsurance

This section has a space to enter the coinsurance percentage that triggers the coinsurance additional condition if coinsurance applies.

Deductible per Sign

This section has spaces to enter the amount of deductible that applies to a single occurrence. It can be expressed as either a Percentage of the Limit of Insurance or as a Dollar Amount.

Example: The named insured’s scheduled street clock had a limit of $10,000, subject to a 5% deductible. A covered loss resulted in total damages to the sign of $1,500. The dollar amount of the deductible was .05 X $10,000 = $500. The named insured was paid $1,000 ($1,500 - $500).

Rates and Premiums

This section has spaces to enter the Rate per $100 and the Premium.

Special Provisions

Any special provisions are entered in the space provided.

IH 00 67–SIGNS COVERAGE FORM ANALYSIS

This analysis is of the 12 13 edition. Changes from the previous edition are in bold print.

Introduction

This section encourages carefully reading the entire coverage form to determine what is covered, what is not covered, rights, and duties. It defines we, us, and our as the insurance company that provides this insurance coverage. It also defines you and your as the named insured on the declarations. The reader is also pointed to the Definitions section because certain words or terms used in the form have a broader or restricted meaning.

A. Coverage

The insurance company pays for direct physical loss or damage to covered property but only when that loss is from a covered cause of loss.

1. Covered Property

Covered property is the following but only if described on the declarations:

a. The named insured's signs and street clocks

b. Similar property that is owned by others in the named insured’s care, custody, or control

Note: In most cases, coverage is written in the sign owner’s name. In some cases, it may be written in the name of the sign manufacturer or a dealer to cover signs it services under a maintenance contract.

2. Property Not Covered

The following described property is excluded:

a. Neon, fluorescent, and automatic, or mechanical electric signs or lamps

Sign141

Example: The Mooresville Consolidated School Corporation attempted to insure its highway sign on IH 00 67. Mooresville’s insurance agent was quick to point out that it was a mechanical sign and that IH 00 67 covers only signs that are not neon, fluorescent, automatic, or mechanical.

Note: This property is properly covered under CM 00 28– Signs Coverage Form.

Related Articles: ISO Signs Coverage Form

b. Contraband. Any property that is illegal for the named insured to own or in illegal trade or transportation is not covered.

3. Covered Causes of Loss

Covered causes of loss are direct physical loss or damage to covered property apart from causes of loss listed in the exclusions section.

4. Additional Coverages

Some of the following additional coverages are also additional amounts of insurance.

a. Debris Removal

A property damage loss almost always creates debris that must be removed. The insurance company pays the cost of removing the debris of a covered loss. The expenses must be reported to the insurance company in writing within 180 days of the date of loss. The most paid is 25% of the sum of the following:

The amount that is paid for direct physical loss or damage to covered property
The deductible that applies to such direct physical loss or damage

Payments under this Additional Coverage do not increase the limit of insurance that applies. However, the insurance company pays an additional $5,000 per occurrence when the direct physical loss or damage combined with the debris removal expense exceeds the limit of insurance or when the debris removal expense is more than the amount payable under the above described 25% limitation.

This coverage does not apply to costs to extract pollutants from land or water or to remove, restore, or replace polluted land or water.

b. Preservation of Property

Covered property may need to be moved from an insured location to keep it from being damaged by a covered cause of loss. In that case, the insurance company pays for any direct loss or damage such property sustains during the move. In addition, coverage applies at the location where the property is stored for up to 30 days after the date it was moved there.

This additional coverage does not increase the limit of insurance.

Notes: There are several important points to consider:

The only property insured is covered property at a location listed on the declarations. Property eligible for coverage moved from a location that is not covered does not create coverage.
The potential loss or damage from which the property is being protected must be a covered cause of loss.

Covered property is covered for ANY cause of loss while it is being moved to and from (and while at) the "safe" location.

The property removed must be moved back to the covered location or the temporary location must be added to the policy within 30 days from the date of the move. Otherwise, all coverage ends after 30 days.

c. Pollutant Clean Up and Removal

The insurance company pays to clean up pollutants caused by or that result from a covered cause of loss that occurs during the policy period. The most paid is $10,000 as an aggregate amount during each separate 12-month policy period. The expenses are paid only if they are reported to the insurance company in writing within 180 days of the date of loss.

This coverage does not apply to costs to evaluate the presence or effects of pollutants. However, it does pay for testing that is part of the extracting of pollutants process from either land or water.

This limit is an additional amount of insurance.

B. Exclusions

1. Primary Exclusions

The first group of exclusions applies whether or not the loss event results in widespread damage or affects a significant geographical area and is absolute. Subject to specific exceptions, 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 that results from any of these events.

a. Governmental Action

This exclusion applies to the legal and authorized seizure or destruction of property by a government entity’s order. There is one exception. Loss or damage that is caused when the governmental entity orders property to be destroyed is covered if used as a method to prevent a fire from spreading is covered. However, this exception applies only if the fire being contained would have been a covered fire under this coverage form.

b. Nuclear Hazard

Nuclear reaction, radiation, or radioactive contamination is not covered. There is an exception. If a fire results from the nuclear reaction, radiation or radioactive contamination there is coverage for the direct loss or damage caused by that fire.

c. War and Military Action

This exclusion lists three specific warlike activities.

War. This can be a declared war, an undeclared war, or a civil war.
Military force of a warlike nature. These activities must utilize military personnel or agents of a government or other type of authority. Actions taken to prevent any of these activities are also considered war.
Insurrection, rebellion, revolution, and attempts to usurp power. Any action a government takes to respond to such actions is also considered 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 resulting from any of these events.

a. Delay, loss of use, and loss of market

These are consequential or indirect losses that develop as a result of a direct loss or damage.

b. Breakage

The breakage of covered property is not covered when it occurs while being transported. It is also not covered while the property is being installed, repaired, or dismantled. There are exceptions. If the breakage is due to fire or lightning coverage applies. Also, if the breakage is due to the vehicle that is transporting the covered property being involved in an accident, coverage applies. However, there is a restriction on these exceptions; the fire, lightning and vehicle accident must be covered causes of loss under this coverage form.

Example: Peter is moving the billboard from its current location to a new location.

Scenario 1: The vehicle transporting the billboard strikes a bridge abutment, and the sign breaks. The breakage loss is covered because it is due to an accident in the transporting vehicle.

Scenario 2: A worker loses his balance and drops his end of the billboard. This causes it to go off balance and breaks. There is no coverage because of this exclusion.

c. Dishonest or criminal acts (12 13 changes)

These are any dishonest or criminal acts the named insured, its partners, employees, temporary employees, leased workers, officers, directors, trustees, authorized representatives, or members and managers of a limited liability company commit. This also includes theft.

Such acts committed by anyone with an interest in the property, their employees, temporary employees, leased workers, or authorized representatives who act alone or who act in collusion with other parties or with each other are also excluded. This exclusion also applies whether or not the acts take place during regular working hours.

This exclusion does not apply to acts of destruction by the named insured’s employees, temporary employees, leased workers, or authorized representatives. However, there is no coverage for theft by the named insured’s employees, temporary employees, leased workers, or authorized representatives.

The 12 13 edition removed the part of the exclusion in the previous edition that applied to dishonest or criminal acts committed by anyone entrusted with the property for any reason.

d. Artificially generated electrical, magnetic, or electromagnetic energy

Loss or damage that is caused by or that results from artificially generated electrical, magnetic, or electromagnetic energy damaging, disturbing, disrupting, or interfering with any of the following:

Networks, devices, systems, wires, or appliances of an electrical or electronic nature
Cellular or satellite devices, appliances, systems, or networks

Examples of this excluded energy are electrical current, charges a magnetic or electromagnetic field produces, and microwaves, but they are not limited to just these.

There are two exceptions:

If the energy described in this exclusion results in a fire or explosion, coverage applies to the direct loss or damage that fire or explosion causes but only if the fire or exploration are considered covered causes of loss under this coverage form.

The exclusion applies only to the item in which the disturbance occurs

e. Voluntary parting

The named insured or anyone else entrusted with the property being tricked or deceived into giving that property away.

f. Unauthorized instructions

When covered property is transferred to another person or place because unauthorized instructions were received to do so.

g. Neglect

Neglect on an insured’s part to take reasonable measures to preserve and protect covered property from subsequent damage during and after the time of loss.

Example: Straight line winds more than 80 miles per hour just before dark tore Old Town Carmel Bed and Breakfast’s sign out of the ground and deposited it in the street virtually undamaged. Old Town was more concerned with addressing damage to its building and neglected to remove the sign from the street. Numerous vehicles ran over the sign during the night. By morning, it was damaged beyond repair. The damage to the sign was not covered because Old Town did not do anything to keep the sign from further damage.

h. Theft (12 13 addition)

Theft by any person the named insured entrusts covered property to for any reason, whether they act alone or act in collusion with any other party. This exclusion applies 24 hours a day/7 days a week. There is one exception. Covered property that is in a carrier for hire’s care, custody, or control is not subject to this exclusion.

3. Other Exclusions

This group of exclusions applies to loss or damage caused by or that result from any of the following loss events. In every case, if loss or damage by a covered cause of loss occurs because of one of these excluded events, coverage applies to the loss or damage the resulting covered cause of loss causes. The insurance company does not pay for any loss or damage caused by or that results from any of these events.

a. Wear and tear, depreciation

This is loss or damage due to wear, tear, and depreciation.

Notes:

Wear and tear is damage that occurs naturally as a result of aging or normal wear.

Depreciation is a loss of value due to wear.

b. Any quality in the property

These are any qualities in the property that cause it to destroy or damage itself.

Note: An example is a loss or damage caused by hidden or latent defects in the property.

c. Insects, vermin, or rodents

This is loss or damage to covered property caused by or that results from insects, vermin, or rodents.

Note: Some examples are damage from mice, rats, cockroaches, squirrels, beavers, spiders, ants, centipedes, and ticks. Each is characterized by destructive habits that cause damage, such as gnawing and nibbling.

d. Corrosion, rust, dampness, or extremes of temperature

This is corrosion or rust, dampness, or extremes of temperature that cause loss or damage to covered property.

Notes:

Rust and corrosion are low-temperature oxidation processes that deteriorate over time due to inactivity or neglect.

Dampness and temperature extremes can affect the oxidation process that affects different forms of property and can also have other effects on the same and other forms of property.

Example: The street clock was beginning to show wear.

Scenario 1: The bolts that secured the street clock to the pavement rusted through. A windstorm came through and the clock fell over because the rusted bolts no longer held the clock securely. The rusted bolts are not covered, but the damage caused when the wind (a covered cause of loss) blew the clock over is covered.

Scenario 2: The clock's face was badly damaged because of rust streaks. This is not a covered loss.

C. Limits of Insurance

The most the insurance company pays for loss or damage in a single occurrence is the limit of insurance on the declarations for the applicable coverage.

D. Deductible

The insurance company does not pay for loss or damage until the amount of the adjusted loss or damage (before capping with the limit of insurance) exceeds the deductible on the declarations. It then pays the amount of the adjusted loss or damage that exceeds the deductible up to the applicable limit of insurance.

E. Additional Conditions

These conditions are in addition to the Commercial Inland Marine Conditions and the Common Policy Conditions.

1. Coverage Territory

The coverage territory is the United States of America, its territories and possessions, Puerto Rico, and Canada.

2. Coinsurance

This condition applies if there is a coinsurance percentage on the declarations.

The insurance company does not pay the full amount of any loss or damage if the value of the covered property at the time of loss or damage multiplied by the coinsurance percentage is more than the limit of insurance for all covered property at that location. In such cases, the amount the company pays is determined as follows:

Step a. Multiply the value of the covered property at the time and location of the loss or damage by the coinsurance percentage on the declarations.

Step b. Divide the limit of insurance for the covered property at the location where the loss or damage occurred by Step a.

Step c. Multiply the total amount of loss or damage at the loss location by Step b. before applying the deductible (if any).

Step d. Subtract the amount of deductible from Step c.

The insurance company pays the lesser of Step d. or the limit of insurance. Any amount that remains must be paid by other insurance, or the named insured must pay it from its own funds.

F. Definitions

There is one definition.

Pollutants

These are any solid, liquid, gaseous, or thermal irritants or contaminants. Pollutants also include smoke, vapor, soot, fumes, acids, alkalis, chemicals, or waste. Waste is any material intended to be recycled, reconditioned, or reclaimed.

ENDORSEMENTS

ISO has not developed any specific endorsements for exclusive use with the Signs Coverage Form.

UNDERWRITING CONSIDERATIONS

The ISO Signs Coverage Form applies to various types of illuminated or non-illuminated plastic-faced signs, ordinary fixed signs, billboards, and street clocks written on a non-filed basis. They may be located inside or outside buildings, be attached to them, or be free standing. These signs are eligible for coverage under Inland Marine coverage forms and policies because the Nationwide Inland Marine Definition includes them. However, neon, fluorescent, and automatic or mechanical electric signs and lamps are filed classes and, therefore, cannot be insured using this form.

Each risk must be evaluated individually by paying attention to the degree of hazard that applies to its situation. Some of the factors that determine the degree of hazard include whether it is located inside or outside and the type of sign or street clock. Other considerations are the type of construction, size, condition, maintenance, damageability, and susceptibility to fire, wind, earthquake, flood, and other unique causes of loss that may affect it.

Underwriting also includes evaluating these physical factors and the extent of care provided to maintain and protect the insured signs or street clocks. This property is situated at fixed locations and is subject to fixed location causes of loss. For example, billboard signs are large outdoor advertising structures. They are usually situated next to high traffic corridors, such as interstates, state highways, and city streets and roads. They may also be attached to buildings, be on top of them, or be inside them. The main underwriting considerations are to evaluate the locations where signs are situated and the protective measures implemented to reduce or eliminate loss. This includes reviewing contracts between the named insured and other parties with an insurable interest in the signs. Some examples are landlords, customers, and leasing companies.

The following are some of the common and important loss factors that should be considered when evaluating signs at fixed locations:

· Wind requires evaluating the construction, age, size, and type of sign or billboard. It must be able to withstand the normal range of winds that occur in the geographic area where it is located. Climatic records of the area are available to assist in this part of the evaluation.

· Vandalism losses occur with some frequency because signs and billboards are ideal targets for this and other types of destructive behavior. The area where they are located should be evaluated, as well as reviewing records of such activities available through local law enforcement agencies.

· The potential for vehicle damage to signs and billboards must be examined carefully relative to their location. This is especially important when considering freestanding property next to or near city streets and parking lots.

· Fire is an important factor for signs inside or outside buildings. The construction, occupancy, public and private protection, and outside exposures must also be evaluated.

· Earthquake and flood (including other water damage) must also be considered if the sign or billboard is located in an area subject to any of these potential causes of loss.

Signs being transported should be packed properly and shipped only with transportation companies that have previous experience handling such property. Providing security should be considered on high value or unique property, and the named insured should evaluate subrogation potential from the transporting carrier.

The named insured itself should be evaluated from the standpoint of inspections, maintenance, and repair of covered property and its financial ability to do so. It should have written maintenance records and a formal safety and inspection program in place. Previous losses should be reviewed to determine if any remedial action was taken afterward to prevent them from recurring.