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SPECIAL COVERAGES IN PROPERTY INSURANCEMarie A. MooreProperty Insurance is the type of insurance that reimburses a property owner for damage to or loss of its property. Owners of commercial property and their lenders rely heavily on this insurance to protect their investment in the property – and the business losses that will result from a fire or other such unexpected event. However, the insurance forms have changed over the last several years, and owners and lenders need to understand the additional coverages needed under current insurance practices to provide the property protection that they expect to receive.Why Special Coverages?The base Property Insurance forms provide coverage only for certain property and certain causes of loss. Most property owners and their lenders require special coverages for property and causes of loss that are either not described in or excluded from the base policy. Landlords and lenders also require special endorsements to give them rights under the property policies maintained by their tenants and borrowers.ISO form CP 00 10 10 12 describes the property covered by a commercial property policy. This property generally comprises only (i) real property and items related to real property, including buildings, fixtures, permanently installed machinery and equipment, and the materials and equipment used to maintain or service the real property, and (ii) “Business Personal Property,” including furniture and fixtures, machinery and equipment, “stock,” and other personal property used in the business and located on the real property or to a limited extent, the property of others. If business losses or rental loss are to be insured, then the owner will need special coverage. And if other types of property such as a tenant’s interest in its improvements are to be insured or if the owner wishes to overcome an endorsement setting out additional exclusions (for example, the ISO CP 10 36 10 12 endorsement states that a roof is covered for its Actual Cash Value only and excludes cosmetic damage to the roof surface), then the owner will need other types of special coverage.There are three types of forms that can be used to describe the basic Covered Causes of Loss:>Basic Form – the basic form policy will cover only listed risks, including fire, lightning, vehicles, aircraft, and civil commotion (generally ISO CP 10 10 10 12).>Broad Form – the broad form policy will cover only the risks described in a basic form plus additional listed perils, such as structural collapse, sprinkler leakage, and losses caused by ice, sleet, or snow weight (generally ISO CP 10 20 10 12).>Special Form (formerly known as “All Risk”) – the policy will cover “direct physical loss unless the loss is excluded or limited in the policy.” (ISO CP 10 30 10 12).A Special Form/Special Causes of Loss policy provides the broadest, and consequently the best, coverage. But there are many exclusions and limitations in the language, and insurers customarily add other exclusions to the policy by endorsement. For this reason, most owners and lenders need special coverage for the risks that are the most important in the area in which the property is located. For example, special coverage is needed for damage caused by flood and many other water-related events, terrorism, ordinance or law, earth movement, government action, loss of utility services, and various other events or circumstances.A landlord that owns a building but relies on the property insurance maintained by its tenant has an additional set of special coverage needs. This landlord needs to be sure that if there is casualty damage, its tenant’s insurance will provide it with the proceeds to restore the property if the lease stays in effect or to provide recovery for its investment if the tenant terminates the lease.Special Coverages Adding Insured Property and Costs.Loss of Business Income; Loss of Rental Value.Perhaps the most important special coverage for a business is Loss of Business Income coverage. A base policy of Property Insurance (for example, ISO CP 00 10 10 12) does not cover the loss of business income that an owner suffers when its property is damaged. The owner must supplement its property damage coverage with an endorsement like ISO CP 00 32 10 12 to provide coverage for these business losses.As stated in ISO endorsement CP 00 32 10 12, a “Loss of Business Income” policy or endorsement covers (i) the “Net Income” – the gross sales or other gross receipts less the operating expenses of the business, plus (ii) the continuing normal operating expenses, including payroll and the rent (if the insured is a tenant and the rent does not abate under the lease). If the business was operating at a loss before the casualty, then it is likely that no business interruption insurance proceeds for loss of net income will be payable for the period after the casualty. As an example of the application of “Net Income,” in B.F. Carvin Construction Co. v. CAN Insurance Co., the district court held that because a construction business had more profits after Hurricane Katrina than before the hurricane, it had not demonstrated actual loss as required by the Business Income insurance policy. However, in Chalmette Retail Center, L.L.C. v. Lafayette Insurance Co., the court held that income from the lease of a parking lot to FEMA should not be deducted from the loss of rental income proceeds for the building because the policy covered the building, not the parking lot.Loss of “Rental Value” is included in a Loss of Business Income endorsement like ISO CP 00 32 10 12. However, it is an option that must be specifically selected. If the owner rents the property or portions of it to tenants, then it (and its lender) need to be sure that the policy’s Declarations page shows that the Rental Value as well as the Business Income options have been selected.Whether a landlord can recover for its rental loss depends on whether the rent abates – Loss of Rental Value insurance covers the rental loss only during periods when the tenant’s rent abates under the lease (and then limited by the reasonable restoration period and the coverage limits). This coverage is not a guaranty that the landlord will collect or receive the rent if it continues to be payable under the lease. If the lease is a net lease under which rent does not abate upon a casualty, then the tenant’s Loss of Business Income insurance is expected to provide the tenant with the funds to pay its rent during the restoration. On the other hand, if the lease is a gross lease and provides that the rent abates until restoration is complete, then the landlord normally expects to recover this abated rent amount from its Loss of Rental Value coverage. However, this normal risk allocation plan in which the landlord expects its Loss of Rental Value coverage to pay its lost rent may be frustrated by a lease clause stating that the tenant’s rent will not abate in the limited circumstance in which the tenant’s negligence caused the damage. This provision may sound fair, but if the tenant’s negligence did cause the casualty, this provision will give the landlord’s insurer an argument that the landlord should recover the lost rent from the tenant, not from the insurer. If the tenant does not have sufficient assets to pay this rent (through its Loss of Business Income coverage or otherwise), then the landlord may be left with no rent and no coverage for that rent.Insurers permit an owner to recover only the Loss of Business Income or Rental Value sustained by reason of its suspension of operations during a “period of restoration” – unless the owner obtains special coverage for an additional period. The ISO CP 00 32 10 12 endorsement defines the “period of restoration” as the period (a) beginning 72 hours after the occurrence of the direct physical loss or damage caused by the Covered Cause of Loss and (b) ending on the earlier of the date on which the property should have been repaired, replaced, or rebuilt with reasonable speed and similar quality, or the date on which business is re-opened at a permanent location. It does not include delays caused by compliance with laws that regulate the construction or environmental laws. The owner can obtain special coverage for additional periods.Extra Expenses.“Extra Expenses” are “necessary expenses” that the Owner incurs “that it would not have incurred if there had been no direct physical loss or damage to the property.” A Loss of Business Income policy can be with or without coverage for Extra Expenses. But Loss of Business Income coverage with Extra Expenses is the best way to avoid a dispute with the insurer over whether the expenses incurred by the business after the casualty event are “continuing normal operating expenses” automatically covered by the Loss of Business Income Policy or are Extra Expenses requiring additional coverage (and limits of coverage).Building Ordinance.The Replacement Cost coverage under a standard property damage policy does not cover the added cost of complying with laws and ordinances when the damaged building did not previously comply with these ordinances (most commonly, because it was grandfathered). For example, if an older building does not comply with newer electrical codes at the time of a fire, the building or zoning codes in effect at the time of the restoration may require that the owner spend a substantial amount to comply with these codes as a condition to permitting it to be restored. A restoring property owner may also have to comply with the ADA, install a sprinkler system, or raise the building to a certain elevation. A property owner can cover the increased costs of complying with these laws and building codes by obtaining the special coverage known as Building Ordinance or Ordinance and Law coverage through an endorsement like ISO CP 04 05 10 12.Two requirements must be satisfied for an Owner to recovery under Building Ordinance coverage. First, the damage must have been caused by a Covered Cause of Loss. Second, the municipality or other governmental body must require that the building be brought up to code before it will allow the building to be rebuilt.There are three coverage options that an owner can purchase:Coverage A – Coverage for Loss to the Undamaged Portion of the Building (covers the loss in value of the undamaged portion of the building if the ordinance or law requires the demolition of the undamaged portion as well as the damaged portion).Coverage B – Demolition Cost Coverage (covers the costs of demolishing and clearing the site if the ordinance or law requires the demolition of the undamaged portion as well as the damaged portion).Coverage C – Increased Cost of Construction Coverage (covers the increased cost of construction repairs or reconstruction necessary to comply with current laws and ordinances).All three types of coverage are valuable. Coverages A and B are important to an owner that must demolish all or part of the improvements to satisfy local codes. Coverage C is important when the Owner does rebuild and must include a sprinkler system or satisfy electrical codes that were not in effect when the building was constructed.Of course, if the loss is not from a Covered Cause of Loss, then the Building Ordinance coverage will not be triggered. If additional construction time will be required to make the changes required by laws or ordinances, then the owner should also contract for an extension to the period during which Loss of Business Income and Loss of Rental Income amounts will be paid pursuant to an endorsement like ISO CP 15 31 10 12 (the period of restoration).Loss of Leasehold Interest.Tenants can obtain a special Loss of Leasehold Interest policy to cover their losses. A Loss of Leasehold Interest endorsement, generally ISO CP 00 60 06 95, states that if the property is damaged by one of the causes of loss described in the selected Causes of Loss form, then the insurer will pay for:(a)The “Net Leasehold Interest,” defined as the present value of the (I) monthly rental value of the premises minus (II) the actual monthly rent and other amounts payable by the tenant (the present value will be determined by the rate of interest set out on a Schedule), plus(b)The unamortized portion of the Tenant’s Improvements, Betterments and Prepaid Rent (amortized over the original lease term and equal to the portion remaining based on the number of months remaining in the lease).Naturally, there are also exclusions to this coverage, including certain occurrences during vacancy.Increase in Rebuilding Expenses.If a disaster affects the entire area in which the covered property is located, materials suppliers and contractors will be scarce and will take advantage of this scarcity to increase their charges. An endorsement like ISO CP 04 09 10 12, entitled Increase in Rebuilding Expenses Following Disaster (Additional Expense Coverage on Annual Aggregate Basis), provides coverage for additional expenses up to a specified additional expense percentage when (i) the Covered Cause of Loss results in a declaration of a state of disaster by state or federal officials or occurs in close temporal proximity to a declared disaster, (ii) the expenses of labor or materials increase as a result of the disaster and the total cost exceeds the applicable limit of expenses, (iii) the insured owner repairs or replaces the damaged building, and (iv) the insured owner notifies the insurer within 30 days of completion of any work to the insured building that increased the replacement cost by 5% or more. This coverage is subject to the coinsurance penalties that apply to the base coverage, and is subject to an annual aggregate.III.Special Coverages Adding Covered Causes That Will Trigger Recovery (Covered Causes of Loss).Terrorism.Terrorism coverage is not the hot-button issue that it was late last year. On January 12, 2015, President Obama signed the Terrorism Risk Insurance Program Reauthorization Act of 2015 (Pub. L. 114-1) (“TRIPRA 2015”), which extended the expiration date of the Terrorism Risk Insurance Program (“TRIP”) to December 31, 2020.As background, the World Trade Center attacks in 2001 and the estimated 40 billion dollars of insured losses that resulted from them made insurers acutely aware of the tremendous potential exposure posed by terrorist attacks. The old exclusion for “war and acts of war” did not apply to these terrorist acts – “war” was no longer the real risk to American insurers. Insurers, actually the less-regulated reinsurers, therefore quickly began inserting in their policies various exclusions for terrorist acts.To address the potential damage to U.S. commercial, and particularly insurance, markets resulting from the withdrawal of the reinsurers, starting in 2002, Congress enacted a series of laws designed to make terrorism coverage available. First came the Terrorism Risk Insurance Act of 2002 (Pub. L. 107-297, 116 Stat. 2322) (“TRIA”), followed by the Terrorism Risk Insurance Extension Act of 2005 (Pub. L. 109-144, 121 Stat. 1839) (“TRIEA”), the Terrorism Risk Insurance Program Reauthorization Act of 2007 (“TRIPRA 2007”), and most recently, TRIPRA 2015. These Acts provide a federal backstop – basically, reinsurance – for these catastrophic events. The insurers cover the first tier of losses, and the federal government covers excess amounts.What sort of event does the TRIP address? The definition is set out in 31 C.F.R. Section 50.5, and it is narrow:Act of terrorism.In general. The term act of terrorism means any act that is certified by the Secretary [of Treasury], in concurrence with the Secretary of State and the Attorney General of the United States:To be an act of terrorism;To be a violent act or an act that is dangerous to human life, property, or infrastructure;To have resulted in damage within the United States, or outside of the United States [in certain specific cases]; andTo have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion.Limitations. The Secretary is not authorized to certify and act as an act of terrorism if:The act committed as part of the course of a war declared by the Congress . . .; orproperty and casualty losses resulting from the act, in the aggregate, do not exceed $5,000,000.The narrowness of this definition is demonstrated by the fact that the Boston Marathon bombing was not considered an act of terrorism for purposes of the TRIP. That bombing was never certified as an act of terrorism by the Secretary of the Treasury, the aggregate losses may not have exceeded the monetary threshold, and there is no real mechanism for determining whether the bombers intended to coerce the civilian population or influence U.S. foreign policy.Under 31 C.F.R. Section 50.23, insurers must quote premiums for terrorism coverage when they quote the premiums for ordinary property damage coverage. Of course, whether the property owner actually obtains the terrorism coverage will depend on its cost and whether its lender requires it, but as noted by attorneys that dealt with the aftermath of the Boston Marathon bombing, “The lesson learned is that when purchasing insurance policies, businesses must ensure that that they have maximum protection in the event of catastrophe. At minimum, this should include affirmative terrorism coverage, as well business interruption, extra expense and civil authority coverage.”Flood Coverage.The property insurance exclusion that has caused owners of physically damaged property the most problems in Louisiana and many other areas is the flood exclusion. This exclusion covers not only events we think of as “floods,” but also surface water, waves, overflow of a body of water, spray from any of these (whether or not wind-driven), mudflow or mudslide, water overflow or back up from a sewer or drain, and underground water seepage.Property owners can obtain coverage for damage caused by flood through policies issued by private commercial insurers. The most readily available coverage is sponsored by the National Flood Insurance Program (“NFIP”), a FEMA program. At this time, NFIP policies have the maximum limits of (i) for residential property: a $250,000 limit for a building and a $100,000 limit for its contents, and (ii) for commercial property: a $500,000 limit for a building and a $500,000 limit for its contents.However, these subsidized policies do not cover loss of business income or rental loss for commercial properties, and only Actual Cash Value (rather than Replacement Cost) is recoverable.The Biggert-Waters Flood Insurance Reform and Modernization Act of 2012 extended the NFIP’s authority through September 30, 2017 (previously it was subject to frequent reauthorization by Congress). This Act also made several changes to the existing program, including phasing out certain subsidies for severe repetitive loss properties and allowing greater annual premium increases. It also allows multifamily properties of five or more residences to purchase flood insurance up to the limits for business properties.As we now know too well, this Act requires that the premium rates for properties located in areas designated as having special flood hazards be increased to accurately reflect the current risk of flood to those properties. This increase is to be phased in over a 5-year period at the rate of 20 percent per year. Most areas have already experienced increases based on the newest flood maps. In response to public comments and complaints about the significant increase in premiums, Congress has enacted the Homeowner Flood Insurance Affordability Act of 2014 (H.R. 3370) that delayed implementation of most of the 2012 amendments until 2016.If the property is not in an A (100-year flood risk) or V zone (100-year flood risk with additional hazards associated with storm-induced waves), a property owner may be able to get non-NFIP flood insurance for the full Replacement Cost and loss of business income/rental value. The property owner may also be able to obtain coverage for the excess over the NFIP limits, though this coverage may be expensive, and it is likely to have a deductible of at least the NFIP limits (in other words, the owner will need to maintain both the NFIP coverage and the additional coverage).NFIP flood coverage will cover only actual cash value and will not cover loss of Business Income, Loss of Rental Value, or many of the other additional types of property loss that require special coverage as described in Section I of these materials.Earthquake and Volcanic Eruption.In many parts of the country, earthquake or volcanic eruption are real risks. The standard Causes of Loss forms exclude earth movement like (i) earthquake, landslide, mine subsidence, and earth sinking (other than sinkhole collapse), but if they result in fire or explosion, the insurer will pay for the damage caused by the fire or explosion, and (ii) volcanic eruption, blasts, dust, and lava. However, an owner can obtain coverage for earthquake and volcanic eruption by means of an endorsement like ISO CP 10 40 10 12 or CP 10 45 10 12.Mechanical Breakdown.Coverage for explosion of boilers and the other mechanical breakdowns is a cause of loss that is excluded in the Special Causes of Loss form property damage policy (these breakdowns can include HVAC systems destroyed by a power surge). However, coverage for equipment breakdown can be obtained through a separate policy or endorsement like the ISO endorsement CP 10 46 10 12, entitled Equipment Breakdown Cause of Loss. This policy or endorsement should be obtained as part of the overall policy from the same insurer that insures the rest of the property to avoid squabbling between insurers.Loss of Utility Services.An owner can obtain coverage for loss of or damage to property, including loss of Business Income, caused by an interruption in utility supply services that originates outside the insured property. ISO endorsement CP 04 17 10 12, Utility Services – Direct Damage, will provide this coverage, but only if the interruption results from direct physical damage by a Covered Cause of Loss to the water supply, communication supply, or power supply equipment. Overhead transmission and distribution lines are not included in the covered utility supply equipment under this ISO form. Although equipment providing communication supply services is part of the covered property, covered property loss does not include loss of or damage to electronic data.Contingent Business Income (From Dependent Properties).A property owner can also obtain coverage for loss of Business Income at the insured property caused by direct physical loss or damage to property other than the insured property. ISO endorsement CP 15 08 10 12 and CP 15 09 10 12 describes this coverage as the actual loss of Business Income sustained by reason of the necessary suspension of operations at the insured’s property by reason of a direct physical loss or damage to another specified property (the “dependent property”) caused (of course) by a Covered Cause of Loss. Loss of electronic data at the dependent property is not recoverable, however. The dependent property should be a property whose operation is crucial to the operation of the insured’s business, such as a primary supplier if the insured is a manufacturer or a shopping center if the insured operates an outparcel.Coping With Endorsements Added By Insurers.Many insurers add an endorsement like ISO CP 04 11 10 12, which requires that the insured maintain certain protective devices or services listed on a schedule as a condition of coverage. This is not “special coverage” – instead, it is a special exclusion from coverage that benefits the insurer (probably explained as justifying a lower premium). The required protective devices can include a sprinkler service, a fire alarm, a security service, an automatic cooking exhaust and extinguishing system, and the like. This endorsement provides that if a fire occurs while the sprinkler system or other protective device is not working, then the insurer may deny coverage (all coverage, not just part of the coverage) unless the insured had previously notified the insurer that the sprinkler system was not working and obtained assurance that the property would be covered during this period.Property damage coverage forms like ISO CP 00 10 10 12 (the Building and Personal Property Coverage Form) provide that if a building has been vacant for longer than a certain period – 60 days in ISO CP 00 10 10 12 – (i) the insurer will not pay for losses caused by vandalism, sprinkler leakage, building glass breakage, water damage, theft, or attempted theft and (ii) the recovery on all types of covered losses will be reduced, by 15% in ISO CP 00 10 10 12. A building is considered to be vacant under ISO CP 00 10 10 12 unless at least 31% of its total square footage is (i) rented to a tenant and used by the tenant to conduct its customary operations and/or (ii) used by the building owner to conduct customary operations. This percentage can be changed pursuant to an endorsement like ISO CP 04 60 10 12 (Vacancy Changes). However, if an owner knows that a substantial portion of the property is vacant at the time the policy is issued or if it later becomes vacant, the owner needs to notify its insurer and obtain a vacancy permit.In Hawaii, Florida, and other coastal areas, insurers are likely to exclude coverage for hurricanes as well as windstorm and hail or to require a higher deductible for those risks. In those areas, an owner should review its policy carefully to be sure that it obtains the necessary additional coverage, and landlords and lenders should require that the property insurance carried by their tenants and borrowers cover damage caused by hurricanes and otherwise by windstorm and hail, without a high deductible.Special Coverages Adding Insured Parties.Additional Insured or Loss Payee Coverage.In a net lease of a stand-alone building, the tenant typically agrees to maintain the property insurance coverage for the building it is occupying. This makes sense if the tenant built and owns the building and has the reconstruction obligations. It makes less sense when the landlord owns the building and must restore it if it is damaged. In addition to the fact that the landlord cannot rely on a one-page ACORD Evidence of Insurance form as proof of coverage as discussed below, the landlord will need to be named on the policy, preferably as both a loss payee and an additional insured. Even then it will not have the rights that it would have if it maintained the coverage itself.What benefits will the owner receive as a loss payee? If the landlord requires that it be a loss payee on the building policy maintained by the tenant, then it will probably receive the type of coverage described in ISO endorsement CP 12 18 10 12. In this form, for Loss Payees that are building owners, the insurer agrees that it will adjust the losses to the building with the building owner and it will adjust the losses to the tenant’s property and its betterments and improvements with the tenant maintaining the coverage, unless the lease provides otherwise. However, the insurer does not agree that the building owner’s rights will not be affected by the tenant’s failure to comply with the policy, and it does not agree to give the building owner a notice of cancellation or modification of the policy. Because the one-page ACORD proof of insurance form no longer provides for notice of cancellation, the building owner will also need to request a separate endorsement in which the insurer agrees to give it this notice.Many national tenants will not make the landlord a loss payee. They insist that the landlord be satisfied with being an additional insured. What benefits will the building owner receive as an additional insured? ISO endorsement, CP 12 19 06 07, simply states that the building owner will be a “Named Insured” with respect to the coverage provided for direct physical loss or damage to the building. Consequently, losses will be adjusted with both of the Named Insureds – the tenant and the landlord – and loss amounts will be paid to both. Again, the insurer does not agree to give notice of cancellation to the building owner, and an additional endorsement providing for notice to the landlord will be required.Additional complications may arise if the tenant is self-insured or if it maintains a blanket policy with a high deductible. Landlords should try to maintain their own property insurance on their own buildings if possible and rely on the tenant’s insurance only if they must (and then only with a great deal of vigilance).Lender Property Coverage.Fortunately for lenders, they are given much better protections than owners in their loss payee endorsements. Commonly used mortgagee and lender loss payee property policy endorsements require the insurer to give the lender notice of cancellation and create an independent contract between the insurer and the lender that insulates the lender from the risk of losing coverage by reason of breaches of the policy by the property owner or tenant maintaining the policy.A mortgagee of real property is generally protected by means of the lender’s loss payable clause in an endorsement such as ISO CP 12 18 10 12. In the “Lender’s Loss Payable Clause” portion of this endorsement, the insurer agrees to pay the lender Loss Payees in their order of precedence, as their interests may appear, even if one of the lender Loss Payees has started foreclosure or similar action with respect to the property. The insurer also agrees that even if the insured borrower has failed to comply with the policy, the lender will have the right to receive payment if it (i) pays the premium at the insurer’s request when the borrower has failed to do so, (ii) submits a signed, sworn proof of loss within 60 days after the insurer’s notice of the insured’s failure to submit this proof of loss, and (iii) has notified the insurer of any change in ownership, occupancy, or substantial change in risk of which the lender is aware. This form endorsement also requires the insurer to give the lender at least 10 days prior notice of a cancellation for nonpayment of premiums and 30 days prior notice of a cancellation for any other reason, and requires the insurer to provide the lender with at least 10 days prior notice of election not to renew on the expiration date.C.The Proof of Insurance Problem.When they rely on the tenant or borrower to maintain the property insurance, both landlords and lenders need to be able to assure themselves that the coverage is in place and contains the required endorsements. Unfortunately, they can no longer rely on the one-page ACORD Evidence of Insurance form as proof of coverage – these Evidence of Insurance forms state on their face that they are not binding on the insurer. The insurers assert that they do not want to be bound by these forms for two reasons: first, brokers or agents, not the insurers themselves, fill them out, and these brokers or agents may not fill them out accurately, and second, the policies themselves contain many exclusions and limitations that are not reflected in the one-page form, and the insurers want to be sure that the certificate holder is bound by all of these exclusions and limitations, not just the brief information in the Evidence of Insurance. In fact, the Evidence of Insurance form no longer even gives Landlords and lenders comfort that they will be given notice of cancellation – landlords and lenders need to be sure that the policy includes an endorsement expressly requiring this notice.What can the landlord or lender do to be sure that the tenant or borrower is maintaining the required coverage? First, the lease or mortgage should require that the party maintaining the coverage from time to time, on request, provide to the landlord or lender a certified copy of the policy itself. Even if a tenant will not agree to give the landlord the whole policy, it should at least be required to deliver a copy of the Declarations pages, the Schedule of Forms, and all required Endorsements to the landlord. At that point, the landlord or lender needs to review this policy or the other information to be sure that the policy provides the required coverages and includes the required endorsements and that it does not contain endorsements that impermissibly limit coverage.Conclusion.Each of the special coverages for events or property is likely to have its own individual limit, so the owner and lender should be sure that each limit reflects the actual anticipated property loss that may be suffered.All of the selected special coverages and their limits need to be reflected on the front page – the Declarations page – of the policy. And the Declarations page and policy provisions are what the owner needs to review – not the one-page evidence of coverage.The management of property loss or damage is more complicated than it used to be, but a property owner and its lender can nevertheless obtain coverage for the most likely casualty events and can cover the most important property. In addition, if the owner and its lender are relying on a tenant’s insurance, the lease can require that the tenant maintain the owner’s desired coverage. Of course, owners must review the property coverage for their buildings and business losses carefully. And lenders, landlords, and their lawyers must be sure that their mortgages, leases, and other contracts are drafted to describe the desired coverage, to assure that the tenant is obligated to obtain endorsements assuring that the proceeds of this coverage will be paid to the owner and its lender or for restoration of the property, and to require the tenant to provide copies of the entire policies, not just the one-page evidence of insurance, so that the coverage can be reviewed and approved by the landlord and its lender. ................
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