Commercial Property/Fire ISO Rules

Transcription

1 Commercial Property/Fire ISO Rules ISO Properties, Inc ADDITIONAL RULE(S) A1. EXCLUSION OF CERTAIN COMPUTER-RELATED LOSSES Attach Exclusion Of Certain Computer-Related Losses Endorsement IL to all policies. This endorsement specifies that certain risks associated with computer or other electronic equipment failure, malfunction, inadequacy or inability to correctly recognize, process, distinguish, interpret or accept one or more dates or times are excluded from coverage. A2. COVERAGE FOR YEAR 2000 COMPUTER-RELATED AND OTHER ELECTRONIC PROBLEMS 1. Description Of Coverage The Business Income And/Or Extra Expense Coverage For Year 2000 Computer-Related And Other Electronic Problems Endorsement CP provides a method for writing coverage for loss of Business Income and/or Extra Expense caused by computer-related or other electronic problems due to the year 2000 and beyond. Such coverage has an annual aggregate limit of $25,000 in any one policy year, regardless of the number of computers or the number of instances involving computer failure. 2. Form Use Business Income And/Or Extra Expense Coverage For Year 2000 Computer-Related And Other Electronic Problems Endorsement CP Applicability Endorsement CP may only be used with: a. Business Income (And Extra Expense) Coverage Form CP b. Business Income (Without Extra Expense) Coverage Form CP c. Extra Expenses Coverage Form CP Rates Refer to company. A3. OIL RISKS - PETROLEUM PROPERTIES A. Explanation Refer to ISO for rules and loss costs pertaining to this coverage. B. Term One Year.

2 A4. BUILDING CODE EFFECTIVENESS GRADING A. General Information 1. The Building Code Effectiveness Grading Schedule develops grades of 1 to 10 for a community based on the adequacy of its building code and the effectiveness of its enforcement of that code. Policies which cover the Windstorm or Hail or Earthquake causes of loss may be eligible for special rating treatment, subject to the criteria in the following paragraphs. The Building Code Effectiveness Grading factor applies, where applicable, in addition to the Public Protection Classification factors. 2. In some communities, two Building Code Effectiveness Grades may be assigned. One grade will apply to 1 and 2 family dwellings; the other grade will apply to all other buildings. The Community Mitigation Classification Manual will indicate the application of each grade. This separation applies even if the residential property is written under a Commercial Property policy. The rate modification factors in Paragraph E. of this Additional Rule apply to the numerical grade shown, regardless of whether the property is graded as residential or commercial. 3. The Building Code Effectiveness Grades for a community, and their effective date, are provided in the Community Mitigation Classification Manual published by Insurance Services Office, Inc. B. Community Grading 1. The Building Code Effectiveness Grading applies to any building that has an original certificate of occupancy dated in the year of the effective date of the community grading, or later. A rating factor has been developed for each community grade. 2. If a community is regraded subsequent to its initial grading, the factor for the revised grade applies to buildings that have an original certificate of occupancy dated the year of the effective date of the revised grading, or later. 3. Where certificates of occupancy are not issued, equivalent documentation acceptable to the company may be used. 4. If, due to an addition or alteration, the original building is changed to comply with the latest building code, the factor for the community grading applicable at the time the reconstruction is completed will apply to such building. 5. The Building Code Effectiveness Grade may apply to Windstorm/Hail or Earthquake, or to both. Specific information is provided in the Community Mitigation Classification Manual. If the grade in the Manual does not apply to one of the causes of loss, the factor should not be applied for that cause of loss.

3 6. Communities that decline to participate in the Building Code Effectiveness Grading Program will be identified in the Community Mitigation Classification Manual as not participating. Buildings in these communities will receive a premium surcharge, unless they qualify for individual grading under Paragraph C. This surcharge will apply to any building that has an original certificate of occupancy dated in the year of the effective date of the community evaluation that identifies the community as not participating. C. Individual Grading Where buildings have been built in full conformance with the natural hazard mitigation elements of one of the nationally recognized building codes even though the community grade is less than 1, or the community is not participating in the program, exception rating procedures may apply. 1. Any building may be classified as Grade 1 for Windstorm/Hail upon certification by a registered or licensed design professional, based on an on-site inspection, that such building is in compliance with one of the three nationally recognized building codes with respect to mitigation of the windstorm and/or hail hazard. This classification is effective only from the date of the certification. 2. Any building may be classified as Grade 1 for Earthquake upon certification by a registered or licensed design professional, based on an on-site inspection, that such building is in compliance with one of the three nationally recognized building codes with respect to mitigation of the earthquake hazard. This classification is effective only from the date of the certification. D. Ungraded And Non-Participating Risks Buildings which do not meet the criteria described in Paragraphs B. and C. for Grade assignment are rated and coded as ungraded or non-participating risks. Do not classify as Grade 10. E. Rate Modification 1. Community Grading For buildings which are eligible under Paragraph B. of this Additional Rule, and for personal property inside such buildings, modify the Basic Group II and/or Earthquake rates by the applicable factor from the following tables. Do not apply a factor if the policy excludes Windstorm or Hail coverage or if Earthquake cause of loss has not been added. a. Basic Group II Factors Territory Grade/ (Code) Seacoast 1 Seacoast 2 Seacoast 3 Inland Key West Monroe Excl. Key West

4 Territory Grade/ (Code) Seacoast 1 Seacoast 2 Seacoast 3 Inland Key West Monroe Excl. Key West 1/(01) /(02) /(03) /(04) /(05) /(06) /(07) /(08) /(09) /(10) Ungraded/(99) Non-Participating/(98) Table A4.E.1.a. Basic Group II Factors b. Earthquake Factors Grade/(Code) Entire State 1 (01).90 2 (02).90 3 (03).90 4 (04).94 5 (05).94 6 (06).94 7 (07).94 8 (08).98 9 (09) (10) 1.00 Ungraded (99) 1.00 Non- Participating (98) 1.00 Table A4.E.1.b. Earthquake Factors

5 2. Individual Grading For any building classified as Grade 1 based upon certification as set forth in Paragraph C. of the Additional Rule, use the appropriate factor listed under Paragraph E.1. Code as follows: Community Grade Code Ungraded 99 Non-Participating 98 Table A4.E.2. Individual Grading A5. RESERVED FOR FUTURE USE A6. FUNGUS, WET ROT, DRY ROT AND BACTERIA - COVERAGE LIMITATIONS AND OPTIONS A. Introduction 1. In this rule, reference to fungus includes wet and dry rot and bacteria. 2. Under the Causes of Loss Forms, loss caused by fungus is limited as follows:

6 a. Fungus is not covered unless it is a consequence of a named peril or flood (if flood is endorsed to the policy). b. Property damage coverage is subject to a sub-limit of $15,000 per policy, applicable on an annual aggregate basis. This is not additional insurance. Property damage coverage includes the cost of tearing out and replacing any part of the building or other property to gain access to the fungus, and the cost of post-remediation testing if indicated. c. When time element coverage is written on a policy and a suspension of operations is caused by fungus, coverage is limited to the amount of business income loss and/or extra expense sustained in a period of not more than 30 days. If the suspension of operations is caused by loss other than fungus, but fungus prolongs the period of restoration, time element loss sustained during the delay is covered but such coverage is limited to 30 days. In either case, the 30 days are cumulative, not necessarily consecutive. 3. The limitations on fungus do not affect: a. Fungus which is a consequence of fire or lightning; or b. Collapse which results from decay or deterioration as provided in the Collapse coverage grant in the Broad and Special Causes Of Loss Forms. B. Optional Endorsement - Increased Coverage 1. Coverage for fungus may be increased by attaching Endorsement CP Changes - Fungus, Wet Rot, Dry Rot And Bacteria. Under this endorsement, any or all of the following options may be provided, by appropriate entry in the Schedule: a. Increase the $15,000 sub-limit for property coverage. The new limit may not exceed the Limit of Insurance, since coverage for fungus is part of, not in addition to, the Limit of Insurance. The revised limit on fungus remains an annual aggregate limit. b. Change the application of the $15,000 (or higher) limit, from a per-policy annual aggregate limit to an annual aggregate limit which applies separately to specified premises or locations. If the Schedule so indicates, a premises may be a separate building. c. Increase the time element coverage period. 2. The following rating provisions apply to the use of Endorsement CP 04 31: a. To increase the $15,000 sub-limit, apply a loss cost to the amount of coverage (in 100's) in excess of $15,000. Refer to the loss cost pages for the applicable loss cost. b. If the Schedule indicates that the $15,000 (or higher) limit applies to separate premises or locations, multiply the number of premises or locations (minus one) by the applicable loss cost shown in the loss cost pages.

7 c. Multiply the Business Income and/or Extra Expense rates otherwise applicable by the following factors based on the total number of days' coverage. The result is an additional premium. Time Element Factors Total Number Of Days Factor Table A6.B.2.c. Time Element Factors A7. RESERVED FOR FUTURE USE A8. RESERVED FOR FUTURE USE A9. TERRORISM OPTIONS - FEDERAL BACKSTOP Refer to the Terrorism Supplement to the CLM.

8 A10. TERRORISM PRICING - FEDERAL BACKSTOP Refer to the Terrorism Supplement to the CLM. A11. EXCLUSION OF LOSS DUE TO VIRUS OR BACTERIA Attach Exclusion Of Loss Due To Virus Or Bacteria Endorsement CP to all policies. A12. CATASTROPHIC GROUND COVER COLLAPSE AND SINKHOLE LOSS A. Florida law requires coverage in all Commercial Property policies for Catastrophic Ground Cover Collapse, which is provided under Florida Changes Endorsement CP (see Rule 14. in these state exceptions) in place of the policy's Sinkhole Collapse coverage. Catastrophic Ground Cover Collapse provides coverage for direct physical loss or damage to Covered Property caused by or resulting from catastrophic ground cover collapse, meaning geological activity that results in all of the following: 1. The abrupt collapse of the ground cover; 2. A depression in the ground cover clearly visible to the naked eye; 3. Structural damage to the building, including the foundation; and 4. The insured structure being condemned and ordered to be vacated by the governmental agency authorized by law to issue such an order for that structure. Catastrophic Ground Cover Collapse does not include sinkhole losses that do not meet the criteria of catastrophic ground cover collapse. Coverage for Sinkhole Loss is addressed in Paragraph D. B. If the policy is not endorsed to cover Sinkhole Loss, multiply the Basic Group II building and personal property rates by the applicable factor from the following table: Counties of Hernando and Pasco.80

9 Counties of Alachua, Citrus, Hillsborough, Lake, Marion, Pinellas, St. Lucie, Seminole,.94 Sumter and Taylor Remainder of State.99 Table A12.B. Modification Factors For Catastrophic Ground Cover Collapse C. If the policy is not endorsed to cover Sinkhole Loss, the insurer must include the following notice in the renewal notice and in the insurance contract by entry in the Declarations, in bold type of not less than 14 points: YOUR POLICY PROVIDES COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE THAT RESULTS IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE, YOUR POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU MAY PURCHASE ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN ADDITIONAL PREMIUM. D. Florida law requires the insurer to make available coverage for Sinkhole Loss for properties located in the state of Florida, subject to the following limited exception. In Hernando or Pasco Counties, an insurer may nonrenew policies which include Sinkhole Loss coverage, for the purpose of removing such coverage; however, a policy including catastrophic ground cover collapse coverage must be offered. Further, in the aforementioned counties the insurer must provide each policyholder with the opportunity to purchase Sinkhole Loss coverage if such action is in accordance with the terms of the insurer's underwriting or insurability guidelines as approved by the Florida Office of Insurance Regulation, and subject to inspection of the property. Sinkhole Loss coverage is a broader coverage than Catastrophic Ground Cover Collapse and therefore when Sinkhole Loss coverage is provided, do not apply the rate modification factors (which reflect a reduction in the Basic Group II rates) shown in Paragraph B. However, if Sinkhole Loss is provided on a residential risk, refer to Rule 70.E.4. in these state exceptions for special credit provisions relating to Sinkhole Loss. Sinkhole Loss means loss of or damage to Covered Property when structural damage to a building, including the foundation, is caused by settlement or systematic weakening of the earth supporting the building, only when such settlement or systematic weakening results from movement or raveling of soils, sediments, or rock materials into subterranean voids created by the effect of water on a limestone or similar rock formation. When Sinkhole Loss coverage is provided, attach Florida - Sinkhole Loss Coverage Endorsement IL in addition to CP

10 A13. OPTION NOT TO COVER CONTENTS (RESIDENTIAL RISKS) Florida law requires that an insurer issuing a commercial residential property insurance policy must make available, at the option of the policyholder, a means to exclude contents coverage. Coverage may be excluded only if the policyholder provides a handwritten statement to the insurer, containing wording prescribed in section of the Florida statutes. The policyholder and all other named insureds must sign and date the statement. The insurer must keep the original copy of the signed statement, electronically or otherwise, and provide a copy to the policyholder who provided it. The exclusion of coverage applies for the term of the policy and for each renewal thereafter; changes to the exclusion may be implemented only as of the date of renewal. Policywriting Support Form IL N 153 Election Not To Purchase Contents Coverage may be used to inform the policyholder of these requirements. Residential properties are properties classified under the following CSP codes: A14. WATER EXCLUSION Attach Water Exclusion Endorsement CP to all policies. RULES (EXCEPTIOnS) RULES (MULTISTATE)

11 SECTION I-GENERAL RULES 1. APPLICATION OF THIS DIVISION A. Contents Division Five contains the rules, ISO prospective loss costs and/or individual company rates, rating procedures and state exceptions for the Commercial Property Coverage Part. B. Sections This Division is divided into separate sections for: 1. General Rules 2. Coverage Form Rules Building And Personal Property Coverage 3. Coverage Form Rules Builders' Risk Coverage 4. Coverage Form Rules Time Element Coverage 5. Coverage Form Rules Other Coverage Forms 6. Causes Of Loss Form Rules 7. Rating Plans 8. Basic Group 1 Class Rates 9. Classification Table 10. Rating Examples Appendix C. Rule Exceptions Refer to the state exceptions for any exception to the rules in this Division. D. Company Rates/ISO Loss Costs 1. Definition This Division contains either ISO prospective loss costs or individual company rates. A loss cost is that portion of the premium which covers only losses and the costs associated with settling losses. 2. Company Rates All rules in this Division are designed to be utilized with rates. All references in the rules and examples to rates and/or premiums (including base premiums) shall be interpreted to mean those established by the individual insurance company. 3. Loss Cost Conversion Each insurance company must provide manualholders with either its own rates or with procedures to convert ISO prospective loss costs to rates and/or premiums. If an insurer provides its own rates, use them in place of the ISO prospective loss costs in this Manual. If an insurer does not provide its own rates, manualholders must convert the ISO prospective loss costs in this Manual to rates and/or premiums before applying any of the rules. Refer to the company for specific instructions - including rounding procedures - on how to do this. E. Statistical Codes

12 Refer to the Commercial Fire and Allied Lines module of the Commercial Statistical Plan for statistical codes. 2. REFERRALS TO COMPANY Rule 2. is replaced by the following: Refer to company for: A. Any applicable rating plan modification. B. Rating or classifying any risk or exposure for which there is no manual rate or applicable classification. Rates shall not be inadequate, excessive or unfairly discriminatory. Companies should maintain complete files, including all details of the factors used in determining the rate or classification for a particular risk and make these files available to state regulators on request. Such rates or classifications need not be filed with the state regulator. However, the second paragraph of Paragraph B. shall not apply when a company has developed or prepared a manual or schedule of rates which includes a classification applicable to a risk being written. To the extent that filing requirements apply to such a manual or schedule of rates, they must be followed. 2. REFERRALS TO COMPANY Refer to the company for: A. Rating or classifying any risk or exposure for which there is no manual rate or applicable classification. B. Any applicable rating plan modification. 3. EFFECTIVE DATE The date shown on the bottom of the manual page is a printing date and not necessarily the effective date. Effective dates are announced on the Notices to Manualholders. 4. POLICY TERM A. Policies may be written for a specific term up to three years or on a continuous basis. B. A policy may be renewed by renewal certificate or by use of Commercial Property Coverage Part Renewal Endorsement CP DS 02. When renewal certificates are used, they must conform in every aspect to current rules, rates and forms at the time of renewal. 5. PREMIUM COMPUTATION A. Prepaid Policies 1. Compute the premium using the annual rates in effect at policy inception multiplied by the policy term expressed in years (term factor). Refer to Table 5.A.1. Policy Term Factors for examples.

13 Term Of Term Policy Factor 6 months months years years 3.0 Table 5.A.1. Policy Term Factors 2. If the term of the policy is less than 1 year, multiply the premium determined in Paragraph A.1. by 1.1 unless the policy is issued to obtain anniversary dates common with other policies. B. Annual Premium Payment Plan Policies 1. For policies with less than $500 annual premium, compute the annual premium payment plan rates by multiplying the annual rates by Such rates shall be used to obtain the premium due at inception and on each anniversary. 2. For other policies, compute the premium at inception using the rates in effect at that time. At each anniversary, compute the premium using the rates in effect at each anniversary. 3. Prorate the premium in preceding Paragraphs B.1. or B.2. when the policy is issued for other than a whole number of years. 4. Attach Calculation Of Premium Endorsement IL C. Continuous Policies Compute the premium at inception using the rates in effect at that time. At each anniversary, compute the premium using the rates in effect at each anniversary. 6. FACTORS OR MULTIPLIERS Factors or multipliers are to be applied consecutively and not added together unless otherwise specified. 7. ROUNDING PROCEDURE A. Rates Round rates, factors and multipliers after the final calculation to three decimal places. Five tenths or more of a mill shall be considered one mill, for example,.1245 =.125. B. Premium Round the premium for each coverage and cause of loss for which a separate premium is calculated, to the nearest whole dollar. Round a premium involving $.50 or over to the next higher whole dollar. 8. POLICYWRITING MINIMUM PREMIUM

14 A. For prepaid policies, apply the policywriting minimum premium shown in the multistate rates regardless of term. B. For annual premium payment plan policies or continuous policies, apply the policywriting minimum premium shown in the multistate rates for each annual period. 9. ADDITIONAL PREMIUM CHANGES Paragraph A.2. is replaced by the following: A. Calculation Of Premium 2. In computing the additional premium for: a. Any changes made to a location included at policy inception, use the rates and rules in effect on the effective date of the policy. If the changes are made after an anniversary date of the policy, use the rates and rules in effect on that anniversary date. b. Locations which are added after policy inception (including all coverages, options and causes of loss at that location) use the rates and rules in effect as of the date of the change. This does not apply to average rated policies. c. Any changes made to a location which was added after policy inception, use the rates and rules in effect as of the date the location was added. Where the policy inception premium was less than the policywriting minimum premium, add the additional premium to the policy inception premium as the total premium for the policy. If the total premium is still below the policywriting minimum premium, charge the policywriting minimum premium instead. 9. ADDITIONAL PREMIUM CHANGES A. Calculation Of Premium 1. Prorate all changes requiring additional premium. 2. In computing the additional premium for: a. Any changes made to a location included at policy inception, use the rates and rules in effect on the effective date of the policy. If the changes are made after an anniversary date of the policy, use the rates and rules in effect on that anniversary date. b. Locations which are added after policy inception (including all coverages, options and causes of loss at that location) use the rates and rules in effect as of the date of the change. This does not apply to average rated policies. c. Any changes made to a location which was added after policy inception, use the rates and rules in effect as of the date the location was added. The additional premium developed is in addition to any applicable policywriting minimum premium. B. Waiver Of Premium Waive additional premium amounts as shown in the multistate rates. This waiver applies only to that portion of the premium due on the effective date of the policy change. 10. RETURN PREMIUM CHANGES A. Premium Computation 1. Compute return premium at the rates used to calculate the policy premium. 2. Compute return premium pro rata and round to the next higher whole dollar when any coverage or exposure is deleted or an amount of insurance is reduced. Retain the policywriting minimum premium.

15 B. Waiver Of Premium Waive return premium amounts as shown in the multistate rates. Grant any return premium due if requested by the insured. This waiver applies only to that portion of the premium due on the effective date of the policy change. 11. POLICY CANCELLATIONS Paragraph C. is replaced by the following: C. Retention Of Policywriting Minimum Premium Do not retain the policywriting minimum premium: 1. When the return premium is calculated under Paragraph A.: 2. When the policy is cancelled as of the inception date; 3. When the return premium is calculated under Paragraph B., unless an exception has been sought under the provisions of Florida Regulations Section (2) by means of a prior approval filing for certain classes or types of risk as set forth in such filing. Refer to the insurer for information on exceptions, if any, in effect for that insurer. 11. POLICY CANCELLATIONS A. Pro Rata Calculations Compute return premium pro rata and round to the next higher whole dollar when a policy is cancelled: 1. At the company's request. 2. Because the insured no longer has a financial or insurable interest in the property or business operation that is the subject of insurance. 3. And rewritten in the same company or company group. 4. After the first year for a prepaid policy written for a term of more than one year. B. Other Calculations If preceding Paragraph A. does not apply, compute return premium as follows: 1. Continuous And Annual Premium Payment Policies Compute return premium at.90 of the pro rata unearned premium for the one year or annual installment period and round to the next higher whole dollar. 2. Prepaid Policies If cancelled during the first year, compute the return premium at.90 of the pro rata unearned premium for the first year, plus the full annual premium for the subsequent years and round to the next higher whole dollar. 3. Policies With A Term Of Less Than One Year Compute return premium at.90 of the pro rata unearned premium and round to the next higher whole dollar. C. Retention Of Policywriting Minimum Premium Retain the policywriting minimum premium when return premium is calculated under preceding Paragraph B. except when a policy is cancelled as of the inception date. 12. PROTECTIVE DEVICES AND SERVICES A. Protective Devices And Services Protective devices or services may be required. The policy must be endorsed to require that the company be notified if the devices or services are discontinued or out of service.

16 B. Forms 1. Protective Safeguards Endorsement IL contains the following clauses. In addition, space is included in the form to insert a special clause peculiar to the risk being insured: a. Automatic Sprinkler System Clause b. Automatic Fire Alarm Clause c. Security Service Clause d. Service Contract Clause 2. Burglary And Robbery Protective Safeguards Endorsement CP may be used if the premium computation under Rule 72. recognizes the applicable protective services and devices. 3. See state exceptions for other clauses and warranties referred to in Specific Property Information quote(s). C. Rule The clause or warranty specified by the rate publication must be added to the policy. D. Symbols Protective Safeguard Symbols applicable to Specific Property Information quote(s) effective on or after 1/1/86: P-1 Automatic Sprinkler System Clause P-2 Automatic Fire Alarm Clause P-3 Security Service Clause P-4 Service Contract Clause 13. RESTRICTIONS OF COVERAGE OR INCREASED RATE The following is added to Rule 13.: Florida Statute requires the written consent of the insured if the insurer wishes to charge a rate in excess of that otherwise applicable to the risk. Insureds Consent To Excess Rate (Florida) Endorsement IL may be used for this purpose. 13. RESTRICTIONS OF COVERAGE OR INCREASED RATE Policies may be issued with special restrictions or at increased premiums if: A. The insured agrees in writing; and B. The policy would not be written otherwise. 14. BASIC FORMS APPLICABLE The following is added to Rule 14.: D. Attach Florida Changes Endorsement CP to all policies. Endorsement CP provides for the following provisions: 1. Coinsurance

17 2. Windstorm Exterior Paint and Waterproofing Exclusion (Applicable in Seacoast Zone 1 and Monroe County.) 3. Loss Payment 4. Catastrophic Ground Cover Collapse Refer to Additional Rule A12. for more information on Catastrophic Ground Cover Collapse and required availability of coverage for Sinkhole Loss. 5. Civil Authority E. For Residential Condominium Associations And Commercial Units In Residential Condominiums: 1. The attributes of a residential condominium are addressed in Section (23) of Florida Statutes. In general, a residential condominium means a condominium consisting of two or more units, any of which are intended for use as a private temporary or permanent residence, except that a condominium is not a residential condominium if the use for which the units are intended is primarily commercial or industrial and not more than three units are intended to be used for private residence, and are intended to be used as housing for maintenance, managerial, janitorial, or other operational staff of the condominium. In addition, if a condominium is a residential condominium but contains units intended to be used for commercial or industrial purposes, then, with respect to those units which are not intended for or used as private residences, the condominium is not a residential condominium. 2. Florida law requires that insurance carried by a residential condominium association be based on the replacement cost of the insured property, as determined at least once every 36 months by an independent insurance appraisal or update of a prior appraisal. Under Condominium Association Coverage Form CP 00 17, activate the policy's Replacement Cost coverage. 3. Attach Florida Changes - Residential Condominium Associations Endorsement CP to policies insuring residential condominium associations. Endorsement CP modifies the Condominium Association Coverage Form CP in response to Florida law governing residential condominium associations. Endorsement CP includes the option to schedule additional property under the condominium association's insurance. Use the applicable building rate. Refer to Paragraph E.5. for information concerning a residential condominium association written under Standard Property Policy CP The insurer may elect to attach Florida Changes - Commercial Units In Residential Condominiums Endorsement CP to policies insuring commercial condominium units located in a residential condominium as described in Paragraph E.1. of this

18 rule. Endorsement CP modifies the Condominium Commercial Unit-owners Coverage Form CP to complement insurance provided to the residential condominium association under Endorsement CP Endorsement CP addresses covered property and related conditions and includes coverage for improvements and additions that are a part of the building or structure, when contained inside the individual unit, unless, regardless of ownership, the Condominium Association Agreement requires the Association to insure such property. Refer to Paragraph E.5. for information concerning a commercial unit (in a residential condominium) written under Standard Property Policy CP Standard Property Policy CP a. Attach Florida Changes - Residential Condominium Associations - Standard Property Policy Endorsement CP to Standard Property Policies insuring residential condominium associations. Endorsement CP modifies the Standard Property Policy CP in response to Florida law governing residential condominium associations, and is used instead of Condominium Association Changes - Standard Property Policy Endorsement CP for such risks. Endorsement CP includes Replacement Cost coverage due to the requirement outlined in Paragraph E.2. of this rule, and enables the option to schedule additional property under the association's insurance. Use the applicable building rate for any scheduled additional property. b. The insurer may elect to attach Florida Changes - Commercial Units In Residential Condominiums - Standard Property Policy Endorsement CP to policies insuring commercial condominium units located in a residential condominium as described in Paragraph E.1. of this rule. Endorsement CP modifies the Standard Property Policy CP to complement insurance provided to the residential condominium association under Endorsement CP When used, Endorsement CP is used instead of Condominium Commercial Unit-owners Changes - Standard Property Policy Endorsement CP Endorsement CP addresses covered property and related conditions and includes coverage for improvements and additions that are a part of the building or structure, when contained inside the individual unit, unless, regardless of ownership, the Condominium Association Agreement requires the Association to insure such property. F. Attach Florida Changes - Legal Action Against Us Endorsement IL to all policies. G. Attach Florida Changes - Cancellation And Nonrenewal Endorsement IL to all policies. H. If a policy covering a residential risk contains a separate Hurricane Deductible, the following statement must appear on the face of the policy in boldfaced type no smaller than

19 18 points: "THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU." Refer to Rule 82. in these Florida exceptions for requirements concerning hurricane deductibles. I. Policy Changes Endorsement IL and Commercial Property Coverage Part Policy Changes Endorsement CP do not apply in Florida. Attach Florida Policy Changes Endorsement IL to change any items of the policy specified in the endorsement. J. Attach Florida Changes - Mediation Or Appraisal (Commercial Residential Property) Endorsement IL to all policies that insure residential property under: 1. Building And Personal Property Coverage Form CP 00 10; or 2. Builders Risk Coverage Form CP with Builders Risk Renovations Endorsement CP 11 13; or 3. Condominium Association Coverage Form CP 00 17; or 4. Condominium Commercial Unit-owners Coverage Form CP 00 18; or 5. Mortgageholders Errors And Omissions Coverage Form CP (Coverages A and B); or 6. Standard Property Policy CP Residential properties are properties classified under the following CSP codes: BASIC FORMS APPLICABLE Except with respect to Standard Property Policy CP 00 99: A. Attach Common Policy Conditions Form IL to all policies.

20 B. Attach Commercial Property Conditions Form CP to all policies except when Mortgageholders Errors And Omissions Coverage Form CP is the only coverage form that applies to the Commercial Property Coverage Part. C. Attach one or more Coverage Forms, as provided in specific rules in this Division. Also attach the applicable Causes Of Loss Form, except with respect to Coverage Form CP DEFINITIONS A. Class Rates Rates which apply to risks that: 1. Are eligible for class rating; and 2. Share the same classification description. B. Construction The following definitions apply to all causes of loss other than Earthquake: 1. Frame Buildings where the exterior walls are wood or other combustible materials including construction where combustible materials are combined with other materials such as brick veneer, stone veneer, wood iron-clad, stucco on wood. 2. Joisted Masonry) Buildings where the exterior walls are constructed of masonry materials such as adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile or similar materials and where the floors and roof are combustible. 3. Non-Combustible Buildings where the exterior walls and the floors and roof are constructed of, and supported by metal, asbestos, gypsum or other non-combustible materials. 4. Masonry Non-Combustible

21 Buildings where the exterior walls are constructed of masonry materials as described in Code 2, with the floors and roof of metal or other non-combustible materials. 5. Modified Fire Resistive Buildings where the exterior walls and the floors and roof are constructed of masonry or fire resistive material with a fire resistance rating of one hour or more but less than two hours. 6. Fire Resistive Buildings where the exterior walls and the floors and roof are constructed of masonry or fire resistive materials having a fire resistance rating of not less than two hours. 7. Mixed Construction When a building is of mixed construction, refer to Rule 85.D. to determine applicable construction type. 8. Construction Enhancements For Basic Group II a. Reinforced Masonry Walls must be reinforced in both the vertical and horizontal directions with steel reinforcement. Vertical reinforcement shall be fully grouted in the cells of hollow masonry units. Horizontal reinforcement shall be fully grouted in specially formed (Bond Beam) units designed for that purpose. Tilt-up or poured concrete wall units shall be reinforced both vertically and horizontally with reinforcing steel. b. Heavy Steel Building must have heavyweight steel H or I column and beam framing, welded, bolted or riveted. c. Light steel Building is constructed with tapered H or I columns or lightweight steel framing with lightweight steel roof; preengineered or custom designed lightweight steel structures with lightweight steel walls and roofs. d. High-Rise Building must have five stories (that is, separate floors) or greater, including the ground floor but excluding the basement. C. Location

22 1. Definition For property damage rating, a location is defined as each separately rated, non-communicating building or structure. 2. Location Count Rule a. Incidental Locations When a form provides for insuring undesignated locations subject to a nominal limit of insurance at each location, do not include such locations in any location count. b. Ineligible Properties Do not include ineligible properties when counting locations if the rules of a program or rating plan consider certain properties as ineligible. D. Miscellaneous Locations 1. Definition When property damage coverage applies to property at 5 or more locations, either blanket or specific, disregard items with values of less than $150,000 and totaling less than 10% of the total coverage in the calculation of the multiple location average rate or other average rates. Locations with such values are Miscellaneous Locations. 2. Rules a. Location Determination Determine locations in accordance with the location definition of Paragraph C. b. Determination Of Values (1) Compute the amount that is 10% of the total values by multiplying the total of all values at all locations by.10. (2) When an average rate includes buildings and personal property coverages, combine the values of buildings and personal property at the same location. (3) Determine the sum of the values of items at locations with values of less than $150,000 beginning with the lowest valued location and proceeding to the next lowest valued location. So long as the total values at these locations are less than the amount computed in Paragraph (1), the locations are Miscellaneous Locations. If the next lowest valued location would make that total more than the amount computed in Paragraph (1), do not classify that location as miscellaneous.

23 3. Premium Determination Determine the premium for Miscellaneous Locations, if calculated separately, by multiplying the multiple location average rate or other average rate by the total of the values at the Miscellaneous Locations. 4. Values Whenever the word "values" is used in this rule, it means: a. Average values when a reporting form is used on renewal business, or b. Total of the limits of insurance contemplating the appropriate Coinsurance percentage when a non-reporting form is used or when a reporting form is used on new business. 5. Miscellaneous Locations Example See Rating Examples Appendix. E. Specific Rates Rates based on loss costs provided by ISO for particular risks. They are based on a property survey and on the application of rating schedules. 16. FORMS PORTFOLIO REFERENCE Refer to the forms portfolio for information on: A. Sample Forms; and B. Applicability and edition dates of forms in each state. 17. RESIDENT AGENT COUNTERSIGNATURE Rule 17. does not apply.

24 17. RESIDENT AGENT COUNTERSIGNATURE If a resident agent's countersignature is required by state law, use Resident Agent Countersignature Endorsement IL unless state law prohibits use of such an endorsement, or so restricts such use as to make it inappropriate. 18. CHANGES IN RATES, RULES AND FORMS A. General Revisions 1. Explanation A general revision is a: a. Revision in rules or forms; or b. Rate revision applying to one or more classes, including rate schedule changes and changes due to reclassification of a community or district. 2. Application To Existing Policies General revisions to rates and rules do not apply to policies existing prior to the effective date of the revision except that: a. At the request of the insured, policies may be adjusted by policy change effective on the next anniversary date to incorporate a general revision. If the policy is subject to audit, attach a copy of the rating worksheet or similar information showing how the additional or return premium was calculated. b. Policies may be cancelled and rewritten at reduced rates resulting from a general revision if the changes are to take effect on other than a policy anniversary date. Refer to Rule 11. B. Other Rate Revisions

25 Because of materially changed conditions, an existing rate may be inequitable. If so, a new rate may be established and policies in force may be changed. The effective date of the new rate is the date ISO or the company receives notification of the changed conditions. 19. INTERSTATE ACCOUNTS (PROPERTY DAMAGE OR TIME ELEMENT POLICIES) A. Writing Of Interstate Accounts Property Damage or Time Element policies providing either specific or blanket coverage on locations in more than one state may be written in one policy subject to the rules and forms of the state in which the: 1. Insured's largest valued location or headquarters is located; or 2. Insurance is negotiated. B. Application For Rates Companies may submit applications to ISO, for rating interstate accounts. The accounts will be rated using the company's rates, or its loss costs and Loss Cost Multiplier. ISO will provide: 1. Interstate account average rates computed for each cause of loss in accordance with the property damage or time element rules of this division. 2. For specific coverage, the specific rates for each location. 20. RATES A. Coinsurance Basis Class rates and specific rates are 80% coinsurance rates unless otherwise specified. Refer to Section III - Causes of Loss Form rules to convert 80% coinsurance rates to an other than 80% coinsurance basis. B. Unrated Risks

26 Risks not eligible for class rates and not yet specifically rated may be written at a tentative rate until the specific loss cost is provided by ISO. Tentative Rate Endorsement CP is available for attachment when the policy is written. CP may also be used at policy renewal in the event that, due to materially changed conditions, an existing specific rate becomes inequitable. After the actual specific rate is available, endorse the policy to the specific rate. The new rate will be effective as of the inception date or renewal date of the policy. For convenience, a tentative loss cost from ISO may be obtained for a new building not yet completed. C. Rating Basis Unless otherwise specified, all rates in this Division are for each $100 of insurance and are annual rates. 21. TRANSFER OF INSURANCE AND REMOVAL OF PROPERTY Paragraph A. is replaced by the following: A. When personal property is moved from one location to another and the insured wants to transfer his or her insurance to cover both locations during removal, Florida Policy Changes Endorsement IL provides coverage for a period of ten days. 21. TRANSFER OF INSURANCE AND REMOVAL OF PROPERTY A. When personal property is moved from one location to another and the insured wants to transfer his or her insurance to cover both locations during removal, the Policy Changes Endorsement CP provides coverage for a period of ten days. B. When insurance covering property is transferred to a location with a different rate, adjust the difference in the premium proportionally. Add all clauses and warranties applying at the new location to the policy.

27 22. ELECTRICAL APPARATUS A. Use Electrical Apparatus Endorsement CP with policies covering public service light, power and traction properties. B. This form modifies the Electrical Apparatus Exclusion of the Causes Of Loss - Basic, Causes Of Loss - Broad and Causes Of Loss - Special Forms and provides for a $1,000 deductible. 23. LOCATION OF CLASSIFICATIONS, TERRITORIES AND RATES A. Location Of Classifications 1. Refer to Classification Table to obtain the following: Causes Of Loss Basic Special (Applicable to Personal Property only when coverage for theft is provided.) Classification Table Item Classification Description, CSP Building and Contents Class Code Personal Property Rate Group and Class Limit Table 23.A.1. Classification Table Information 2. Refer to Division Rules to obtain the following: Causes Of Loss Form Cause Of Loss Rule No.

28 Causes Of Loss Form Basic, Broad, Special Basic Cause Of Loss Rule No. Group I Construction Definitions Group II Rate Symbols 15.B. 70. Earthquake Building Classification, Personal Property Rate Grade 73. Table 23.A.2. Rules Providing Classification Information B. Location Of Rating Territories Refer to Territory Definitions in the Community Mitigation Classification Manual or the Territory Code Manual to determine the territory and territory code applicable to the location of the property being insured. Rates for the following causes of loss may vary by territory: Causes of Loss: 1. Basic. a. Group I (class rated risks only) b. Group II 2. Special (personal property other than offices and apartments/condominiums). 3. Earthquake. 4. Sprinkler Leakage - Earthquake Extension. Refer to the state rates and state exceptions for rates or rating factors that vary by territory. Refer to the territory section for ZIP code-based territory definitions where applicable. C. Location Of Public Protection Classification Information Refer to the state section of ISO's Community Mitigation Classification Manual to determine the protection classification applicable to the community or classified area where the insured

29 property is located. Basic Group I rates (class rated risks only) may vary by protection classification. Refer to the state rates and state exceptions for rates or rating factors that vary by protection. D. Location Of Rates Rates may be found as follows for basic and optional coverages: Causes Of Loss Group I (Special Class Rated Properties) Broad Special (Theft Increments Only) Group I (Class Rated Properties) Group II Special (Except Theft Increments) Earthquake Group I (Specific Rated Properties) Location Multistate Rates State Rates Specific Property Information Quote Earthquake (When Specifically Rated) Table 23.D. Location Of Rates 24. CONTRIBUTING INSURANCE A. When coverage is divided between two or more companies on a percentage basis, the Contributing Insurance Endorsement CP may be attached. B. In the coverage part Declarations, show the limit of insurance for each coverage written by the company.

30 C. In Item A. of the Schedule of CP 99 20, show the company's percentage (%) of the total of all contributing insurance; and In Item B. of that Schedule, show the total dollar amount of all contributing insurance, for each coverage subject to contributing insurance. 25. RISKS REINSURED ON A FACULTATIVE BASIS - INDIVIDUAL RISK SITUATIONS Paragraph A. is replaced by the following: A. When coverage or a portion of coverage is reinsured on a facultative (individual risk) basis, the following rating procedure may be used, subject to Paragraph B.: 1. Manual rules and rates (for a specifically rated property - rates based on the Specific Property Information quote) apply to the portion of the Limit of Insurance retained by the company. 2. For any portion of the Limit of Insurance obtained by means of facultative reinsurance, the premium shall be the facultative cost for such coverage, increased by a charge up to but not exceeding 50% for the expenses of the company. This procedure applies to any coverage (for example, property damage or time element) written under the Commercial Property program on a monoline or package basis. 25. RISKS REINSURED ON A FACULTATIVE BASIS - INDIVIDUAL RISK SITUATIONS A. When coverage or a portion of coverage is reinsured on a facultative (individual risk) basis, the following rating procedure may be used, subject to Paragraph B.: 1. Manual rules and rates (for a specifically rated property - rates based on the Specific Property Information quote) apply to the portion of the Limit of Insurance retained by the company. 2. For any portion of the Limit of Insurance obtained by means of facultative reinsurance, the premium shall be the facultative cost for such coverage, increased by a charge

31 up to but not exceeding 50%. The charge shall not be inadequate, excessive or unfairly discriminatory. This procedure applies to any coverage (for example, property damage or time element) written under the Commercial Property program on a monoline or package basis. B. With respect to the premium developed in accordance with Paragraph A.2., the company is responsible for: 1. Complying with any regulatory requirements, including any requirements for filing or disclosure. 2. Maintaining complete files, including all details relating to selection of the premium charge RESERVED FOR FUTURE USE RESERVED FOR FUTURE USE SECTION II-COVERAGE FORM RULES BUILDING AND PERSONAL PROPERTY SECTION II-COVERAGE FORM RULES BUILDING AND PERSONAL PROPERTY COVERAGE