What We Learned: Claim and Coverage Issues from Catastrophes

What We Learned: Claim and Coverage Issues from Catastrophes Presented By: Catherine Trischan, CPCU, CRM, CIC, ARM, AU, AAI, CRIS, MLIS Catherine Trischan, CPCU, CIC, CRM, ARM, AU, AAI, CRIS, MLIS SLIDES-WWL-FISCE-CEP-CT 1

Total economic damage caused by natural disasters in the U.S. 1900-2015 Economic damage caused by natural disasters in the United States from 1900 to 2015, by disaster type (in million U.S. dollars) Economic damage in million U.S. dollars 0 50000 100000 150000 200000 250000 300000 350000 400000 450000 Tropical cyclone 401,827.81 Convective storm 151,729.7 Riverine flood 47,682 General flood 47,046.43 Ground movement 41,740.77 Drought 37,335 Forest fire 12,378.5 Heat wave 9,025 Cold wave 7,060 Land fire (Brush, Bush, Pasture) 3,214.1 Extra-tropical storm 1,000 Ash fall 860 Flash flood 826.83 Landslide 20 Tsunami 0.9 Note: United States; 1900 to 2015 Further information regarding this statistic can be found on page 8. Source: CRED; ID 236530 Most costly disasters to the insurance industry worldwide 1970-2014 Most costly catastrophes to the insurance industry worldwide from 1970 to 2014 (in billion U.S. dollars) Loss in billion U.S. dollars 0 10 20 30 40 50 60 70 80 90 Hurricane Katrina (2005) 78.64 Earthquake/tsunami in Japan (2011) 36.83 Hurricane Sandy (2012) 36.08 Hurricane Andrew (1992) 26.99 Terror attack on WTC, Pentagon and other buildings (2001) 25.1 Northridge earthquake (1994) 22.36 Hurricane Ike (2008) 22.26 Earthquake in New Zealand (2011) 16.84 Hurricane Ivan (2004) 16.16 Floods in Thailand (2011) 15.78 Hurricane Wilma (2005) 15.23 Hurricane Rita (2005) 12.24 Drought in the Corn Belt in the U.S. (2012) 11.34 Hurricane Charley (2004) 10.09 Typhoon Mireille (1991) 9.81 Note: Worldwide; 1970 to 2014 Further information regarding this statistic can be found on page 8. Source: Swiss Re; ID 267210 SLIDES-WWL-FISCE-CEP-CT 2

Direct Damage Issues Water and Wind Hurricane Katrina August 2005 SLIDES-WWL-FISCE-CEP-CT 3

Causation Proximate cause A cause which, in a natural and continuous sequence, unbroken by any new and independent cause, produces an event, and without which the event would not have happened. Efficient proximate cause If the efficient proximate cause of the loss is covered, but excluded causes contribute to the loss, the entire loss will be covered. Concurrent causation Coverage is afforded when a covered cause of loss contributes to the loss, even if the predominant cause of loss is excluded. SLIDES-WWL-FISCE-CEP-CT 4

Causation Pre - 1983 We do not cover loss resulting directly or indirectly from (water exclusion and others) Current language We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss (water exclusion and others) HO 00 03 05 11 We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. CP 10 30 10 12 We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. SLIDES-WWL-FISCE-CEP-CT 5

HO 3 categories of exclusions -#1 We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area. (water exclusion and others) HO 3 categories of exclusions -#2 We do not insure for loss to property described in Coverages A and B caused by any of the following. However, any ensuing loss to property described in Coverages A and B not precluded by any other provision in this policy is covered. a. Weather conditions b. Acts or decisions c. Faulty, inadequate or defective planning, zoning...surveying...design...workmanship, repair, construction...materials maintenance SLIDES-WWL-FISCE-CEP-CT 6

HO 3 categories of exclusions -#3 We do not insure, however, for loss CP - 3 categories of exclusions 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss (water exclusion and others) 2. We will not pay for loss or damage caused by or resulting from any of the following SLIDES-WWL-FISCE-CEP-CT 7

CP - 3 categories of exclusions 3. We will not pay for loss or damage caused by or resulting from any of the following, 3.a. through 3.c. But if an excluded cause of loss that is listed in 3.a. through 3.c. results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss. a. Weather conditions b. Acts or decisions c. Faulty, inadequate or defective planning, design, materials, maintenance etc. HO Form -HO 00 03 05 11 The Water Exclusion SECTION I EXCLUSIONS A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area. SLIDES-WWL-FISCE-CEP-CT 8

HO Form -HO 00 03 05 11 3.Water This means: a. Flood, surface water, waves, including tidal wave and tsunami, tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind, including storm surge; b. Water which: (1) Backs up through sewers or drains; or (2) Overflows or is otherwise discharged from a sump, sump pump or related equipment; c. Water below the surface of the ground, including water which exerts pressure on, or seeps, leaks or flows through a building, sidewalk, driveway, patio, foundation, swimming pool or other structure; or d. Waterborne material carried or otherwise moved by any of the water referred to in A.3.a. through A.3.c. of this exclusion. HO Form -HO 00 03 05 11 This Exclusion A.3. applies regardless of whether any of the above, in A.3.a. through A.3.d., is caused by an act of nature or is otherwise caused. This Exclusion A.3. applies to, but is not limited to, escape, overflow or discharge, for any reason, of water or waterborne material from a dam, levee, seawall or any other boundary or containment system. However, direct loss by fire, explosion or theft resulting from any of the above, in A.3.a. through A.3.d., is covered. SLIDES-WWL-FISCE-CEP-CT 9

Special Form -CP 10 30 10 12 The Water Exclusion B. Exclusions 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. Water Exclusion Water (1) Flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge); (2) Mudslide or mudflow; (3) Water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment; (4) Water under the ground surface pressing on, or flowing or seeping through: (a) Foundations, walls, floors or paved surfaces; (b) Basements, whether paved or not; or (c) Doors, windows or other openings; or SLIDES-WWL-FISCE-CEP-CT 10

Water Exclusion (5) Waterborne material carried or otherwise moved by any of the water referred to in Paragraph (1), (3), or (4), or material carried or otherwise moved by mudslide or mudflow. This exclusion applies regardless of whether any of the above, in Paragraphs (1) through (5), is caused by an act of nature or is otherwise caused. An example of a situation to which this exclusion applies is the situation where a dam, levee, seawall or other boundary or containment system fails in whole or in part, for any reason, to contain the water. But if any of the above, in Paragraphs (1) through (5), results in fire, explosion or sprinkler leakage, we will pay for the loss or damage caused by that fire, explosion or sprinkler leakage (if sprinkler leakage is a Covered Cause of Loss). SLIDES-WWL-FISCE-CEP-CT 11

Wind/Flood Wind vs. Flood - Issue 1 Was the property destroyed by the wind before the flooding occurred? Wind vs. Flood - Issue 2 Whether the storm surge or other flooding was caused by the force of the wind Wind and Flood How much damage was caused by wind, and how much was caused by flood? SLIDES-WWL-FISCE-CEP-CT 12

ISO Flood Endorsement CP 10 65 The following is added to the Covered Causes of Loss: Flood, meaning a general and temporary condition of partial or complete inundation of normally dry land areas due to: 1. The overflow of inland or tidal waters; 2. The unusual or rapid accumulation or runoff of surface waters from any source; or 3. Mudslides or mudflows which are caused by flooding as defined in C.2. above. For the purpose of this Covered Cause of Loss, a mudslide or mudflow involves a river of liquid and flowing mud on the surface of normally dry land areas as when earth is carried by a current of water and deposited along the path of the current. All flooding in a continuous or protracted event will constitute a single flood. ISO Flood Endorsement CP 10 65 72 hour waiting period Excess over NFIP, unless underlying requirement is waived Land, excavations, grading, and filling aren t covered Personal property in the open must be scheduled to be covered Property not eligible for flood coverage pursuant to the provisions of the Coastal Barrier Resources Act and the Coastal Barrier Improvement Act of 1990 is not covered Boathouses and open structures over a body of water aren t covered Bulkheads, pilings, piers, wharves, docks, or retaining walls that are not part of a building aren t covered Foundations are covered Underground pipes, flues and drains are covered All flooding in a continuous or protracted event will constitute a single flood. SLIDES-WWL-FISCE-CEP-CT 13

NFIP A flood is A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from: Overflow of inland or tidal waters; Unusual and rapid accumulation or runoff of surface waters from any source; Mudflow; or Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above. Wind Endorsements Windstorm or Hail Exclusion (ISO CP 10 54) Excludes loss caused directly or indirectly by windstorm or hail Coverage does apply if the windstorm or hail results in a covered cause of loss (e.g. fire) Windstorm or Hail Percentage Deductible (ISO CP 03 21) Deductible is a percentage of the limit Deductible applies separately to Building and Business Personal Property and Personal Property in the Open SLIDES-WWL-FISCE-CEP-CT 14

Wind Endorsements Fixed Dollar Deductible (e.g. ISO CP 03 20) Endorsement allows a separate dollar deductible to apply to certain causes of loss, such as windstorm or hail Named Storm Deductible Applies when damage is by a storm system that has been declared and named a tropical windstorm or hurricane by the National Weather Service. Named Hurricane Percentage Deductible Applies when sustained hurricane force winds of 74 mph + have been measured in the state. What about the Trees? SLIDES-WWL-FISCE-CEP-CT 15

HO Form -HO 00 03 05 11 Trees, Shrubs And Other Plants We cover trees, shrubs, plants or lawns, on the "residence premises", for loss caused by the following Perils Insured Against: a. Fire or Lightning; b. Explosion; c. Riot or Civil Commotion; d. Aircraft; e. Vehicles not owned or operated by a resident of the "residence premises"; f. Vandalism or Malicious Mischief; or g. Theft. We will pay up to 5% of the limit of liability that applies to the dwelling for all trees, shrubs, plants or lawns. No more than $500 of this limit will be paid for any one tree, shrub or plant. We do not cover property grown for "business" purposes. This coverage is additional insurance. SLIDES-WWL-FISCE-CEP-CT 16

Building and PP Form -CP 00 10 10 12 Coverage Extension Outdoor Property e. Outdoor Property You may extend the insurance provided by this Coverage Form to apply to your outdoor fences, radio and television antennas (including satellite dishes), trees, shrubs and plants (other than trees, shrubs or plants which are stock or are part of a vegetated roof), including debris removal expense, caused by or resulting from any of the following causes of loss if they are Covered Causes of Loss: (1) Fire; (2) Lightning; (3) Explosion; (4) Riot or Civil Commotion; or (5) Aircraft. The most we will pay for loss or damage under this Extension is $1,000, but not more than $250 for any one tree, shrub or plant. These limits apply to any one occurrence, regardless of the types or number of items lost or damaged in that occurrence. Building and PP Form -CP 00 10 10 12 Coverage Extension Outdoor Property Subject to all aforementioned terms and limitations of coverage, this Coverage Extension includes the expense of removing from the described premises the debris of trees, shrubs and plants which are the property of others, except in the situation in which you are a tenant and such property is owned by the landlord of the described premises. SLIDES-WWL-FISCE-CEP-CT 17

Commercial Property Outdoor Trees, Shrubs and Plants Endorsement CP 14 30 10 12 Basic, Broad or Special Form can be selected. Higher limits per tree, shrub or plan are available. A higher overall limit is available. Vehicle damage can be specifically excluded. Debris Removal SLIDES-WWL-FISCE-CEP-CT 18

HO Form -HO 00 03 05 11 Additional Coverages - Debris Removal We will pay your reasonable expense for the removal of: (1) Debris of covered property if a Peril Insured Against that applies to the damaged property causes the loss; or (2) Ash, dust or particles from a volcanic eruption that has caused direct loss to a building or property contained in a building. This expense is included in the limit of liability that applies to the damaged property. If the amount to be paid for the actual damage to the property plus the debris removal expense is more than the limit of liability for the damaged property, an additional 5% of that limit is available for such expense. HO Form -HO 00 03 05 11 Additional Coverages - Debris Removal (cont d) We will also pay your reasonable expense, up to $1,000, for the removal from the "residence premises" of: (1) Your trees felled by the peril of Windstorm or Hail or Weight of Ice, Snow or Sleet; or (2) A neighbor's trees felled by a Peril Insured Against under Coverage C; provided the trees: (1) Damage a covered structure; or (2) Do not damage a covered structure, but: (a) Block a driveway on the "residence premises" which prevents a "motor vehicle", that is registered for use on public roads or property, from entering or leaving the "residence premises"; or (b) Block a ramp or other fixture designed to assist a handicapped person to enter or leave the dwelling building. SLIDES-WWL-FISCE-CEP-CT 19

HO Form -HO 00 03 05 11 Additional Coverages - Debris Removal (cont d) The $1,000 limit is the most we will pay in any one loss, regardless of the number of fallen trees. No more than $500 of this limit will be paid for the removal of any one tree. This coverage is additional insurance. Building and PP Form -CP 00 10 10 12 ADDITIONAL COVERAGE - DEBRIS REMOVAL a. Pays expenses to remove debris of Covered Property and other debris on the described premises caused by or resulting from a Covered Cause of Loss that occurs during the policy period. b. Debris removal does not apply to costs to: Remove debris of the insured s property or property of others in the insured s possession that isn t covered under the policy. Remove debris of landlord s property unless the insured is covering the property as required in a contract. Remove debris of Property Not Covered. Remove property of others of a type that wouldn t be Covered Property. (e.g. trees) Remove deposits of mud or earth from the grounds Extract pollutants from land or water Remove, restore or replace polluted land or water SLIDES-WWL-FISCE-CEP-CT 20

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Building and PP Form -CP 00 10 10 12 DEBRIS REMOVAL SUBLIMIT Sublimit - 25% (amount paid for direct damage + deductible) Additional $25,000 available if needed SLIDES-WWL-FISCE-CEP-CT 22

Earthquake North Ridge Earthquake 1/17/94 SLIDES-WWL-FISCE-CEP-CT 23

Earthquakes that caused the most economic damage in the U.S. 1900-2014 Costliest earthquakes in the United States from 1900 to 2014, by economic damage (in million U.S. dollars) Damage in million U.S. dollars 0 5000 10000 15000 20000 25000 30000 35000 January 17, 1994, Los Angeles 30,000 October 18, 1989, San Francisco 5,600 February 28, 2001, Seattle 2,000 March 28, 1964, Prince William Sound 1,020 Date, Location February 9, 1971, Los Angeles April 18, 1906, San Francisco October 1, 1987, Los Angeles 535 524 213 December 22, 2003, San Robbles (California) 200 October 15, 2006, Hawai Island 150 June 28, 1992, Landers California 100 April 22, 1992, South California 100 Note: United States; 1900 to 2014 Further information regarding this statistic can be found on page 8. Source:CRED;ID 237556 US Fault Lines SLIDES-WWL-FISCE-CEP-CT 24

HO Form -HO 00 03 05 11 Earth Movement Exclusion SECTION I EXCLUSIONS A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area. HO Form -HO 00 03 05 11 Earth Movement Exclusion Earth Movement means: a. Earthquake, including land shock waves or tremors before, during or after a volcanic eruption; b. Landslide, mudslide or mudflow; c. Subsidence or sinkhole; or d. Any other earth movement including earth sinking, rising or shifting. This Exclusion A.2. applies regardless of whether any of the above, in A.2.a. through A.2.d., is caused by an act of nature or is otherwise caused. However, direct loss by fire, explosion or theft resulting from any of the above, in A.2.a. through A.2.d., is covered. SLIDES-WWL-FISCE-CEP-CT 25

Earthquake Endorsement HO 04 54 05 11 A. Section I Property Coverages The following is added: 1. We insure for direct physical loss to property covered under Section I caused by earthquake, including land shock waves or tremors before, during or after a volcanic eruption. One or more earthquake shocks that occur within a 72- hour period constitute a single earthquake. HO 04 54 05 11 B. Section I Exclusions 1. The following exclusions are added: a. Exterior Masonry Veneer We do not cover loss to exterior masonry veneer caused by earthquake. The value of exterior masonry veneer will be deducted before applying the earthquake deductible described above. For the purpose of this exclusion, stucco is not considered masonry veneer. (Coverage for exterior masonry veneer can be added.) SLIDES-WWL-FISCE-CEP-CT 26

HO 04 54 05 11 B. Section I Exclusions 1. The following exclusions are added: b. Flood We do not cover loss resulting directly or indirectly from flood of any nature or waves, including tidal wave and tsunami, whether: earthquake. (1) Caused by; (2) Resulting from; (3) Contributed to by; or (4) Aggravated by; HO 04 54 05 11 B. Section I Exclusions 1. The following exclusions are added: c. Filling Land This coverage does not include the cost of filling land. SLIDES-WWL-FISCE-CEP-CT 27

Special Form -CP 10 30 10 12 Earth Movement Exclusion B. Exclusions 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. CP 10 30 -Earth Movement Exclusion Earth Movement (1) Earthquake, including tremors and aftershocks and any earth sinking, rising or shifting related to such event; (2) Landslide, including any earth sinking, rising or shifting related to such event; (3) Mine subsidence, meaning subsidence of a man-made mine, whether or not mining activity has ceased; (4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface. But if Earth Movement, as described in b.(1) through (4) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.. SLIDES-WWL-FISCE-CEP-CT 28

Basic Form -CP 10 10 10 12 Covered Peril: Sinkhole Collapse, meaning loss or damage caused by the sudden sinking or collapse of land into underground empty spaces created by the action of water on limestone or dolomite. This cause of loss does not include: a. The cost of filling sinkholes; or b. Sinking or collapse of land into man-made underground cavities. Sinkhole Collapse SLIDES-WWL-FISCE-CEP-CT 29

Florida - Sinkholes Sinkhole Collapse is not an exception to the Earth Movement Exclusion. An endorsement is needed to restore coverage. If Sinkhole Loss causes Catastrophic Ground Cover Collapse, coverage is provided. This is the case even if a Sinkhole endorsement has not been added. Catastrophic Ground Cover Collapse involves: Abrupt collapse of ground cover; and Visible depression in the ground cover; and Structural damage to the building and foundation; and The structure must be condemned SLIDES-WWL-FISCE-CEP-CT 30

Earthquake & Volcanic Eruption Endorsement CP 10 40 10 12 C. Additional Covered Causes Of Loss 1. The following are added to the Covered Causes Of Loss: a. Earthquake. b. Volcanic Eruption, meaning the eruption, explosion or effusion of a volcano. All Earthquake shocks or Volcanic Eruptions that occur within any 168-hour period will constitute a single Earthquake or Volcanic Eruption. The expiration of this policy will not reduce the 168-hour period. Earthquake & Volcanic Eruption Endorsement CP 10 40 10 12 There is an option to cover only Sprinkler Leakage resulting from Earthquake or Volcanic Eruption. The endorsement excludes damage to exterior masonry veneer (except stucco) on wood frame walls, unless under 10% of the total outside wall area is faced with masonry veneer. (There is an option to add back this coverage.) SLIDES-WWL-FISCE-CEP-CT 31

Earthquake & Volcanic Eruption Endorsement CP 10 40 10 12 Earthquake & Volcanic Eruption are covered Causes of Loss for Collapse. Tidal wave or tsunami is excluded, even if attributable to an Earthquake or Volcanic Eruption. Volcano SLIDES-WWL-FISCE-CEP-CT 32

Kilauea November 2014 HO Form -HO 00 03 05 11 Covered Peril: Volcanic Eruption This peril does not include loss caused by earthquake, land shock waves or tremors. SLIDES-WWL-FISCE-CEP-CT 33

HO Form -HO 00 03 05 11 Earth Movement Exclusion Earth Movement means: a. Earthquake, including land shock waves or tremors before, during or after a volcanic eruption; b. Landslide, mudslide or mudflow; c. Subsidence or sinkhole; or d. Any other earth movement including earth sinking, rising or shifting. This Exclusion A.2. applies regardless of whether any of the above, in A.2.a. through A.2.d., is caused by an act of nature or is otherwise caused. However, direct loss by fire, explosion or theft resulting from any of the above, in A.2.a. through A.2.d., is covered. Special Form -CP 10 30 -Earth Movement Exclusion Earth Movement (5) Volcanic eruption, explosion or effusion. But if volcanic eruption, explosion or effusion results in fire, building glass breakage or Volcanic Action, we will pay for the loss or damage caused by that fire, building glass breakage or Volcanic Action. Volcanic Action means direct loss or damage resulting from the eruption of a volcano when the loss or damage is caused by: (a) Airborne volcanic blast or airborne shock waves; (b) Ash, dust or particulate matter; or (c) Lava flow. With respect to coverage for Volcanic Action as set forth in (5)(a), (5)(b) and (5)(c), all volcanic eruptions that occur within any 168-hour period will constitute a single occurrence. Volcanic Action does not include the cost to remove ash, dust or particulate matter that does not cause direct physical loss or damage to the described property. SLIDES-WWL-FISCE-CEP-CT 34

Basic Form -CP 10 10 10 12 Covered Peril: Volcanic Action, meaning direct loss or damage resulting from the eruption of a volcano when the loss or damage is caused by: a. Airborne volcanic blast or airborne shock waves; b. Ash, dust or particulate matter; or c. Lava flow. With respect to coverage for Volcanic Action as set forth in 11.a., 11.b. and 11.c., all volcanic eruptions that occur within any 168-hour period will constitute a single occurrence. This cause of loss does not include the cost to remove ash, dust or particulate matter that does not cause direct physical loss or damage to the described property. SLIDES-WWL-FISCE-CEP-CT 35

HO Form -HO 00 03 05 11 Power Failure Exclusion We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss 4. Power Failure Power Failure means the failure of power or other utility service if the failure takes place off the "residence premises". But if the failure results in a loss, from a Peril Insured Against on the "residence premises", we will pay for the loss caused by that peril. HO Form -HO 00 03 05 11 Covered Peril: Sudden And Accidental Damage From Artificially Generated Electrical Current This peril does not include loss to tubes, transistors, electronic components or circuitry that is a part of appliances, fixtures, computers, home entertainment units or other types of electronic apparatus. SLIDES-WWL-FISCE-CEP-CT 37

Utility Services Exclusion (CP 10 30 10 12) We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. e. Utility Services The failure of power, communication, water or other utility service supplied to the described premises, however caused, if the failure: (1) Originates away from the described premises; or (2) Originates at the described premises, but only if such failure involves equipment used to supply the utility service to the described premises from a source away from the described premises. (continued) Utility Services Exclusion (CP 10 30 10 12) Failure of any utility service includes lack of sufficient capacity and reduction in supply. Loss or damage caused by a surge of power is also excluded, if the surge would not have occurred but for an event causing a failure of power. But if the failure or surge of power, or the failure of communication, water or other utility service, results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss. Communication services include but are not limited to service relating to Internet access or access to any electronic, cellular or satellite network. SLIDES-WWL-FISCE-CEP-CT 38

Utility Services Direct Damage Endorsement (CP 04 17 10 12) Direct Damage Coverage only Provides coverage for direct damage to insured property due to loss of water supply services &/or communication supply services &/or power supply services May include or exclude overhead transmission lines. Loss must result from a Covered Cause of Loss. Refrigerated Property Coverage Endorsement (HO 04 98 05 11) $500 limit Covers property stored in freezers or refrigerators on premises Covered causes of loss - Loss of power caused by damage to generating or transmitting equipment. - Mechanical failure of the unit Loss of power is defined as the complete or partial interruption of electric power due to conditions beyond the insured s control. Unit must have been maintained in proper working condition prior to the loss. SLIDES-WWL-FISCE-CEP-CT 39

Spoilage Coverage (CP 04 40 06 07) Covers Perishable Stock May cover Breakdown or Contamination and/or Power Outage Selling Price is an option A refrigeration maintenance agreement warranty may apply. Coinsurance does not apply. Several special exclusions have been added. Water Exclusion applies. Deductible applies. Blanket Limit is not permitted. Ordinance or Law SLIDES-WWL-FISCE-CEP-CT 40

Exclusion HO Ordinance or Law We do not insure for loss caused directly or indirectly by any of the following. 1. Ordinance Or Law Ordinance Or Law means any ordinance or law: a. Requiring or regulating the construction, demolition, remodeling, renovation or repair of property, including removal of any resulting debris b. The requirements of which result in a loss in value to property; or c. Requiring any "insured" or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, pollutants. HO Ordinance or Law Additional Coverage You may use up to 10% of the limit of liability that applies to Coverage A for the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates: (1) The construction, demolition, remodeling, renovation or repair of that part of a covered building or other structure damaged by a Peril Insured Against; (2) The demolition and reconstruction of the undamaged part of a covered building or other structure, when that building or other structure must be totally demolished because of damage by a Peril Insured Against to another part of that covered building or other structure; or SLIDES-WWL-FISCE-CEP-CT 41

HO Ordinance or Law Additional Coverage (continued) (3) The remodeling, removal or replacement of the portion of the undamaged part of a covered building or other structure necessary to complete the remodeling, repair or replacement of that part of the covered building or other structure damaged by a Peril Insured Against. b. You may use all or part of this ordinance or law coverage to pay for the increased costs you incur to remove debris resulting from the construction, demolition, remodeling, renovation, repair or replacement of property as stated in a. above. HO Ordinance or Law HO 04 77 10 00 Ordinance or Law Increased Amount of Coverage Endorsement can be used to increase the 10% available for Ordinance or Law. SLIDES-WWL-FISCE-CEP-CT 42

Exclusion CP Ordinance or Law We will not pay for loss or damage caused directly or indirectly by any of the following Ordinance Or Law The enforcement or compliance with any ordinance or law: (1) Regulating the construction, use or repair of any property; or (2) Requiring the tearing down of any property, including the cost of removing its debris.. CP Ordinance or Law Increased Cost of Construction Additional Coverage Applies only to buildings insured at RC Coverage applies only to the repair, rebuilding, or replacement of damaged parts of the building. It is designed to respond to a situation where a building code requires some upgrades, but not major construction changes. It does not apply to changes the insured was supposed to have complied with prior to loss, if he failed to do so. It does not apply to ordinances that require action because of the presence or spread of pollutants or fungus. Limit of $10,000 or 5% of the limit of insurance applicable to that building (whichever is less) SLIDES-WWL-FISCE-CEP-CT 43

Ordinance or Law Endorsement CP 04 05 Coverage A Coverage for loss to undamaged portion of the building Coverage B Demolition Cost Coverage Coverage C Increased Cost of Construction Coverage Limits for Coverages B and C can be specific or blanket. $30,000 limit Flood - ICC Coverage Pays costs to comply with a state or local floodplain management law or ordinance affecting repair or reconstruction of a structure suffering flood damage Compliance activities include elevation, floodproofing, relocation or demolition. A structure must be a repetitive loss structure or have sustained substantial flood damage. SLIDES-WWL-FISCE-CEP-CT 44

Time Element Issues HO Form -HO 00 03 05 11 Coverage D Loss of Use Additional Living Expense If a loss covered under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living. Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere. SLIDES-WWL-FISCE-CEP-CT 45

HO Form -HO 00 03 05 11 Coverage D Loss of Use Fair Rental Value If a loss covered under Section I makes that part of the "residence premises" rented to others or held for rental by you not fit to live in, we cover the fair rental value of such premises less any expenses that do not continue while it is not fit to live in. Payment will be for the shortest time required to repair or replace such premises. HO Form -HO 00 03 05 11 Coverage D Loss of Use Civil Authority Prohibits Use If a civil authority prohibits you from use of the "residence premises" as a result of direct damage to neighboring premises by a Peril Insured Against, we cover the loss as provided in 1. Additional Living Expense and 2. Fair Rental Value above for no more than two weeks. SLIDES-WWL-FISCE-CEP-CT 46

BI and EE Form -CP 00 30 10 12 We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "period of restoration". The "suspension" must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which a Business Income Limit of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss.. BI and EE Form -CP 00 30 10 12 We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "period of restoration". The "suspension" must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which a Business Income Limit of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss.. SLIDES-WWL-FISCE-CEP-CT 47

Elements of a Business Income Loss 1. Suspension of Operations The slowdown or cessation of your business activities Elements of a Business Income Loss 2. Direct physical loss of or damage to property at premises Premises includes the area within 100 feet of the building or described premises, whichever is greater If only part of the premises is occupied by the insured, premises includes areas within the building or on the premises used to service or gain access to the premises The damaged property doesn t need to be covered property for Business Income Coverage to apply SLIDES-WWL-FISCE-CEP-CT 48

Elements of a Business Income Loss 3. Covered Cause of Loss Basic Broad Special Flood? Elements of a Business Income Loss 4. Actual loss of business income Net Income that would have been earned or incurred; and Continuing normal operating expenses incurred, including payroll SLIDES-WWL-FISCE-CEP-CT 49

Period of Restoration Begins with a covered loss to property on premises 72 hour waiting period applies to Business Income, not to Extra Expense Ends when the property should be repaired or replaced, or the business relocated Policy expiration will not limit the period of restoration. Does not include extra time required due to enforcement of building laws or due to pollution clean-up Business Income Changes Beginning of the Period of Restoration (CP 15 56) Can be used to eliminate the waiting period or to reduce the waiting period from 72 to 24 hours This change also applies to the Civil Authority waiting period SLIDES-WWL-FISCE-CEP-CT 50

Ordinance or Law -Increased Period of Restoration (CP 15 31) Amends the "Period of Restoration" to include increased time necessary to comply with existing building laws and codes regulating construction or repair of damaged buildings Extended Business Income An Additional Coverage in the Business Income Form Starts when the property is replaced and operations are resumed Provides up to 60 days coverage Does not apply to loss resulting from unfavorable business conditions caused by the impact of the loss in the area Not additional insurance Extended Period of Indemnity can be used to increase the time period. SLIDES-WWL-FISCE-CEP-CT 51

Civil Authority An Additional Coverage in the Business Income Form Applies when access to the insured premises is prohibited due to a covered direct physical loss of or damage to property within one mile of the insured s location 72 hour business income waiting period No extra expense waiting period 4 week time period Time Period and/or radius can be increased (CP 15 32) Ingress/Egress Non-ISO coverage from some carriers - Sample Language We will pay for the actual: business income loss you incur due to the actual impairment of your operations; and extra expense you incur due to the actual or potential impairment of your operations, when existing ingress to or egress from a premises shown in the Declarations is prevented due to direct physical loss or damage by a covered peril to property at a location contiguous to such premises. This Premises Coverage will begin at the time of direct physical loss or damage and will continue until the expiration of thirty (30) consecutive days thereafter or whenever your business income coverage ends, whichever occurs first.. SLIDES-WWL-FISCE-CEP-CT 52

Power Outage Time Element Issues HO Form -HO 00 03 05 11 Power Failure Exclusion We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss 4. Power Failure Power Failure means the failure of power or other utility service if the failure takes place off the "residence premises". But if the failure results in a loss, from a Peril Insured Against on the "residence premises", we will pay for the loss caused by that peril. SLIDES-WWL-FISCE-CEP-CT 53

Utility Services Time Element (CP 15 45) Covers loss when service to an insured s premises is interrupted by a covered cause of loss. Water Supply Services Waste Water Removal Property (new in 2012) Communications Supply Services Power Supply Services Overhead Transmission Lines may be excluded Why Was the Power Out? Was it Flood? Was it Wind? What are the Covered Causes of Loss? SLIDES-WWL-FISCE-CEP-CT 55

Catherine Trischan, CPCU, CIC, CRM, ARM, AU, AAI, CRIS, MLIS FLORIDA MANDATORY REMINDER- UNAUTHORIZED ENTITIES An entity that is required to be licensed or registered with the Florida Office of Insurance Regulation but is operating without the proper authorization is identified as an unauthorized insurer. All persons have the responsibility of conducting reasonable research to ensure they are not writing policies or placing business with an unauthorized insurer. Any person who, directly or indirectly, aid or represent an unauthorized insurer can lose their licenses or face other disciplinary sanctions. Please see section 626.901, Florida Statutes, to read the laws. Lack of careful screening can result in significant financial loss to Florida consumers due to unpaid claims and/or theft of premiums. Under Florida law, a person can be charged with a third-degree felony and also held liable for any unpaid claims and refund of premiums when representing an unauthorized insurer. It is the person s responsibility to give fair and accurate information regarding the companies they represent. For more information please contact http://www.floir.com/companysearch SLIDES-WWL-FISCE-CEP-CT 56

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