Authors: Sara Strohm and Gregory Palumbo
After taking a sharp hit at the start of the pandemic, small business formation has rebounded, giving insurers an opportunity to target new customers.
The ISO Businessowners program was developed to help insurers support just such small-to-medium-sized enterprises. As part of the most significant update to the ISO Businessowners program since its inception, we're introducing nearly 60 new, optional endorsements, revisions to dozens more, and updates to the base form. These updates will provide added flexibility during underwriting and help insurers address some of the new and emerging risk exposures that confront today's businesses.
A strong base
Among the several changes we're making to the base businessowners coverage form is a tenfold increase in the coverage radius for the insured's business personal property (now 1,000 feet). This could also be particularly appealing to restaurant risks that expanded outdoor seating into parking lots and sidewalks during the pandemic—an expansion that may endure after the public health crisis abates.
To allow for more flexibility, we're providing the ability to increase the $10,000 limit applicable to the Personal Property Off Premises Coverage Extension.
In response to the ever-increasing threat of ransomware, and to reinforce that coverage for those attacks is more appropriately provided under dedicated cyber coverage, such as the ISO Information Security Protection Endorsement (BP 15 07) or a standalone cyber policy, we're specifically excluding ransomware under the Electronic Data and Interruption of Computer Operations Additional Coverages.
Additional enhancements have been made that generally track with updates to other ISO Insurance Policy Programs including our general liability, commercial property, and crime programs.
To help insurers tailor their coverages to fit the unique exposures or needs of their insureds, we're introducing 57 new, optional endorsements. Here's just a few of the highlights:
Unmanned Aircraft: Drone usage for commercial purposes is expected to soar over the next several years. We're introducing an endorsement to provide limited property coverage (including business interruption coverage) for drones on either a scheduled or blanket basis. Coverage will apply on or off the insured's premises. The coverage provided via this endorsement will not apply to certain exposures including drone delivery, drone racing, drone rentals, or mechanical breakdowns. An additional endorsement is available to extend drone property coverage worldwide (with some exceptions). Companion rules and advisory prospective loss costs will also be introduced.
Cannabis: To help insurers fine-tune their approach to the growing cannabis market, the ISO Businessowners program will offer several new property and liability coverage endorsements as well as several exclusions. A cannabis property coverage endorsement will address cannabis stock and include business income and extra expense coverage. For cannabis liability exposures, we're adding options that generally allow insurers to place a sub-limit on either cannabis activity as a whole or hemp specifically. Other endorsements will provide the flexibility to limit coverage for cannabis exposures that fall under the definition of products/completed operations.
Abuse or molestation: There can be several types of abuse, including sexual abuse, elder abuse, and other types of physical and/or psychological abuse. Civil actions seeking recovery of damages for sexual abuse against institutions, organizations, and private or public firms could have an increasing impact on liability insurers. To provide insurers with additional underwriting tools, we're introducing new exclusions and coverage options to address liability risk exposures from actual, alleged, or threatened abuse or molestation.
Auto service risks: By adding the auto service risks endorsement to the ISO Businessowners policy, insurers will be able to address property exposures (including employees' tools, loss or damage to customer's property and loss or damage to lessor's property) and liability associated with various, newly eligible, auto services classifications. Additionally, we'll offer rules and advisory loss costs to address the unique exposures in this industry class.
Additional insureds: Ten new endorsements will let insurers extend coverage to additional insureds beyond the primary policyholder. These endorsements will encompass several business risks, including vendors, executors, and contractors, among others.
More support for international risks: The supply-chain bottlenecks of recent months have served as a salutary reminder of how many businesses rely on international trade. For insureds with international property exposures, we're adding four new, optional endorsements that generally provide limited property, business income, and extra expense coverage under the businessowners program—including for property in transit between an international and domestic destination.
Emerging issues: Several new endorsements will provide greater underwriting flexibility when addressing emerging exposures related to electronic cigarettes (both manufacturing and health hazards), genetically modified organisms, and sport or athletic events (both sponsored and nonsponsored).
We currently plan to file the new base form and endorsements in the first quarter of 2022 with an 18-month lead time.
To learn more about all the upcoming coverage enhancements for the ISO Businessowners program, please email Sara.Strohm@Verisk.com.
First published: November 5, 2021