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Insight On “Ordinary Payroll” coverage on a Business owner Insurance policy

The article characterized the Business Income as being a distinct advantage of the BOP over the traditional handling of business income on a Commercial Property Policy. While the BOP has streamlined the coverage, there are also inherent shortcomings of the coverage. One of those shortcomings is how the BOP treats ordinary payroll. On a Business Income Form in the CPP series, “ordinary payroll” is covered unless it is excluded by endorsement. It is limited only by the amount of insurance purchased. On the BOP, there traditionally is no limit of insurance for Business Income, it is an ALS policy subject to 12 months.
This is where it becomes so important to read policy language. In the ISO form series, to which most companies adhere to in large part, the BOP limits ?ordinary payroll? to only 60 days of coverage. There is no ISO endorsement to extend the “ordinary payroll” coverage; however, some carriers will allow for a different time frame if it is activated on the Declarations Page. This restriction may not be a serious concern for a habitational, retail or service operation. However, if the insurance company is offering BOP coverage for larger, more complex risks the limitation on “ordinary payroll” could be unacceptable. Always read your company’s specific policy language to determine if coverage is appropriate for your insured.

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