Question

1: A used celebrity guitar business conducts most of its sales via its website. Its warehouse and office operations are housed in a large building, which is insured under a BPP. The office contains the company’s servers, currently valued at $300,000. Two years ago, the company purchased a separate electronic data processing (EDP) equipment policy to cover its computer hardware. The company has kept the policy in force, but it has not increased the original $200,000 amount of insurance. A computer room fire destroys all of its servers. How much will each policy provide in covering the loss?

2: An office building and its contents are insured under a Commercial Package Policy that includes the BPP (Business Personal Property) with a limit of $2 million (building) and $1 million (business personal property), the Causes of Loss - Special Form, and the Replacement Cost optional coverage. While extinguishing a fire at the insured’s location, firefighters disturbed stored chemicals that then leached into the soil. The cost to remove the soil and remediate the site was $45,000 and this expense was reported to the insurer within forty-five days of its occurrence. Determine whether any of the Additional Coverages of this policy apply to this loss. (Ignore the application of a deductible.)

Answer 1

Solution

1

Because the EDP equipment policy specifically describes the computer hardware, its coverage is primary and will cover the loss for its $200,000 limit. The company's BPP policy will then cover the remaining $100,000 of the loss as business personal property.

2

Limited coverage for this loss would be provided by The Pollutant Cleanup and Removal additional coverage (in addition to the policy limit) for the "seepage" of pollutants caused by or resulting from a Covered Cause of Loss.