What it does
CM 00 66 covers the financial consequence of losing receivable records rather than the paper or media itself. After a covered cause of loss to the records, it pays amounts due from customers that the insured cannot collect, interest on a loan taken to offset the uncollectible amounts while waiting for payment, collection expense above normal, and reasonable expense to re-establish the records. Covered causes are written on an open-perils basis: direct physical loss or damage to the records except as excluded.
Who needs it
Any business with significant credit sales. A fire, burst pipe or theft that destroys billing records can leave a firm unable to prove what customers owe, and many customers simply do not pay. The form is often included in BOP and property package enhancements at low limits; a separate form is used when receivables are large.
Key provisions
- Not covered: records stored away from the described premises, and contraband.
- Removal extension: records moved to a safe place because of imminent danger are covered there and in transit if the insurer is notified in writing within 10 days.
- Notable exclusions: dishonest acts of the insured or employees (theft by employees is not covered), alteration or destruction of records to conceal a theft, bookkeeping or billing errors, electronic erasure from programming errors or from power problems originating more than 100 feet from the premises, losses that can only be proven by audit or inventory computation, plus the usual government action, nuclear and war exclusions.
- Determination of receivables: when the outstanding balance cannot be established, it is calculated from the average monthly receivables for the prior 12 months, adjusted for normal fluctuations, then reduced for accounts not affected, amounts collected, probable bad debt and unearned interest.
- Coinsurance applies if a percentage is shown, and protection of records requires keeping records in the receptacles described in the declarations when the business is closed.
Quoting and selling notes
Ask for the average and peak monthly receivables, how records are kept (cloud, server, paper), backup frequency and the type of safe or cabinet used. The 01 13 edition added an abrupt collapse additional coverage. Reporting form CM 66 06 replaces coinsurance with periodic reports for businesses with fluctuating receivables; CM 66 04 adds a duplicate-records warranty; CM 66 01 excludes named customers.
Related forms
CM 00 01, CM 66 01, CM 66 04, CM 66 06, and CM 00 67 for the records themselves.
