1. Forms
2. CP
3. CP-00-90

What the form is

The Commercial Property Conditions form (CP 00 90) is a mandatory component of the Insurance Services Office (ISO) Commercial Property Program. It sets forth nine essential conditions that define the terms of the insurance contract and govern the relationship between the insurer and the insured. These conditions are supplementary to the Common Policy Conditions (IL 00 17) and any conditions found within specific coverage forms. The key provisions addressed in CP 00 90 include:

• Concealment, Misrepresentation, or Fraud
• Control of Property
• Insurance Under Two or More Coverages (how losses are handled when multiple coverages apply)
• Legal Action Against Us (the insurer)
• Liberalization
• No Benefit to Bailee
• Other Insurance
• Policy Period and Coverage Territory
• Transfer of Rights of Recovery Against Others to Us (Subrogation).

Classes of business it applies to

This form is broadly applicable to nearly all types of commercial enterprises that carry property insurance under the ISO Commercial Property Program. This encompasses a wide range of industries such as manufacturing, retail, wholesale, services, real estate, and more. It is a standard attachment whether the commercial property coverage is written as a standalone (monoline) policy or as part of a Commercial Package Policy (CPP). For instance, a retail business insuring its building and inventory, a factory covering its equipment and stock, or the owner of an office complex insuring the structure would all typically have the CP 00 90 as part of their property insurance documentation.

Special considerations

• Mandatory Attachment: The CP 00 90 is almost invariably included in commercial property policies. A primary exception is when the Mortgage Holders Errors and Omissions Coverage Form (CP 00 70) is the sole commercial property coverage form being used.
• Concealment, Misrepresentation, or Fraud: This crucial condition stipulates that the coverage part can be voided if the insured, or any other insured, intentionally conceals or misrepresents a material fact concerning the coverage, the covered property, their interest in it, or a claim. The application of this clause can be influenced by individual state laws and regulations.
• Legal Action Against Us: This provision typically sets a statute of limitations for initiating legal proceedings against the insurer, commonly two years from the date the direct physical loss or damage occurred. Adherence to this timeframe is critical for insureds.
• Liberalization: If the insurer revises the coverage forms in a way that broadens coverage without an additional premium charge, this clause ensures the broadened coverage automatically applies to the current policy if the revision occurs within 45 days prior to or during the policy period.
• Other Insurance: This condition outlines how claim payments are handled when other insurance policies also cover the same loss. It typically specifies whether the policy will pay on a pro-rata basis (sharing the loss with other similar policies) or on an excess basis (paying only after the other insurance has been exhausted).
• Transfer of Rights of Recovery Against Others to Us (Subrogation): This allows the insurer, after settling a claim, to step into the insured's shoes and seek recovery from any third party responsible for the loss. Insureds are generally permitted to waive these rights of recovery in writing before a loss occurs, or in certain specified situations after a loss (e.g., in favor of a tenant).
• Control of Property: This condition clarifies that the insurance will not be affected by any act or neglect of any person (other than the named insured) who is beyond the named insured's direction or control. Furthermore, if a policy condition is breached at one insured location, it will not impact coverage at another insured location where the breach did not occur at the time of loss.

Key information for agents and underwriters

• Client Education: Agents should ensure their clients understand these fundamental policy conditions, especially their duties in the event of a loss, the serious consequences of misrepresentation, and the time limits for legal action.
• Risk Management (Underwriting): Underwriters depend on these conditions to manage risk and clearly define the contractual obligations. The 'Concealment, Misrepresentation, or Fraud' clause is a vital safeguard against moral hazard.
• Subrogation Opportunities: The 'Subrogation' clause is significant for potential recoveries, which can affect overall loss ratios and potentially influence future premiums. It's crucial for underwriters and agents to understand when an insured might waive subrogation rights (e.g., as often required in lease agreements with tenants) and the implications thereof.
• Coordination of Benefits: The 'Other Insurance' provision is essential for correctly apportioning loss payments when multiple policies are involved, preventing overpayment and ensuring fair contribution among insurers.
• Coverage Scope: The 'Policy Period and Coverage Territory' condition (which typically includes the United States, its territories and possessions, Puerto Rico, and Canada) clearly delineates when and where the insurance applies.
• State Variations: While CP 00 90 provides a standard set of conditions, state-specific endorsements can alter its provisions. Agents and underwriters must remain vigilant for such state-level modifications.
• Policy Structure: It's important to remember that the CP 00 90 is one piece of the puzzle. It functions in concert with the Declarations page, the specific Coverage Form(s) (like CP 00 10), the Causes of Loss Form(s) (e.g., CP 10 30), and the Common Policy Conditions (IL 00 17) to create the complete commercial property insurance policy.