Capital Assets Program Coverage Form (OP 00 01)
The OP 00 01 - Capital Assets Program Coverage Form is a comprehensive and broad property insurance policy designed by the Insurance Services Office (ISO) primarily for larger and medium-sized commercial accounts. Its core function is to provide extensive, often "all-risk" or open perils coverage, for both real and personal property. This form is distinguished by its capacity to consolidate various property coverages, including buildings, business personal property, business income, and extra expense, into a single, integrated policy. It is structured more from a property perspective than a traditional inland marine approach, though it can incorporate inland marine-type coverages. Unlike many standard ISO forms that rely on numerous endorsements to broaden coverage, the OP 00 01 is designed as a complete coverage form where endorsements are more likely to reduce or modify the inherent broad protection.
Classes of Business and Applications
The Capital Assets Program Coverage Form is versatile and intended for a wide array of commercial enterprises. Specific classes of business that would typically utilize this form include:
- Manufacturing and Industrial Risks: Businesses with significant investments in machinery, equipment, and inventory spread across potentially large facilities. For example, a large automotive parts manufacturer could use this form to cover its factory, specialized production machinery, and warehoused goods.
- Commercial, Wholesale, and Retail Operations: Larger retail chains, distribution centers, or wholesale suppliers with substantial property values and complex operational needs. For instance, a regional supermarket chain could insure its store buildings, fixtures, inventory, and potential business income loss.
- Service and Contracting Businesses: Larger service providers or contractors with valuable equipment, tools, and potentially, property held for installation at job sites. A large commercial HVAC contractor might use this form.
- Institutional and Habitational Risks: Organizations like large schools, hospitals, or extensive residential complexes (though less common for standard habitational). For example, a private university could cover its campus buildings, laboratories, and libraries.
The form is particularly well-suited for businesses seeking blanket coverage, often on a replacement cost basis, and without a coinsurance provision, which simplifies the insurance process for sufficiently large accounts.
Special Considerations
Several important factors differentiate the OP 00 01 and require careful consideration:
- Valuation and Limits: The program often requires insuring property to its full 100% value, which can lead to substantially higher building limits compared to other forms, as it may include elements like foundations, underground pipes, and drains. Options for valuation can include actual cash value, agreed value, or functional replacement cost for buildings.
- Rigid Structure: While comprehensive, the OP 00 01 can be less flexible in terms of mixing and matching with other standard ISO property forms. Modifications often involve restricting the built-in broad coverage rather than adding to it.
- Built-in Coverages: Business income and extra expense coverages are typically written into the form and activated by entries on the declarations page. This automatic inclusion is a key feature.
- Property Not Covered: While broad, there are still exclusions. For example, property in transit might have limited coverage unless specifically addressed, and property specifically covered by another policy might be covered on an excess basis.
- Declarations Importance: The OP DS 00 (Capital Assets Program Declarations) and potentially OP DS 02 (Supplemental Declarations) are crucial related forms that specify limits, covered locations, and any modifications to the standard OP 00 01 provisions.
Real-world example: A manufacturing company considering this form must be prepared to insure its entire facility, including foundations and underground pipes, to 100% of their value, which might be a different approach than they are used to with standard commercial property policies. This could significantly impact the total insured value and premium.
Key Information for Agents and Underwriters
Agents and underwriters should be mindful of the following when working with the OP 00 01:
- Risk Assessment: Due to the breadth of coverage and typically high limits, a thorough understanding of the insured's operations, property values, and risk management practices is critical. The "all-risk" nature means underwriters need to carefully assess exposures that might otherwise be excluded or limited under more restrictive forms.
- Pricing Flexibility: The program is designed to offer pricing flexibility for large and medium commercial accounts. However, this flexibility is often tied to the insured's commitment to higher insured values and comprehensive risk disclosure.
- Coverage Gaps: While broad, agents should still review for potential gaps, especially for unique exposures. For instance, worldwide coverage for business personal property at locations the insured doesn't own, lease, or operate might be limited (e.g., up to $100,000). Specific needs for higher sub-limits (e.g., for fine arts, valuable papers, or precious metals) should be identified and may require supplemental declarations or specific endorsements.
- Underwriting Guidelines: Underwriters will focus on the quality of the risk, loss history, and the adequacy of proposed insured values. The form's intention to cover "everything that makes up buildings" means detailed property valuations are essential. The absence of a coinsurance clause shifts the emphasis to ensuring accurate values are declared upfront.
- Comparison to Standard Policies: Agents should clearly articulate how the OP 00 01 differs from a standard Commercial Property policy (like the CP 00 10), particularly regarding the scope of covered property, valuation requirements, and the integrated nature of coverages like business income.
Practical Insight: An underwriter evaluating an application for OP 00 01 for a complex manufacturing risk will likely require more detailed engineering reports and property appraisals than for a standard property policy, given the "all-risk" nature and the inclusion of elements like foundations and underground flues. Agents should prepare clients for this level of scrutiny.