BUSINESS INCOME COVERAGE FORM

Transcription

1 BUSINESS INCOME COVERAGE FORM Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Common Policy Declarations. The words "we", "us" and "our" refer to the Company providing this insurance. Other words and phrases that appear in quotation marks have special meaning. Refer to Section G. Definitions in this Coverage Form and Section H. - Definitions in the Commercial Property Coverage Form. TABLE OF CONTENTS Do not add this form to a policy. It is for informational purposes only. A. COVERAGE Business Income Indemnity Period... 2 a. Earnings Option... 2 b. Profits Option Ordinary Payroll Expense Covered Causes Of Loss Additional Coverages... 3 a. Alterations And New Buildings - Delay In Completion... 3 b. Business Income From Dependent Property... 4 c. Civil Authority... 4 d. Contract Penalties... 4 e. Electronic Vandalism... 4 f. Expenses To Reduce Loss... 5 g. Ingress Or Egress... 5 h. Newly Acquired Premises... 5 i. Ordinance Or Law - Increased Indemnity Period... 5 j. Pollutant Cleanup And Removal... 6 k. Professional Fees... 6 l. Transit Business Income... 7 m. Undescribed Premises... 7 n. Utility Services... 7 B. EXCLUSIONS AND LIMITATION Exclusions... 8 a. Finished Stock... 8 b. Other Consequential Loss... 8 c. Specified Property... 8 d. Strike, Cancellation Of Contract Limitation Electronic Media And Records... 9 C. LIMITS OF INSURANCE... 9 D. DEDUCTIBLE Waiting Period Dollar Amount... 9 E. LOSS CONDITIONS Appraisal Duties In The Event Of Loss - Additional Duty Loss Determination Loss Payment F. ADDITIONAL CONDITION G. DEFINITIONS PR1270CF (03-13) Business Income Coverage Form Page 1 of 12

2 A. COVERAGE Do not add this form to a policy. It is for informational purposes only. We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "indemnity period" caused by direct physical loss of or damage to property at your premises which are described in the Business Income Declarations and for which a Business Income Limit of Insurance is shown in such Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss. With respect to loss of or damage to personal property in the open or personal property in a vehicle, the described premises include the area within 300 metres of the site at which the described premises are located. If you occupy only part of the site at which the described premises are located, your premises means: The portion of the building which you rent, lease or occupy; and Any area within the building or on the site at which the described premises are located, if that area services, or is used to gain access to, the described premises. 1. Business Income Business Income means the sum of the: a. Net Income (Net Profit or Loss before income taxes) that would have been earned or incurred, including "rental value"; plus b. "Continuing operating expenses" incurred. For manufacturing risks, Net Income includes the net sales value of production. 2. Indemnity Period a. Earnings Option When the Business Income Declarations shows this option, the "indemnity period" ends on the earliest of: (1) The date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality; or (2) The date you could restore your "operations", with reasonable speed, to the condition that would have existed if no direct physical loss or damage had occurred; or (3) The number of months shown in the Business Income Declarations. b. Profits Option When the Business Income Declarations shows this option, the "indemnity period" ends no later than the number of months shown in the Business Income Declarations during which time your Business Income continues to be affected as a direct result of direct physical loss or damage to property at the described premises caused by or resulting from a Covered Cause of Loss. 3. Ordinary Payroll Expense a. When the Business Income Declarations shows that: (1) Ordinary payroll expense is covered, the Business Income coverage provided for "continuing operating expenses" incurred includes ordinary payroll expense; (2) Ordinary payroll expense is not covered, the Business Income coverage provided for "continuing operating expenses" incurred does not include ordinary payroll expense; (3) Ordinary payroll expense is limited to a specified number of days, the Business Income coverage provided for "continuing operating expenses" incurred only includes ordinary payroll expense for the specified number of days. The number of days may be used in two separate periods during the "indemnity period". b. Ordinary payroll expense means payroll expenses for all your employees except: (1) Officers; (2) Executives; PR1270CF (03-13) Business Income Coverage Form Page 2 of 12

3 (3) Department managers; and (4) Employees under contract. c. Ordinary payroll expense includes: (1) Payroll; and (2) Employee benefits, if directly related to payroll. 4. Covered Causes Of Loss Covered Causes of Loss means RISKS OF DIRECT PHYSICAL LOSS unless the loss is excluded or limited in: a. Section B. Exclusions or Section C. Limitations of the Commercial Property Coverage Form; or b. Section B. Exclusions and Limitation of this Coverage Form. 5. Additional Coverages Unless Not Covered is indicated in the Business Income Additional Coverages Declarations, each of the following Additional Coverages applies subject to the Limit of Insurance shown in the Business Income Additional Coverages Declarations for such Additional Coverage. Unless otherwise specified, the Limit of Insurance shown in the Business Income Additional Coverages Declarations for each Additional Coverage applies in any one occurrence and in addition to the applicable Limit of Insurance. a. Alterations And New Buildings - Delay In Completion (1) We will pay for the actual loss of Business Income you sustain during the "indemnity period" due to direct physical loss of or damage to any property described in Paragraphs (a) through (c) below at a described premises or a premises covered under the Newly Acquired Premises Additional Coverage. The loss or damage must be caused by or result from a Covered Cause of Loss. (a) New buildings or structures, whether complete or under construction; (b) Alterations or additions to existing buildings or structures; and (c) Materials, equipment, supplies and temporary structures on or within 300 metres of such premises and: (i) Used for making additions, alterations or repairs to the buildings; or (ii) Incidental to the occupancy of new buildings. (2) With respect to this Additional Coverage, the "indemnity period" definition under Paragraph G. Definitions is replaced by the following: (a) "Indemnity period" means, subject to any applicable Deductible under Section D. of this Coverage Form, the period of time, during which the start of "operations" is delayed due to direct physical loss or damage by a Covered Cause of Loss, that: (i) Begins at the date "operations" would have begun if the direct physical loss or damage had not occurred; and (ii) Ends on the date when the construction of the property at the described premises should be completed using reasonable speed and similar quality. (b) "Indemnity period" does not include any increased period required due to the enforcement of any ordinance or law that: (i) Regulates the demolition, construction, or repair of any property or establishes zoning or land use requirements at the described premises, except as provided in the Ordinance Or Law - Increased Indemnity Period Additional Coverage; or (ii) Requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants", except as provided in the Pollutant Clean Up And Removal Additional Coverage. (3) The expiration date of this policy will not cut short the "indemnity period". Payment under this Additional Coverage is included in and does not increase the applicable Limit of Insurance. PR1270CF (03-13) Business Income Coverage Form Page 3 of 12

4 b. Business Income From Dependent Property (1) We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "indemnity period" caused by direct physical loss of or damage to property at the premises of a "dependent property" located anywhere in the "coverage territory". The loss or damage to the property must be caused by or result from a Covered Cause of Loss. (2) This Additional Coverage does not apply to "dependent property" for which you have more specific insurance under this or any other policy. (3) With respect only to the insurance provided under this Additional Coverage, the phrase, at the described premises, as used in the definition of "indemnity period" and Section A.2. Indemnity Period, is replaced by the phrase at the premises of a "dependent property". c. Civil Authority (1) When a Covered Cause of Loss causes damage to property other than property at the described premises, we will pay for the actual loss of Business Income you sustain caused by action of civil authority that prohibits access to the described premises, provided that both of the following apply: (a) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the described premises are within that area but are not more than 160 kilometres from the damaged property; and (b) The action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property. (2) Civil Authority coverage will begin 72 hours (unless a different number of hours is shown in the Business Income Declarations) after the time of the first action of civil authority that prohibits access to the described premises and will apply for a period of up to 30 consecutive days from the date on which such coverage began. Section D. Deductible does not apply to this Additional Coverage. (3) Payment under this Additional Coverage is included in and does not increase the applicable Limit of Insurance. d. Contract Penalties (1) We will pay for Contract Penalties you incur due to the necessary "suspension" of your "operations" during the "indemnity period" caused by direct physical loss or damage to property at the described premises, including "finished stock" and personal property in the open (or in a vehicle) within 300 metres of the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss. (2) As used in this Additional Coverage, Contract Penalties means amounts which, under the terms of a written contract that is in effect at the time of the direct physical loss or damage, you are required to pay to your customers for failure to deliver your products or services on time. (3) The Limit of Insurance shown for Contract Penalties in the Business Income Additional Coverages Declarations is the most we will pay for all Contract Penalties incurred in any one occurrence under this Additional Coverage, regardless of the number of contracts involved. (4) Section D. Deductible does not apply to this Additional Coverage. e. Electronic Vandalism (1) We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "indemnity period" caused by direct physical loss of or damage to "electronic data processing equipment" or "electronic data processing data and media" at the described premises. The loss or damage must be caused by or result from "electronic vandalism". PR1270CF (03-13) Business Income Coverage Form Page 4 of 12

5 (2) The Limit of Insurance shown for "electronic vandalism" in the Business Income Additional Coverages Declarations is the most we will pay under this Additional Coverage for the sum of all covered Business Income losses arising out of all "electronic vandalism" occurring in any "policy year". This limit applies regardless of the number of described premises, items or types of property or coverages involved under this Coverage Form. f. Expenses To Reduce Loss In the event of a covered loss of Business Income, we will pay for the actual reasonable and necessary expenses you incur, except the cost of extinguishing a fire, to avoid further loss of Business Income. The total of our payment for Business Income loss and Expenses To Reduce Loss will not be more than the Business Income loss that would have been payable under this Coverage Form if the Expenses To Reduce Loss had not been incurred. Payment under this Additional Coverage is included in and does not increase the applicable Limit of Insurance. g. Ingress Or Egress (1) When a Covered Cause of Loss causes damage to property that is away from, but within 1,600 metres of the described premises, we will pay for the actual loss of Business Income you sustain caused by the prevention of ingress to or egress from the described premises (other than as provided under the Civil Authority Additional Coverage). (2) Ingress Or Egress Coverage for Business Income will begin 24 hours (unless a different number of hours is shown in the Business Income Declarations) after the time ingress to or egress from the described premises is first prevented and will apply for a period of up to 30 consecutive days. Section D. Deductible does not apply to this Additional Coverage. (3) Payment under this Additional Coverage is included in and does not increase the applicable Limit of Insurance. h. Newly Acquired Premises (1) We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "indemnity period" caused by direct physical loss or damage to property (including property under construction) at any premises you newly acquire by purchase or lease, other than at "exhibitions". The loss or damage must be caused by or result from a Covered Cause of Loss. (2) With respect only to the insurance provided under this Additional Coverage, the phrase, at the described premises, as used in the definition of "indemnity period" and Section A.2. Indemnity Period, is replaced by the phrase at a newly acquired premises. (3) Insurance under this Additional Coverage for each newly acquired premises will end when any of the following first occurs: (a) This policy is terminated or expires; (b) 180 days expire after you acquire or begin to construct the property; (c) Coverage for Business Income at the premises is more specifically insured; (d) The date we endorse this policy to add such premises, if we agree to do so; or (e) The date we notify you that coverage will cease because we elect not to insure the newly acquired premises. We will charge you additional premium for values reported from the date you acquire the premises. i. Ordinance Or Law - Increased Indemnity Period (1) If direct physical loss or damage by a Covered Cause of Loss occurs to property at the described premises, we will pay for the actual loss of Business Income you sustain during the reasonable and necessary increase in the "indemnity period" caused by or resulting from the enforcement of any ordinance or law which: (a) Regulates the demolition, construction or repair of any property or establishes zoning or land use requirements at the described premises; PR1270CF (03-13) Business Income Coverage Form Page 5 of 12

6 (b) Requires the demolition of undamaged parts of property not damaged by a Covered Cause of Loss; and (c) Is in force at the time of loss. However, this Additional Coverage applies only to the increased period required to repair, reconstruct or remodel the property to comply with the minimum standards of such ordinance or law. (2) This Additional Coverage does not apply to any loss caused by or resulting from: (a) The enforcement of any ordinance or law which requires: (i) The demolition, repair, replacement, reconstruction, remodelling or remediation of property due to contamination by "pollutants" or due to the presence, growth, proliferation, spread or any activity of "fungus", virus or bacteria; or (ii) Any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants", "fungus", virus or bacteria; or (b) The enforcement of any ordinance or law which: (i) You were required to comply with before the loss, even if the building was undamaged; and (ii) You failed to comply with. (3) The Ordinance Or Law exclusion in Section B.1.f. of the Commercial Property Coverage Form does not apply to the insurance specifically provided under this Additional Coverage. j. Pollutant Cleanup And Removal (1) You may extend the insurance provided by this Coverage Form for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "indemnity period" to apply to the actual amount of such loss of Business Income that you incur during the increased period of time necessarily required to extract "pollutants" from land or water at the described premises. (2) The insurance provided under this Additional Coverage applies only if the discharge, dispersal, seepage, migration, release or escape of the "pollutants" into the land or water is caused by or results from direct physical loss or damage by a Covered Cause of Loss which occurs: (a) On the described premises; (b) To Covered Property under the Commercial Property Coverage Form; and (c) During the policy period. (3) The Limit of Insurance shown for Pollutant Cleanup And Removal in the Business Income Additional Coverages Declarations is the most we will pay under this Additional Coverage for the sum of all covered Business Income losses arising out of all Covered Causes of Loss occurring in any "policy year". k. Professional Fees (1) You may extend the insurance provided by this Coverage Form to apply to the reasonable expenses you incur preparing claim data when we require it to adjust a covered loss. This includes the cost of preparing income statements and other documentation to show the extent of loss. (2) We will not pay for: (a) Any expenses incurred, directed or billed by or payable to lawyers, insurance adjusters including public adjusters, or their associates or subsidiaries; (b) Any costs as provided in the Loss Condition E.1. Appraisal; or PR1270CF (03-13) Business Income Coverage Form Page 6 of 12

7 (c) Any expenses incurred, directed or billed by or payable to insurance brokers or agents or insurance consultants, or their associates or subsidiaries, without our written consent prior to such expenses being incurred. l. Transit Business Income (1) You may extend the insurance provided by this Coverage Form for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "indemnity period" to apply to the actual amount of such loss of Business Income that you incur caused by direct physical loss or damage by a Covered Cause of Loss to Covered Property under the Commercial Property Coverage Form while in transit within the "coverage territory". (2) This Additional Coverage does not apply to loss caused by or resulting from loss of or damage to: (a) Shipments by a governmental postal service, except by registered mail; (b) Export and import shipments while covered under an ocean marine cargo or other insurance policy; (c) Property while waterborne, except while in transit by inland water carriers or by coastwise vessels operating within "territorial waters"; (d) Property of others for which you are responsible while acting as a common or contract carrier, car-loader, freight forwarder, freight consolidator, freight broker, shipping association or similar arranger of transportation, or as a public warehouse operator; (e) Property within a conveyance or container caused by theft while the conveyance or container is unattended unless the portion of the conveyance or container containing the property is fully enclosed and securely locked, and the theft is by forcible entry of which there is visible evidence; or (f) The transporting conveyance. (3) With respect only to the insurance provided under this Additional Coverage, the phrase, at the described premises, as used in the definition of "indemnity period" and in Section A.2. Indemnity Period, is replaced by the phrase in transit. m. Undescribed Premises (1) We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "indemnity period" caused by direct physical loss of or damage to property at Undescribed Premises. The loss or damage must be caused by or result from a Covered Cause of Loss. (2) Undescribed Premises, as used in this Additional Coverage, means premises: (a) Owned, leased or operated by you; or (b) Not owned, leased or operated by you, where your business personal property or business personal property of others in your care, custody or control is located; that are within the "coverage territory" and not described in the Business Income Declarations. (3) This Additional Coverage does not apply to loss caused by or resulting from loss or damage to property: (a) At the premises of a "dependent property"; (b) At any premises to which the Newly Acquired Premises Additional Coverage applies; or (c) In transit. (4) With respect only to the insurance provided under this Additional Coverage, the phrase at the described premises, as used in the definition of "indemnity period" and Section A.2. Indemnity Period, is replaced by the phrase at Undescribed Premises. n. Utility Services (1) We will pay for the actual loss of Business Income you sustain caused by the interruption of service to the described premises. The interruption must result from direct physical loss or PR1270CF (03-13) Business Income Coverage Form Page 7 of 12

8 damage by a Covered Cause of Loss to the following property located away from the described premises or located at the described premises and used to supply the utility service to the described premises from a source away from the described premises: (a) "Water supply services property"; (b) "Communication supply services property"; or (c) "Power supply services property". (2) The Hour Deductible that applies to this Utility Services Additional Coverage is indicated in the Business Income Additional Coverages Declarations. We will only pay for loss of Business Income you sustain after the number of consecutive hours indicated in the Business Income Additional Coverages Declarations following the direct physical loss or damage. The Deductible under Section D. of this Coverage Form does not apply to this Additional Coverage. (3) The Utility Services exclusion in Section B.1.h. of the Commercial Property Coverage Form does not apply to the insurance specifically provided under this Additional Coverage. B. EXCLUSIONS AND LIMITATION Do not add this form to a policy. It is for informational purposes only. The following exclusions and limitation apply in addition to the exclusions and limitations contained in the Commercial Property Coverage Form. 1. Exclusions We will not pay for: a. Finished Stock Any loss caused by or resulting from: (1) Damage or destruction of "finished stock"; or (2) The time required to reproduce "finished stock". This exclusion does not apply to the Contract Penalty or Expenses To Reduce Loss Additional Coverages. b. Other Consequential Loss Any other consequential loss including fines and penalties, except as specifically provided under the Contract Penalties Additional Coverage. c. Specified Property Any loss caused by or resulting from direct physical loss of or damage to the following property: (1) Harvested grain, hay, straw or other crops while outside of buildings; (2) Outdoor trees, shrubs, plants, lawns (including fairways, greens and tees), artificial turf (including its underlayment), growing crops, land or water; (3) Radio or television antennas (including satellite dishes), and their lead-in wiring, masts or towers, unless attached to a covered building at the described premises; (4) Animals, unless the loss is caused by or results from a "specified cause of loss", and then only if, as a direct result of the "specified cause of loss", the animals are killed or their death or destruction is made necessary; or (5) Human body parts and fluids, including organs, tissue, blood and cells. d. Strike, Cancellation Of Contract Any increase in loss caused by or resulting from: (1) Delay in rebuilding, repairing or replacing the property or resuming "operations", due to interference at the location of the rebuilding, repair or replacement by strikers or other persons; or (2) Suspension, lapse or cancellation of any license, lease or contract. But if the suspension, lapse or cancellation is directly caused by the "suspension" of "operations", we will cover such loss that affects your Business Income during the "indemnity period". PR1270CF (03-13) Business Income Coverage Form Page 8 of 12

9 2. Limitation Electronic Media And Records a. We will not pay for any loss of Business Income caused by direct physical loss of or damage to electronic media and records after the longer of: (1) The number of consecutive days as indicated in the Business Income Additional Coverages Declarations from the date of direct physical loss or damage; or (2) The period, beginning with the date of direct physical loss or damage, necessary to repair, rebuild or replace, with reasonable speed and similar quality, other property at the described premises (or other location of the loss to which this insurance applies) which suffered loss or damage in the same occurrence. b. Electronic media and records are: (1) Data stored on, created or used on, or transmitted to or from computer software (including systems and applications software) on electronic data processing recording or storage media such as hard or floppy disks, CDs, DVDs, flash memory, tapes, drives, cells, data processing devices or any other repositories of computer software which are used with electronically controlled equipment; (2) The electronic media on which the data is stored; and (3) Programming records and instructions used with electronically controlled equipment. C. LIMITS OF INSURANCE The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Business Income Declarations or any schedule or endorsement. Such limit will apply as follows: Scheduled Basis The Limit of Insurance shown in the Business Income Declarations applies separately to each scheduled described premises in any one occurrence. Blanket Basis The Limit of Insurance shown in the Business Income Declarations applies to all described premises, but is the most we will pay regardless of the number of described premises involved in any one occurrence. D. DEDUCTIBLE Coverage for loss of Business Income is subject to the applicable Deductible, if any, shown in the Business Income Declarations: 1. Waiting Period If an hour or "business day" deductible applies to your Business Income coverage, we will not pay for loss of Business Income in any one occurrence that is incurred during the period of time that: a. Begins at the time of direct physical loss or damage that triggers the Business Income coverage; and b. Continues for the consecutive number of hours or "business days" shown in the Business Income Declarations as the applicable Business Income deductible. 2. Dollar Amount If a dollar amount deductible applies to your Business Income coverage, we will not pay for loss of Business Income in any one occurrence until the amount of covered Business Income loss exceeds the applicable dollar amount deductible indicated in the Business Income Declarations. We will then pay the amount of Business Income loss in excess of the dollar amount deductible up to the applicable Limit of Insurance. PR1270CF (03-13) Business Income Coverage Form Page 9 of 12

10 E. LOSS CONDITIONS Do not add this form to a policy. It is for informational purposes only. The following conditions apply in addition to the Common Policy Conditions, the Loss Condition - Duties In The Event Of Loss Or Damage in the Commercial Property Coverage Form and the Additional Conditions in the Commercial Property Coverage Form: 1. Appraisal If we and you disagree on the amount of Net Income and "continuing operating expenses" or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser within 30 days of the written demand. Within 15 days of each party selecting an appraiser, the two appraisers will select an umpire. If they cannot agree within that 15 day period, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the amount of Net Income and "continuing operating expenses" or amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will: a. Pay its chosen appraiser; and b. Bear the other expenses of the appraisal and umpire equally. If there is an appraisal, we will still retain our right to deny the claim. 2. Duties In The Event Of Loss - Additional Duty The following duty applies in addition to the duties specified in the Loss Condition - Duties In The Event Of Loss Or Damage in the Commercial Property Coverage Form: If you intend to continue your business, you must resume all or part of your "operations" as quickly as possible. 3. Loss Determination a. The amount of Business Income loss will be determined based on: (1) The Net Income of the business before the direct physical loss or damage occurred; (2) The likely Net Income of the business if no physical loss or damage occurred, but not including any Net Income that would likely have been earned as a result of an increase in the volume of business as a result of favourable business conditions caused by the impact of the Covered Cause of Loss on customers or on other businesses; (3) The "continuing operating expenses", including ordinary payroll expense if applicable, necessary to resume "operations" with the same quality of service that existed just before the direct physical loss or damage; and (4) Other relevant sources of information, including: (a) Your financial records and accounting procedures; (b) Bills, invoices and other vouchers; and (c) Deeds, liens or contracts. b. Resumption Of Operations We will reduce the amount of your Business Income loss to the extent you can resume your "operations" in whole or in part, by using damaged or undamaged property (including merchandise or "stock") at the described premises or elsewhere and, with respect to the Business Income From Dependent Property Additional Coverage, by using any other available source of materials or outlet for your products. c. If you do not resume "operations", or do not resume "operations" as quickly as possible, we will pay based on the length of time it would have taken to resume "operations" as quickly as possible. 4. Loss Payment We will pay for covered loss within 30 days after we receive the sworn proof of loss, if: a. You have complied with all of the terms of this Coverage Form; and PR1270CF (03-13) Business Income Coverage Form Page 10 of 12

11 b. (1) We have reached agreement with you on the amount of loss; or (2) An appraisal award has been made. F. ADDITIONAL CONDITION Do not add this form to a policy. It is for informational purposes only. If a Coinsurance Percentage is shown in the Business Income Declarations the following Additional Condition applies: 1. Coinsurance a. We will not pay the full amount of any Business Income loss if the Limit of Insurance for Business Income is less than: (1) The Coinsurance Percentage shown for Business Income in the Business Income Declarations; times (2) The sum of: (i) The Net Income (Net Profit or Loss before income taxes); and (ii) "Continuing operating expenses", including ordinary payroll expense if applicable; that would have been earned or incurred (had no loss occurred) by your "operations" at the described premises for the number of months shown in the Business Income Declarations for the Indemnity Period following the inception, or last previous anniversary date, of this policy (whichever is later). Instead, we will determine the most we will pay using the following steps: (1) Multiply the Net Income and "continuing operating expenses" for the number of months shown in the Business Income Declarations for the Indemnity Period following the inception, or last previous anniversary date, of this policy by the Coinsurance Percentage; (2) Divide the Limit of Insurance for the described premises by the figure determined in step (1); and (3) Multiply the total amount of the covered loss, before application of the deductible, if any, by the figure determined in step (2). We will pay the amount determined in step (3) (subject to the applicable deductible, if any) or the Limit of Insurance, whichever is less. For the remainder, you will either have to rely on other insurance or absorb the loss yourself. b. Coinsurance only applies to the following Additional Coverages: (1) Alternations And New Buildings Delay In Completion; (2) Civil Authority; and (3) Ingress Or Egress. G. DEFINITIONS 1. "Business day" means a day, ending at midnight, that you are normally open for business. The first business day or hour begins at the time of loss. The day ends at midnight. If the loss occurs after the business has closed for the day, we will consider the first day or hour to be the next day or hour on which you would normally be open for business. 2. "Continuing operating expenses" means those operating expenses that continue to be incurred in whole or in part after direct physical loss of or damage to property by a Covered Cause of Loss results in a necessary "suspension" of your "operations" at a described premises. It may or may not include ordinary payroll expense. But "continuing operating expenses" does not include: a. Depreciation of buildings; or b. Depreciation of personal property. 3. "Dependent property" means property operated by others you directly depend on to: PR1270CF (03-13) Business Income Coverage Form Page 11 of 12

12 a. Deliver materials or services to you, or to others for your account (Contributing Locations). But any property which delivers the following services is not a Contributing Location with respect to such services: (1) Water supply; (2) Power supply; or (3) Communication, including services relating to internet access or access to any electronic, cellular or satellite network. b. Accept your products or services (Recipient Locations); c. Manufacture products for delivery to your customers under contract of sale (Manufacturing Locations); or d. Attract customers to your business (Leader Locations). 4. "Finished stock" means "stock" you have manufactured. "Finished stock" also includes whiskey and alcoholic products being aged. "Finished stock" does not include "stock" you have manufactured that is held for sale on the premises of any retail outlet insured under this Coverage Form. 5. "Operations" means your business activities occurring at the described premises even if such activities would not have produced income during the "indemnity period", such as research and development activities, and the tenantability of the described premises. 6. "Indemnity period" a. "Indemnity period" means, subject to any applicable Deductible under Section D. of this Coverage Form, the period of time that: (1) Begins at the time of direct physical loss or damage caused by or resulting from a Covered Cause of Loss at the described premises; and (2) Ends based on the option shown in the Business Income Declarations and as described in Section A.2. Indemnity Period. b. "Indemnity period" does not include any increased period required due to the enforcement of any ordinance or law that: (1) Regulates the demolition, construction or repair of any property or establishes zoning or land use requirements at the described premises, except as provided in the Ordinance Or Law - Increased Indemnity Period Additional Coverage; or (2) Requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants", except as provided in the Pollutant Clean Up And Removal Additional Coverage. The expiration date of this policy will not cut short the "indemnity period". 7. "Policy year" means the policy period shown in the Common Policy Declarations when the policy period is one year or less. When the policy period is longer than one year, it means the period of time that begins with the effective date of the policy and ends after 12 months, plus any additional period of less than 12 months, if the policy is extended. 8. "Rental value" means Business Income that consists of: a. Net Income (Net Profit or Loss before income taxes) that would have been earned or incurred as rental income from tenant occupancy of the premises described in the Declarations as furnished and equipped by you, including fair rental value of any portion of such described premises which is occupied by you; and b. "Continuing operating expenses" incurred in connection with such premises, including the amount of charges which are the legal obligation of the tenant(s) but would otherwise be your obligations. 9. "Suspension" means: a. The partial or complete cessation of your business activities; or b. That a part or all of the described premises is rendered untenantable. PR1270CF (03-13) Business Income Coverage Form Page 12 of 12