Form CP 01 38: Washington Changes - Commercial Property
1. What the form is
Form CP 01 38, titled "Washington Changes," is a mandatory endorsement that modifies the Commercial Property Coverage Part, most commonly the Building and Personal Property Coverage Form (CP 00 10), to ensure compliance with Washington state-specific laws and regulations. Its primary function is to amend standard policy language to align with the legal requirements of Washington, potentially impacting various aspects of coverage, conditions, or definitions within the policy. This endorsement ensures that the commercial property policy adheres to the minimum standards and specific provisions mandated by Washington's Office of the Insurance Commissioner.
2. Classes of business it applies to
The CP 01 38 endorsement applies to virtually any commercial enterprise in Washington that requires commercial property insurance. Since it modifies the standard Commercial Property Coverage Part, its reach is broad. Examples include, but are not limited to:
- Retail Stores: From small boutiques in Pike Place Market to larger department stores, this form ensures their property coverage (building, contents, business income) meets Washington's requirements.
- Manufacturing Facilities: Businesses involved in manufacturing, such as aerospace component producers in Everett or food processing plants in Eastern Washington, will have this endorsement attached to their property policies.
- Real Estate: Owners of commercial buildings, such as office complexes in Seattle or mixed-use properties, will find this endorsement part of their insurance contract.
- Hospitality: Hotels, motels, and restaurants across the state.
- Warehousing and Logistics: Companies operating storage facilities or distribution centers.
- Service Industries: Various service-oriented businesses that own or lease commercial space.
Essentially, any business purchasing a standard commercial property policy (which often uses ISO forms like the CP 00 10 as a base) in Washington will likely have the CP 01 38 endorsement included.
3. Special considerations
Several special considerations are important when dealing with form CP 01 38:
- Mandatory Application: This is not an optional endorsement. If an insurer uses a standard Commercial Property Coverage Part (like those based on ISO forms) in Washington, this endorsement is typically required to bring the policy into compliance with state law.
- Washington-Specific Provisions: The changes introduced by this form are driven by Washington's unique regulatory landscape. These could relate to aspects like:
- Claim handling procedures and timelines.
- Specific policy language requirements or prohibitions.
- Conditions related to policy cancellation or nonrenewal.
- Provisions concerning specific perils or types of property if Washington law dictates particular treatment.
- Impact on Standard Forms: It directly amends the language of underlying forms like the CP 00 10. It's crucial to read CP 01 38 in conjunction with the rest of the policy to understand the full scope of coverage and conditions. For example, if Washington law mandates a specific notice period for policy changes that differs from the standard CP 00 10 language, the CP 01 38 would implement that state-specific requirement.
- Regulatory Updates: Washington's insurance laws and regulations can change. Insurers must ensure they are using the most current version of CP 01 38 to remain in compliance. Agents and underwriters should stay informed about updates from the Washington Office of the Insurance Commissioner.
Real-world example: If Washington state law has a specific requirement regarding how "fungus" coverage (often limited in standard property forms) must be addressed or offered, the CP 01 38 would incorporate those specific requirements, potentially amending or clarifying the standard policy's approach to this peril.
4. Key information for agents and underwriters
- No Direct Pricing Impact (Usually): The CP 01 38 itself doesn't typically have a direct, separate premium charge. Its purpose is compliance. However, the underlying Washington regulations it incorporates might indirectly influence overall base rates for commercial property in the state.
- Risk Assessment: While the form itself is about legal compliance, the specific Washington laws it addresses might highlight areas of risk that require particular attention during underwriting. For example, if Washington has stringent rules on claims handling for certain perils, underwriters might scrutinize a risk's history or exposure to those perils more closely.
- Coverage Interpretation: Agents must understand that the CP 01 38 can alter standard coverage interpretations. They should be prepared to explain to clients how Washington-specific provisions might affect their coverage compared to a generic policy.
- Underwriting Guidelines: Underwriters must ensure their company's specific underwriting guidelines for Washington incorporate any nuances introduced by the CP 01 38 and the state laws it reflects. This includes ensuring policy issuance and administration align with Washington's requirements.
- Keeping Current: It is paramount for both agents and underwriters to use the latest edition of this form and be aware of any circulars or bulletins from ISO or the Washington Office of the Insurance Commissioner that might affect its application or interpretation. Failure to comply with state-mandated endorsements can lead to regulatory penalties and coverage disputes.
- Relation to CP 00 10: This endorsement is specifically designed to modify forms like the CP 00 10 (Building and Personal Property Coverage Form). Understanding the base CP 00 10 is essential to grasp the modifications made by CP 01 38.
Real-world example for agents: An agent explaining a Commercial Property policy to a Washington-based client should specifically point out any provisions in the CP 01 38 that differ from what a client in another state might expect, such as specific timelines for claim acknowledgment or payment mandated by Washington law and incorporated via this endorsement.