What it does
CP 01 40 adds an exclusion for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces, or is capable of inducing, physical distress, illness or disease. It applies to every form and endorsement in the Commercial Property Coverage Part or Standard Property Policy. That includes building and personal property coverage and business income, extra expense and civil authority coverage.
Key provisions
- The exclusion does not apply to "fungus", wet rot or dry rot, which are handled by the separate fungus exclusion and limited additional coverage in the Causes of Loss forms.
- It takes precedence over any pollutant exclusion for losses within its scope.
- It removes references to bacteria from the fungus exclusion and from the limited fungus additional coverage.
- It states that it does not create coverage for any loss otherwise excluded.
Who sees it
Nearly every commercial property policy written on ISO forms since the mid-2000s carries this endorsement. Policies containing it have been litigated in COVID-19 business interruption suits. One example is The Inns by the Sea v. California Mutual Insurance Co. (Cal. Ct. App. 2021), whose policy included CP 01 40 07 06.
Quoting and selling notes
- Clients who ask about pandemic or contamination shutdowns should know the property policy does not respond. Specialty event cancellation, food contamination (CP 15 05 for food businesses) or parametric products may be alternatives.
- Food processors and restaurants should review contamination coverage separately.
