1. Forms
2. CP
3. CP-03-39

What the form is

The CP 03 39 12 00 endorsement is designed for commercial property insurance policies in South Carolina. Its primary function is to implement a percentage-based deductible specifically for damage caused by windstorm or hail. Unlike a fixed dollar deductible, a percentage deductible is calculated as a percentage of a predetermined value, such as the value of the insured property or the applicable limit of insurance. This endorsement was introduced to ensure compliance with South Carolina insurance regulations (S.C. INS REGS. 69-56 (2000)) concerning windstorm and hail deductibles.

Classes of business it applies to

This endorsement applies to virtually any commercial property located within the state of South Carolina that is insured under a commercial property policy. It is particularly relevant for properties in areas susceptible to windstorms and hail. Examples include:

• Retail stores
• Office buildings
• Manufacturing facilities
• Warehouses
• Apartment buildings and other commercial habitational risks

Special considerations

• State-Specific Mandate: The form was specifically created to comply with South Carolina regulations, indicating its use may be mandatory or highly recommended for policies covering property in SC.
• Replacement of Previous Form: CP 03 39 12 00 replaced the form CP 03 21 (Windstorm Or Hail Percentage Deductible) for use in South Carolina.
• Impact of Percentage Deductible: Insureds must understand that a percentage deductible can result in a substantially higher out-of-pocket cost in the event of a significant windstorm or hail loss, especially for high-value properties, compared to a traditional flat dollar deductible. The basis for the percentage calculation (e.g., per building, per occurrence, total insured value) should be clearly understood.
• Disclosure: The form includes mandatory wording to notify insureds about the separate windstorm and hail deductible.

Key information for agents and underwriters

• Agent's Role: Agents must clearly explain the operation of the percentage deductible to their South Carolina clients, ensuring they comprehend how it's calculated and its financial implications in the event of a windstorm or hail claim. This includes clarifying what value the percentage applies to.
• Underwriting Considerations: Underwriters need to assess the increased risk retention by the insured due to the percentage deductible, particularly for properties in coastal or other high-risk zones within South Carolina. This understanding is crucial for appropriate risk assessment and pricing.
• Regulatory Compliance: Utilization of this form helps ensure compliance with specific South Carolina insurance regulations regarding windstorm and hail coverage.
• Coverage Clarity: This endorsement helps in clearly defining the insured's responsibility in the event of a windstorm or hail loss, separating it from other perils that might be subject to a standard deductible.