1. Forms
2. CP
3. CP-10-65

What the Form Is

The CP 10 65 Flood Coverage Endorsement is an optional endorsement used with commercial property policies to add flood as a covered cause of loss. Standard commercial property policies typically exclude damage from flood, making this endorsement crucial for businesses seeking protection against this peril. The endorsement defines 'flood' as a general and temporary condition of partial or complete inundation of normally dry land areas due to: the overflow of inland or tidal waters; the unusual and rapid accumulation or runoff of surface waters from any source; or mudslides or mudflows caused by flooding. It's important to note that this endorsement modifies, but does not entirely replace, the water exclusion in the underlying Causes of Loss form; it specifically carves back in coverage for 'flood' as defined. This endorsement is not a stand-alone policy and must be attached to one of the standard Causes of Loss forms (e.g., CP 10 10, CP 10 20, or CP 10 30).

Classes of Business It Applies To

This endorsement is relevant for a wide range of commercial enterprises, particularly those with exposures to flood damage. Examples include:

• Businesses located in designated floodplains or coastal areas.
• Properties situated near rivers, lakes, or other bodies of water prone to overflowing.
• Operations in areas with poor drainage or susceptibility to rapid surface water accumulation during heavy rainfall.
• Real estate owners, manufacturers, retailers, hospitality businesses, and any commercial entity whose buildings or business personal property could be damaged by floodwaters.

For instance, a waterfront restaurant, a manufacturing plant near a river, or a retail strip mall in a low-lying area would all be prime candidates for this endorsement.

Special Considerations

• Interaction with NFIP: The CP 10 65 can serve as primary flood coverage, or it can act as excess or 'wrap-around' coverage over a policy from the National Flood Insurance Program (NFIP). In some cases, particularly for properties eligible for NFIP coverage, the endorsement may require the insured to maintain an underlying NFIP policy unless specifically waived by the insurer.
• Waiting Period: A 72-hour waiting period typically applies from the time the endorsement is added or when a limit increase is requested. However, the 10 12 edition clarified that this waiting period may not apply to renewal policies or new policies if flood coverage was continuously maintained with a prior carrier.
• Valuation: Unlike standard NFIP policies which often limit coverage to Actual Cash Value (ACV) for commercial properties, the CP 10 65 typically follows the valuation provisions of the underlying commercial property policy, which could be Replacement Cost (RC) if so written.
• Time Element Coverage: If the underlying commercial property policy includes Business Income and/or Extra Expense coverage (e.g., via CP 00 30), the CP 10 65 can extend these coverages to apply to suspensions of operations caused by flood, a significant advantage over NFIP policies which generally do not offer time element coverage.
• Specific Exclusions: The endorsement contains its own set of exclusions and limitations. For example, it typically excludes loss or damage from the destabilization of land due to subsurface water accumulation. Property such as land, boathouses, open structures on or over water, bulkheads, pilings, piers, wharves, docks, and retaining walls (unless specifically added by another endorsement like CP 14 10) are often not covered or have limited coverage.
• Debris Removal: Debris removal coverage is modified by this endorsement. It covers the cost to remove debris of covered property damaged by flood and other debris on the premises, but generally excludes the expense to remove mud or earth from the grounds.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters must carefully evaluate the flood exposure, considering factors like flood zone designation (e.g., FEMA flood maps), elevation, proximity to water bodies, historical flood data, and any flood mitigation measures in place.
• Limit Adequacy: Agents should work with insureds to determine appropriate flood limits, which can be the same as or a sub-limit of the overall property limits. An aggregate limit for all flood losses during a policy year also applies.
• Deductibles: A specific flood deductible will apply, which can be different from the standard policy deductible.
• Coinsurance: The coinsurance condition of the base policy generally applies to flood losses unless a 'no-coinsurance' option is indicated on the Flood Coverage Schedule (CP DS 65).
• Coverage Gaps: Agents should explain that while this endorsement adds flood coverage, it doesn't cover all water-related losses. The underlying water exclusion in the base policy still applies to perils other than flood as defined (e.g., sewer backup unless directly caused by the flood event as specified, leakage, seepage not meeting the flood definition).
• Ordinance or Law: The standard Ordinance or Law exclusion in the Causes of Loss form remains applicable to flood losses unless coverage is specifically added by an endorsement like CP 04 05–Ordinance or Law Coverage.
• Tsunami: The tsunami portion of the earth movement exclusion in the base Causes of Loss form does not apply to a tidal water loss that would be covered under this endorsement.