Form OP DS 00: Capital Assets Program Declarations
1. What the form is
The OP DS 00, Capital Assets Program Declarations, is a crucial component of an Output Policy. It functions as the summary page for the Capital Assets Program Coverage Form (OP 00 01). This declarations page personalizes the broader coverage form by detailing the specific agreements between the insurer and the named insured. It outlines key information such as the named insured, policy period, description of covered property, coverage limits, deductibles, and the premium. Essentially, it's a snapshot of the essential elements of the insurance contract, making it easier to understand the scope of coverage without having to sift through the entire policy document. The declarations page will also list any attached forms and endorsements that modify the policy.
2. Classes of business it applies to
The Capital Assets Program, and therefore the OP DS 00 declarations, is designed for a wide array of medium to large commercial accounts. It's particularly well-suited for businesses with significant tangible assets. Specific industries and business types that would utilize this form include:
- Manufacturing: This is a primary sector for output policies, covering everything from raw materials to finished goods and the machinery used in production. Examples include furniture manufacturers, plastic and rubber manufacturers, and automakers.
- Industrial Operations: Businesses involved in processing and other industrial activities benefit from the broad property coverage. This could include iron, steel, and aluminum industries or chemical product manufacturers.
- Commercial Entities: This includes a broad range of businesses like wholesalers, retailers, and service providers.
- Institutional Risks: Organizations such as schools or hospitals with substantial property exposures can be covered.
- Habitational Risks: Certain types of multi-unit dwellings may be eligible.
- Contracting: Businesses that hold property for installation at job sites can find this coverage beneficial.
- Agribusiness: While there is a specific Agricultural Capital Assets Program, the general Capital Assets Program may be suitable if the agribusiness component of an operation is minor. Examples include food processing and manufacturing.
The program is generally not intended for risks whose principal activity is housing or agriculture (though some agribusiness may fit), natural gas companies, or electrical generating stations.
3. Special considerations
There are several important factors to keep in mind when using the OP DS 00 and the underlying Capital Assets Program:
- Broad Coverage: The Capital Assets Program (OP 00 01) is known for providing very broad and comprehensive property coverage, often on a blanket basis and without a coinsurance penalty. This means one limit can apply to all covered buildings and business personal property.
- Mandatory 100% Value: All covered property must typically be insured to its full 100% value. This can lead to higher building limits compared to other forms, as it includes items like foundations, underground pipes, flues, and drains.
- Limited Endorsement Flexibility: Unlike many other ISO forms that can be easily modified with endorsements, the OP 00 01 is a largely self-contained coverage form. Endorsements are more likely to reduce or restrict coverage rather than enhance it.
- Business Income and Extra Expense: These coverages are often automatically included when a limit of insurance is entered on the declarations page.
- Declarations Accuracy is Key: Since the declarations page (OP DS 00) defines the specifics of coverage (e.g., named insured, property descriptions, limits), extreme accuracy is vital. Errors or omissions can lead to claim denials or coverage disputes. For example, an incorrect property address could jeopardize coverage.
- Multiple Locations: If the insured has multiple locations, a supplemental declarations form (like the CP DS 01 for general commercial property) might be needed for each additional location, though the OP DS 00 itself would be the primary declarations for the overall Capital Assets Program. The OP DS 02 is a supplemental declarations form specifically for the Capital Assets Program when higher limits for certain coverages apply.
Real-world example: A large manufacturing company with multiple buildings, extensive machinery, and inventory would benefit from the blanket coverage and automatic business income provisions. However, they must ensure the OP DS 00 accurately reflects all locations and that the property values listed meet the 100% insurance-to-value requirement, including often-overlooked items like foundations and underground pipes, to avoid issues at the time of a claim.
4. Key information for agents and underwriters
- Pricing Flexibility: The Capital Assets Program is designed to offer pricing flexibility for large and medium commercial accounts. Rating is often based on the specific operation and can be risk-sensitive.
- Risk Assessment: Underwriters need to carefully assess the nature of the risk, given the breadth of coverage. This includes understanding the insured's operations, the types of property covered (including mobile equipment and property held for installation), and potential exposures like property in transit or off-premises. The program is designed for well-managed risks.
- No Coinsurance: A significant feature is the absence of a coinsurance provision, which simplifies loss settlement for clients but requires careful upfront valuation to ensure adequate limits are set at 100% of value.
- Built-in Coverages: Many coverages that are optional or require separate endorsements in other property programs are automatically included in the OP 00 01 coverage form, such as certain inland marine type coverages (e.g., property in transit, property at unnamed locations up to a sub-limit). The declarations (OP DS 00) will reflect the applicable limits for these.
- Coverage Gaps: While broad, it's crucial to identify any remaining coverage gaps. The OP 00 01 is comprehensive, but specific client needs might require manuscript endorsements or separate policies for exposures not covered (though modifying the OP 00 01 itself is less common for broadening coverage).
- Underwriting Guidelines: Insurers will have their own specific underwriting guidelines regarding eligible classes of business, minimum/maximum property values, and excluded operations. For instance, some insurers may deem contractors or certain restaurant types unacceptable for their version of an output program.
- Review Declarations Carefully: Agents must meticulously review the OP DS 00 with the client to ensure all information, including named insureds, locations, property descriptions, limits, and deductibles, is accurate and aligns with the client’s needs and the insurer’s requirements. This includes verifying that all necessary forms and endorsements are listed.
Real-world example for underwriting: An underwriter evaluating a submission for a wholesale distributor using the Capital Assets Program would pay close attention to the values declared for inventory (stock) on the OP DS 00, the transit exposures (as some transit coverage is built-in), and any off-premises property. They would also verify that business income and extra expense limits are appropriate for the business's operational needs, as these coverages are activated by entries on the declarations. The lack of a coinsurance clause means the underwriter must be confident in the accuracy of the 100% valuation provided.