Does your prospect’s policy cover foundations and underground pipes? Does the business owner think they are covered?

There are many similarities in coverage between BOP and CP 0010 (Building and BPP Coverage form), but there also significant differences. One of those is in coverage of Foundations and Underground Pipes.

Form CP 0010 specifically excludes:

“g. Foundations of buildings, structures, machinery or boilers if their foundations are below:
The lowest basement floor; or
The surface of the ground, if there is no basement”

and also specifically excludes

“m. Underground pipes, flues or drains”

Uh-oh.

Let’s look at the BOP. It contains limited exclusions for foundations:

exclusion B.1.b.4. for earth movement and earth sinking
and exclusion B.1.g.4. for “water under the ground surface pressing on, or flowing or seeping through: Foundations, walls, floors or paved surfaces;
Basements, whether paved or not”

The BOP is silent on underground pipes. In other words, coverage is not excluded.

Earth movement and sinking coverage should be provided by an Earthquake policy, and it’s not surprising that water damage to a foundation (probably caused by a flood) is excluded. This is an improvement over the CPP, since we have mostly covered the underground pipes and foundations.

Are these components of the building included in the Building limit, so that prospect believes they are insured? If the policy is a BOP, no problem. If the policy is a CPP, the coverage needs to be scheduled elsewhere – or the coverage does not exist. This is a possible wedge to sign that prospect.