Wheaton, Ill., April 30, 2008—Property/casualty insurers will soon have access to a new endorsement option for adding equipment breakdown coverage to a homeowners policy.

The endorsement will be made available on a sample basis (not filed) as part of the Homeowners Program developed and maintained by the American Association of Insurance Services (AAIS), a national advisory organization that develops policy forms and rating information used by more than 600 property/casualty insurers throughout the U.S.

AAIS's latest homeowners equipment breakdown coverage endorsement was developed in conjunction with Mutual Boiler Re, Malvern, Pa., an equipment breakdown reinsurer that specializes in treaty reinsurance and support services for insuring losses arising from mechanical, electrical, and pressure systems. Such losses are typically excluded from standard personal and commercial property forms.

While the endorsement was developed in conjunction with Mutual Boiler Re, it can be used with any equipment breakdown reinsurer. AAIS anticipates that most primary carriers will require the input of an equipment breakdown reinsurer to develop rules and rating information for use of the endorsement.

The AAIS "Equipment Breakdown Enhancement Endorsement" covers direct physical loss and resulting loss of use caused by equipment breakdown, which includes physical loss or damage to all mechanical, electrical, or fiber optic equipment. Although the endorsement carries its own limit and deductible amount for physical damage and loss of use, it relies on the base homeowners form with respect to the terms that describe covered property and the terms that trigger loss of use coverage.

In addition, the endorsement introduces three new incidental property coverages:

• "Expediting Expense," which covers the cost of expediting the repair of covered property;

• "Refrigerated Property," which covers the cost of perishable goods which have spoiled due to breakdown of covered equipment; and

• "Pollutant Clean Up and Removal," which covers the cost of cleaning up and removing pollutant following a covered loss to covered property.

Subject to the equipment breakdown per occurrence limit, each of the incidental coverages pays recovery up to the respective sub-limit set by the insurer.

For information on affiliating with AAIS for use of its Homeowners Program, contact Rick Maka, director of marketing, at rickm@AAISonline.com, or by calling 800-564-AAIS.