Goods in transit
Over 150 years ago commercial transportation centered on the
oceans and the ports that sent and received the goods. Obviously, those goods that ended up
transported by ocean had to be transported to the ports for shipment. Inland marine insurance refers to the
transportation over land. Primarily,
the risks and coverage relate to goods in transit. Even so, risks have been added that have little or no transit
characteristics.
Why is it called Inland Marine insurance?
Originally it was the custom to insure goods only while on a
vessel. Water travel was the principal
means of transportation so the demand was for coverage for those circumstances. As inland transportation became more common
the need for insurance beyond the vessel also became in demand. The ocean policy was extended by endorsement
to cover the goods while on dock. Then
it was extended by endorsement to cover the goods while they were on connecting
land and water conveyances until they reached their destination. The next step wasnt hard to make: adapt the
ocean policy to cover inland transportation risks. They termed the policies Inland
Marine Insurance.
Growth of the Inland Marine Insurance Industry
Inland marine insurance would not have developed had the inland
transportation facilities not developed and improved. With each new improvement, new and varied transportation risks
were recognized. These risks needed
insurance. One of the major
developments was the transportation of certain types of personal property,
which the owners desired insurance for.
The first major inland transporter was the railroad. Initially, the railroad practiced
self-insurance. This worked well in
most cases, but as private industry began to ship large cargos, it became
evident that self-insurance would no longer be the answer. Many private companies actually bought their
own railroad cars and paid the railroad to move them. As this became more common the shippers realized that there were
gaps in the railroads protection. They
sought insurance as a result.
Next came private transportation: automobiles, trucks, and
airplanes. Although they were not
typically used in major transportation of goods they did have a value that was
substantial. The possibility of loss,
therefore, was also substantial to their owners. As private inland transportation became increasingly common,
owners requested insurance policies to insure against loss.
Americans consider their economy as one of financial affluence. Our ability to spend on nonessential items
has grown as our economy has grown. Of
course we still have poverty, but America has less poverty to a less severe
degree than nearly any other country.
Even our poor have more dollars to spend than does the poor in most
other countries. The result is an
increase in personal property. Our
personal property includes such things as jewelry and other high value items
that require insurance against theft or other loss. Small items, such as
jewelry and personal equipment (computers for example) present a high moral
hazard because they are so easily sold.
While kept at a residence such items are covered by homeowners
insurance, which tend to be named-location and named-perils coverage. However, this coverage is not always
adequate for the value needed and, in some cases, for the type of property
owned. The need for broader coverage
and off-premises protection may be considered by the inland marine insurer. Due to many reasons, including the need to
adapt to new demands, some risks became better covered by marine rather than
fire or casualty insurers. For those
who are interested in a historical perspective, Franklin Tuttles Examination
of Insurance Companies should be consulted.
Many states have laws that restrict the types of items and
coverage that a fire and casualty company may insure. Typically the insurance lines that must be followed are life,
fire, casualty, or marine. These
limitations made some types of coverage more easily underwritten by marine
insurers. The charters and state laws
gave marine insurers the power to assume liability against loss or damage to
property originating from the perils of transportation. Since there was no precise definition as to
what constituted a transportation risk, an ambitious marine underwriter could
interpret transportation risk any way he or she saw fit. There were few (if any) objections from the
fire and casualty insurers who did not wish to take on the additional broad
coverages. Additionally, marine
insurers had expertise from the hazards of transportation that were
unique. They were accustomed to writing
policies that were designed for specific situations. These underwriters could zero in on specific circumstances in
ways that the typical fire and casualty underwriter was not experienced in.
Fire and casualty underwriters were restricted from the kind of
experience that marine underwriters were exposed to routinely. The strict regulation of the forms and rates
used by fire and casualty insurers (as required by state regulation) also
restricted their underwriting experiences.
The regulations promoted rigidity rather than flexibility in the
policies. Since marine underwriters had
never experienced such restriction they were experienced in the flexibility
required to venture into new forms of coverage. It is unlikely that marine insurance will ever experience such
rigid control since they compete in an international market where competition
requires the ability to be flexible.
Competition is the nature of the marine market.
New types of coverage can be difficult to write effectively in
the beginning. Marine insurers, in some
cases, issued very broad policies covering all risks, with few exclusions. Policies were issued for warehouses and
property that were never in transit.
Items such as stained-glass windows, organs, high-tension lines,
bridges, and tunnels were insured.
Obviously, a bridge or tunnel will not be in transit.
As the marine underwriters wrote a growing number of policies
that had nothing to do with transportation, fire and casualty insurers began to
protest. They felt their field of
insurance was being invaded. The
conflict became so pronounced that in 1932 the Insurance Superintendent in New
York held hearings and issued a ruling as to the powers each type of insurer
had. The National Convention of
Insurance Commissioners (today called The National Association of Insurance
Commissioners) adopted the Nationwide Definition and Interpretation of the
Insuring Powers of Marine and Transportation Underwriters in June 1933, which
is referred to as the Nationwide Marine Definition. This definition has been revised in 1954, 1956, 1959, and
1976. The various underwriters have
agreed to abide by its provisions. A
Joint Committee on Interpretation and Complaint was established under the
agreement. It consists of
representatives of the marine, casualty, and fire underwriters. They have the power to execute and carry out
the provisions of the wide marine definition, although any insurer may appeal a
ruling or interpretation.
The Joint Committee on Interpretation and Complaint addresses
questionable cases that come up and issues interpretive bulletins on questions
that are submitted by insurers under the definition. The Nationwide Marine Definition has been modified periodically
by individual states. This is not a
definition in the normal sense. Rather,
it is a listing of the types of policies and risks that the NAIC has identified
as making up the field of marine insurance.[1] Primarily the purpose is to classify risks
as either marine, inland marine, or transportation insurance. There is an abbreviated version
of six divisions of coverage identified in the Nationwide Marine Definition:
1)
Imports. As long as the goods remain segregated and
identifiable and have not been sold by the importer, removed from storage and
placed on sale, or moved into a manufacturing or processing operation they are
considered to be imports.
2)
Exports. From the time the goods are designated and
being prepared for export, they are considered to be in this category.
3)
Domestic Shipments. This includes goods that are in transit, on
consignment, or otherwise in the custody of others that are not the owner. Such shipments are not covered at the manufacturing
premises nor after arrival at the premises owned, leased, or operated by the
insured.
4)
Means of Communication. This includes bridges, tunnels, piers,
pipelines, power transmission lines and towers, radio and television equipment,
and towers and outdoor cranes.
Specifically excluded are buildings, their improvements, furniture and
fixtures, and supplies held in storage.
5)
Personal Property Floater Risks. This would include:
a.
Personal effects
b.
Personal property
c.
Government service
d.
Personal fur
e.
Personal jewelry
f.
Wedding presents
g.
Silverware
h.
Fine arts
i.
Stamp and coin collections
j.
Musical instruments, including radios, TVs, and
record-type players that are not musical instruments
k.
Mobile machinery and equipment, excluding any items
designed for highway use
l.
Installment sales and leased property, excluding any items
designed for highway use
m.
Live animals
6)
Commercial Property Floater Risks. In
addition to the transit risks concerned with imports, exports, domestic
shipments, and qualified communication items, there are business risk floaters.
a. Radium
b. Physicians and surgeons instruments
c. Patterns and dies
d. Theatrical property that would travel with a troupe
e. Film during production and on completed negatives and sound
records
f. Salesmens samples
g. Exhibition property in transit and while on exhibit
h. Live animals
i.
Builders and/or installation risks
j. Mobile articles, machinery, and equipment, excluding motor
vehicles designed for highway use
k. Property in the custody of a bailee or in transit to or from
bailment
l.
Installment sales and leased property
excluding motor vehicles designed for highway use
m. Garment contractors
n. Furriers or fur storers of customers property
o. Accounts receivable, valuable papers and records
p. Floor plan merchandise held for sale by dealers under a plan of reimbursement
q. Signs and street clocks
r. Fine arts held or owned by other than individuals
s. Dealers who sell personal property that may be covered
specifically by floater policies after the sale.
t. Wool growers
u. Domestic bulk liquids including storage tanks
v. Difference in conditions (DIC) coverage
w. Electronic data-processing policies
The final section of the Nationwide Marine Definition identifies
the exposures that do not qualify as marine risks unless specifically covered
in the preceding sections.
Storage of insureds merchandise
Merchandise in the course of manufacture on the premises
of the manufacturer
Furniture and fixtures and improvements and betterments to
buildings
Monies and securities in safes, vaults, safety deposit
vaults, banks or insureds premises, except while in the process of
transportation
Inland Marine Insurance
Characteristics
The Nationwide Marine Definition does not define inland marine
insurance. Only the underwriting powers
for the ocean and inland policies are described. The Nationwide Marine Definition is used to distinguish the
powers of the marine and other types of insurers, but no dividing line between
the ocean marine and inland marine insurance is given. The term, Inland
Marine Insurance, while used by those in the business, actually has
no stated meaning. While it is possible
to state the inland marine insurance lines, it is difficult to define the
subject in a definite manner that would exclude other lines of coverage. Why?
It is the nature of inland marine insurance to cover a wide variety of
risks. The chief characteristic of
inland marine insurance is coverage of property inland during transit. Inland
transit is transportation of property by means other than sea. That could include transportation by land,
air, or even water (but not the ocean).
This statement contains some important exceptions or modifications:
1. Sometimes
protection against the hazard of transportation by sea is made in inland marine
policies. An example of this is the
Jewelers Block policy.
2. Usually
the insured property is the cargo and not the actual transportation
vehicle. Insurance policies on hulls
used on lakes, rivers, and canals, and insurance policies covering other types
of inland carriers, such as aircraft or trucks designed for highway use are not
considered to be inland marine items for coverage. However, railroad rolling stock and off-the-road contractors
equipment would qualify for inland marine coverage.
3. Many
policies cover the legal liability of the insured rather than direct damage to
property. For example, in contracts
issued to motor, railroad, and air carriers, the policy gives protection
against legal liability for loss and damage caused by the perils insured
against while the goods are in the possession of the carrier.
4. Some
policies may be issued to cover non-portable property, such as bridges or
tunnels. Such items were considered an
aid to transportation so this class of business was given to inland marine
insurers. Additionally, fire and
casualty insurers were originally unable to provide coverage for the perils
these items faced.
5. Coverage
against the risks faced by property while it is stationary is also available
under inland marine policies. These
floater policies are common in the protection of portable property, both of the
business and personal type. These
floater policies were the first items that caused problems between other
insurers and inland marine insurers.
A very important characteristic of inland marine insurance
(perhaps the most important characteristic) is the willingness of this type of
underwriter to venture into new and previously untried fields of
insurance. Of course, it helps that
marine underwriters are legally able to venture into new fields. The lack of regulatory restrictions and the
past experience of marine underwriters in new areas created a unique ability to
try new fields. Probably no single
contribution, however, has been as significant as the development of all risks
coverage by the marine and inland marine underwriters.[2]
All-risks protection
The development of all-risks coverage is a development that is
relatively new. It came about when
organized land transportation companies became a major mover of goods. These companies needed protection from the
risks of land transportation. Besides
needing coverage, they needed coverage in an amount that would protect the
actual value of the goods. The types
and quantities of the goods being moved required protection from a wider
variety of risks than previously provided for.
The all-risk policy was developed through recognition of these
facts. The all-risk protection was
necessary because a major loss is still a financial loss whether it results
from fire, theft, or a gas leakage.
This fact had already been recognized in the ocean marine business. It took longer to be recognized for goods
transported across land.
Since marine underwriters had vast experience underwriting
transportation of goods, it made sense that they would underwrite land
transportation, too. It is important to
remember, however, that although there is all-risk protection available for
inland marine policies, that does not necessarily mean all policies are written
as such. There are many inland marine
policies that cover only specified perils named in the policy.
Both an inland marine policy and a fire policy could be written
on either a specified peril basis or an all-risk basis. When written on a named peril basis, each
peril is specifically named. If it is
not named, it probably is not covered.
Under an all-risk policy, protection is provided against all fortuitous
causes of loss subject to any exceptions specially stated in the policy. Even when named peril policies seem broad
(because so many perils are named), it is impossible to compare it to an
all-risk policy. It is the nature of
things to have hazards that were not anticipated. Why would the insured go with a named peril policy when an
all-risk policy gives better protection against loss? Because a named peril policy is less expensive than the broader
all-risk policy premium.
All-risk policies do not all have the same wording. Older policies state that they cover against
all risks of direct physical loss, or all risks of loss or damage to the insured
property except as hereinafter provided.
More recent policies may state they cover external risks of direct
physical loss unless the loss is limited or caused by a peril that is
excluded. Whatever the wording, the
courts have held that the all-risks type of policy covers only those losses
that are direct rather than consequential, fortuitous, and accidental in
nature. Losses intentionally caused by
the insured would not be covered.
No policy covers everything.
Even all-risk policies have exclusions.
The exact exclusions will be listed in the policy. Exclusions are used to clarify coverage,
eliminate risks that cannot be insured against based on reasonable rates, or to
reduce the likelihood of carelessness on the part of the insured.
Excessive hazard
Excessive hazards are typically excluded from coverage. An excessive hazard may be, for example,
property that is on exhibition exposing it to a large number of people. This peril may be able to be covered for
additional premium. Some hazards, such
as war, cannot be covered even for extra premium.
Property normally
covered by other insurance
It is not unusual for property to be covered under more than one
policy. When it would be normal
for the risk to be covered by another policy, it may be excluded under an inland
marine all-risk contract. An example of
this would be an automobile that would typically be covered under a separate
policy specifically designed for this purpose.
Wear and tear
Most items have routine use that causes wear and tear. Such routine use is typically excluded from
policies. Otherwise, consumers would
never have to personally replace anything as it ages. Normal use that produces the natural aging (and wear and tear) of
an item is not considered normal coverage for a policy. A related type of loss arising out of inherent
vice is also excluded. Inherent
vice is loss due to the natural quality of the item. For example, food will spoil normally as it ages even if no
actual damage has occurred. Some
contracts also exclude loss due to insects and vermin. The terms may not be specific, but typically
it includes moths, and rats. There has
been some debate as to whether or not squirrels are included in the exclusion.
Dampness or
extremes of temperature
Exclusions for dampness and temperature extremes are likely to be
found in floaters that deal with property that is susceptible to such
things. This is very similar to the
wear and tear exclusions.
Carelessness of
the insured
A major cause of loss is carelessness. As a result, some policies exclude loss due to policyholder
carelessness. Language may differ, but
often refers to marring and scratching of fragile articles. Any loss that is within the control of the
insured may be excluded. The number of
claims filed may also determine whether or not carelessness is considered by
the company.
Carelessness of
others
When insured items are being worked on by others, underwriters do
not want to be insuring their actions.
Therefore, loss or damage that is the result of the item being worked on
(whether employees of the insured or not) may be excluded. This exclusion is related to moral
hazard. If it is the job of employees
to work on equipment, there is likely to be a policy in place for that specific
purpose.
Mysterious disappearance
One of the major risks faced by businesses today is the
disappearance of property with no provable reason. The moral hazard this represents is too great to be insurable. There are floaters that cover theft, but
they require evidence or at least a strong presumption that theft has occurred.
Infidelity (a
disloyal act)
We like to believe that honesty is a trademark of business. As Enron demonstrated, this is not always
the case. Insurers are not interested
in duplicating the coverage of fidelity bonds or assuming the moral hazard
where there is misappropriation, secretion, infidelity, or any dishonest act
on the part of the insured . . . his employees . . . or others to whom the
property may be entrusted (carrier for hire excepted).
Artificially
generated electricity
Those who have a generator or some other devise for generating
electricity may find that their policy does not cover loss as a result. Usually, it applies only to electrical
apparatus and does not exclude coverage for fire that may ensue.
Earthquake and
flood
Earthquakes and flood perils are excluded with respect to
property at the premises of the insured.
There are policies that may be purchased that would cover such loss. Inland marine policies may also offer
floaters to provide this coverage.
War, acts of war,
and nuclear reaction
It may seem unlikely that one would be applying for compensation
following an act of war. However, in
these times of terrorism there is the possibility that an act of war, even in
peacetime, can happen. The intent is to
avoid the catastrophe hazard. With the
changing times, it has been necessary to expand the traditional definition of
warlike actions.
Underwriting
Moral and Morale
Hazards
The types of property that inland marine policies cover are
susceptible to theft because it is mobile, hard to identify, and readily
convertible to cash. In addition, the
goods often have a high value. The
owner, if financially stressed or simply dishonest, can submit a claim for theft
and still sell the merchandise. Even an
honest policyholder, if careless in protecting the goods, may end up submitting
a claim when the goods are genuinely stolen.
This leads to high premiums and selective underwriting.
Assignment
Insurance companies recognize the importance of the person
purchasing the insurance. While the
property being insured is certainly a major focus so, too, is the person
purchasing it. Because underwriters
consider the buyer when issuing a contract, they tend to prohibit assignment of
the policy to another without their consent.
When their consent is requested for assignment, the company will
consider whom the policy is being assigned to before granting permission. The underwriter will be considering the
moral hazard that might be present.
Who is requesting coverage?
Those insured will be presented in the same order found in the
Nationwide Marine Definition. Risks
vary so greatly depending upon the subject that there is no particular order
necessary anyway. Some inland marine
contracts will be standardized, whereas others are literally written to meet
the specific needs of a particular insured.
Imports and
exports (categories A and B)
As we have previously discussed, this relates to the ocean marine
policy. Inland marine policies merely
adapted the ocean marine policies for their use with the warehouse-to warehouse
clause.
Domestic shipments
(category C)
As the name implies, this relates to domestic shipments. The property transportation begins and ends
within the United States. That doesnt
mean that all these policies are the same.
Since the interests and goods may be vastly different, the policies
governing them may be vastly different as well.
The coverage of domestic shipments is separated into two main
groups. First there is the exposure to
loss by the ones who have an interest in the goods themselves. This is the shipper. Second,
there is the exposure of loss for one carrying the goods of another. That would be the liability of loss of someone
elses goods while in the carriers care.
This is the carrier.
The shipper has several choices:
He may transport the goods on owned or leased equipment
himself.
He may place his goods in the care of a common carrier.
Or, he may place the goods in the care of a contract
carrier.
Of the owner (shipper) uses railroad or truck common carriers,
then under English common law, the carrier is generally responsible for the
safe delivery of the goods. There are
exceptions. If the loss results from
acts of God, acts of the public enemy, exercise of public authority, fault or
neglect on the part of the shipper, or inherent vice or nature of the property
then the carrier is not at fault and is not, therefore, liable. This is different than carrier by sea,
whether domestic or overseas, where they are not responsible for loss to cargo
simply if free of negligence.
Responsibility of air carriers falls between the land and the sea
carriers, being greater than that of the sea carriers and less than that of the
land carriers.
The liability of a contract carrier depends upon the terms of
their contract. When the contract does
not address the subject of liability, then the carrier is usually only considered
liable if there is negligence.
What is a common carrier?
A common carrier is one that holds itself out to serve all who want to
use their services, provided its equipment is suitable for the goods being
shipped. Typically common carriers
operate on established routes on an established schedule. Contract carriers reserve the right to
choose the shippers they serve and to go where the shipper directs.
When there is a loss, how is payment for that loss
determined? There is the right of the
carrier to limit the dollar amount of recovery. If a straight bill of lading is used then the carrier
will be liable for the full value of the damaged goods. The tariff, which is the charge for carrying the
goods, will be higher than if a release bill of lading is used. Under a release bill of lading the amount
that can be recovered is limited. Since
the tariff might be substantially higher under a straight bill of lading, the
second type is often used.
Even though the common carrier may have liability for the goods
being transported, it is often beneficial for the owner of the goods to carry
insurance of their own. This is often
considered because the loss of goods due to some peril that would not be
covered by the shipper must be recognized.
In addition, the shipper may be given the release bill of lading which
would not cover the true value of the goods.
Finally, in the event of loss, the shipper would receive immediate
compensation from his or her personal policy and through subrogation gives the
insurer the opportunity to seek satisfaction from the carrier. Even though a court may find the carrier
liable to the shipper, whether or not the shipper could collect damages is
always uncertain.
Transportation
policies
Transportation policies may also be referred to as transit policies. Transit policies are considered vital to shippers since they
cover the shippers interests only.
They are usually of the open or floater type (the word open is used in
the same sense as it was in connection with ocean marine cargo policies). In other words, it is written on a time
basis and automatically covers all shipments of goods of the kind described in
the policy. In open policies the
values of all shipments are reported to the insurer and periodically the premium
is determined based on the values of the goods shipped since the last
adjustment. There are no rate filings
for most transit policies since there are no standard policies. Rates and coverage will depend upon the past
loss experience of the insured, the type of cargo being transported, the frequency
of the shipments, the value of the shipments, where the goods are going to and
coming from, plus anything else that might influence the possibility of
loss. This would include how the goods
will be stored before and during the delivery and how the goods will be handled
(even how many times they will be handled) by the insured. The insurance normally applies in the United
States from the time the goods leave the premises of the insured until they
reach their destination.
Protection is available on either a specified-perils or on an
all-risks basis. As we stated,
all-risks is more expensive, but also more comprehensive. Under specified perils coverage, protection
is typically listed as:
1. While on land against loss or damage by fire, lightning,
cyclone, tornado, flood; collision, derailment, and overturning of a vehicle;
and other perils inherent in the act of transportation.
2. While waterborne, against loss or damage caused
by fire and perils of the sea, including general average and/or salvage charges
and expenses, but free of particular average unless amounting to 3 percent of
the value of each case or package.
3. Against theft of an entire shipping package only, but does not
include pilferage.[3]
The all-risks (broad form) extends the coverage to include all
risks of loss or damage from any external cause. Both types of coverage will list exceptions to the protection
purchased. Some types of property will
not be insured at all, including such things as accounts, bills, currency and
goods carried on deck. This stated list
is not inclusive. There can be other
types of goods not covered besides those listed here.
Some types of hazards are not covered, such as acts of war
(whether declared or not). Generally
loss determined to be caused by neglect will not be covered. Most merchandise being transported via
public carriers are written on an all risk policy.
Policies will have conditions in them. Conditions relate to multiple things including any other
insurance that might be primary, misrepresentation when applying for either the
insurance or for a covered loss, fraud, notice of loss, damage to labels on
insured goods, plus anything else that might apply to the particular types of
goods being transported. Some of the
conditions will be adaptations from fire and ocean marine policies. Others will be specifically designed for the
individual policy based on individual traits of the transaction.
Parcel Post and
registered mail policies
When an agent drops new business into the mail, he or she usually
insures the package (we hope). This is
done as a protection against loss or theft if it includes any type of monetary
document and as a way of tracing the package if it becomes misdirected.
Parcel post and registered mail policies cover the shipments by
specified transportation companies.
Each type of mail is specific so each policy will be specific as well,
although there will be similarities.
Depending upon the mail piece, carriers will use airlines, railroads,
trucks, and other forms of transportation that may be specific to the
carrier. This might even include
individuals who are contracted to make the final leg of the mail delivery
journey.
Parcel post insurance is available to those who ship often by
parcel post and who do not want to deal with insuring each piece of mail
individually with the U.S. Postal Service.
Coverage is written using an open form that requires the insured to keep
a record of shipments and to report them periodically to the insurer. An estimated premium is typically deposited
in advance. The premium may be adjusted
as necessary to keep up with the mail shipped.
The quoted rate per $100 of value shipped is applied to the reported
values to arrive at the final premium.[4]
Packages and mail is insured while in transit by parcel post,
whether registered or not, from the time the property passes into the custody
of the Postal Service for transmission until arrival at the stipulated address
within the limits of the continental United States, Canada, and Alaska. Although there are some exceptions, the
coverage is for all risks of loss or damage from any external cause. Goods that easily deteriorate are only
protected against fire, theft, pilferage, and non-delivery. There is also an exemption from loss when
the package or goods have been wrongly addressed or the address is not
complete. This would even include the
omission of a suite or apartment number.
There is also no coverage against loss if the package is not properly
packaged or wrapped. Obviously, there
would be no coverage if sufficient postage has not been paid. Coverage may also be excluded if the package
is not marked Return Postage Guaranteed.
In addition, some items are not insured, such as currency, bills or
deeds. They may be able to be insured
under a separate coverage. Liability
for any one package shipped by ordinary parcel post is limited to $100 per
package unless additional insurance has specifically been purchased. The limit is $50 for any one package shipped
by registered mail or government-insured parcel post.
Registered mail
policy
The Registered Mail policy is typically used to insure transfer
of securities, bullion, jewelry, precious stones, coins, currency, checks,
money orders, postage, or other types of goods that have a specific value that
need specific handling. This type of
mail is shipped by registered mail and/or express (including registered air
mail and/or air express) within and between places in North America and/or
places in North America to places anywhere in the world and vice versa. This offers protection that exceeds that
offered by most other shippers.
Shipments may be reported on a daily, monthly or annual basis.
All risks are covered under a registered mail policy, except for
war and nuclear energy. Coverage is in
place while the mail is between the premises of the sender and addressee or
until returned if delivery is not possible.
Like all policies, there are conditions. Some are adaptations from fire and marine
policies. Others are particular to the
type of policy this is. Due to the
content value of many of these packages, there may be the condition that the
contents be verified by two persons.
Wrapping may also be required to meet certain criteria. Liability to the insurer is typically
limited to certain amounts depending upon the type of property shipped. These limits may be quite high. Securities, for example, may be as high as
$5,000,000 or more.
First class mail
policy
Even first class mail can be insured. It is a special form covering shipments handled by the Postal
Service. This policy and certified mail
coverage were designed to supplement coverage for the insureds holding
registered mail policies.
This type of coverage is issued to banks, bankers, trust companies,
investment firms, security brokers, and others who transfer security
issues. The policy covers all risks on
shipments of bonds, coupons, stock certificates, and other securities. The only exclusion is war and nuclear
energy. It should be noted that no
coverage is provided on any U.S. government securities or coupons thereof.
Certified mail coverage
may be an endorsement on the first class mail policy, which then covers another
form of shipment that is handled by the Postal Service.
Other forms
Armored car and messenger policy
Just as postal services find insurance necessary, so does
messenger services and armored car services.
Their policies are similar to the registered mail policies in that they
cover types of merchandise that need special handling. The merchandise would include such things as
precious metals, currency, and other items that would be difficult, perhaps
even impossible to replace. Coverage is
from the time of acceptance to the delivery point. If delivery is not possible, the policy would also cover the
return to the shipper. The policy is
all-risk with exceptions for war, nuclear energy and theft by the shipper or
the consignee.
Motor truck cargo
insurance
As we know, trucks move large amounts of American goods across
the country. Obviously, they would
purchase insurance for their own protection.
The trucking companies are liable to the shipper if goods are lost or
damaged due to any reason that is not excluded in their transportation
contract.
Not all motor truck cargo insurance policies are the same, but
they do share similarities. The Owners Form of the motor cargo policy is
similar to the transportation policy, except that it is designed to protect the
shipper who owns and operates their own fleet.
The policy will use wording similar to merchandise is insured only
while in the custody of the insured and actually in transit and only while
contained in or on the following described motor truck and/or trucks that are
owned and operated by the insured.
Typically, covered perils include:
Fire, including self-ignition and internal explosion of
the conveyance, and lightning
Flood
Cyclone and tornado
Perils of the sea, lakes, rivers, and/or inland waters
while on ferries only
Collapse of bridges, and
Accidental collision, including overturning of the
vehicles.
Theft coverage is often added to this list, although it is
usually limited to theft of either an entire shipping package or the entire
load. All goods must be valued prior to
shipment. The amount of insurance is,
therefore, specific to each trucks goods.
Not every type of loss or merchandise is insurable. Motor truck cargo insurance excludes such
things as:
Accounts, bills, currency, deeds, and similar items
Property located in or on the premises of the insured, or
in any garage or other building where the described trucks are usually kept
Loss due to delay, wet, dampness, spotting, and so forth
Loss due to strikers, locked-out workers, riot, civil
commotion, and so forth
Loss or damage to livestock, except in the event of death
caused or made necessary by the enumerated perils in the policy
Loss or damage due to war.
Public truckers
legal liability forms
The Interstate Commerce Commission (ICC) that governs motor
carriers engaged in interstate commerce requires public truckers to obtain
legal liability coverage before certificates of
convenience and necessity for engaging in motor trucking will be issued. Many states also require cargo endorsements to be attached to
policies of carriers operating within or passing through their borders. As a result, this type of insurance is a
necessity for most trucking companies.
Each policy issued will have a stated maximum of liability
coverage for each truck.
Means of
communication coverage
The Nationwide Marine Definition identifies bridges, tunnels,
piers, pipelines, power transmission lines, and radio and TV towers, including
the equipment. Although these items are
stationary, they are still involved in the moving of goods and people. Since coverage for such items must be so
broad, only the inland marine underwriter was equipped to issue the
protection. It has only been recently
that fire underwriters have started to insure these types of items against the
perils that affect them: collapse, flood, ice, earthquake, and collision. Inland marine underwriters had established
their place in writing all-risk coverage for bridges and tunnels as well as
aids to navigation, transportation, and communication as early as 1935. As time went by, inland marine underwriters
added other insured items, such as power lines and communication
equipment. This topic could be expanded
into a course itself, so much has happened in recent years under the heading of
communication.
Many of the items covered do not have a standard form. Each policy is written to fit the situation.