Personal Property Floater Risks
There are special coverages that are designed for special classes
of property listed in the Nationwide Marine Definition. These are called floaters. The
protection provided follows the property wherever it may be located. This would include property at a fixed
location and property that is transit.
These policies typically cover property that is frequently, or at least
has the option of, moving from place to place.
These policies are usually of the all-risk variety rather than named
perils. The exclusions in these
all-risk policies are usually loss or damage from certain named causes such as
insects, vermin, inherent vice, wear and tear, gradual deterioration, war and,
nuclear energy. It should be noted that
under vermin there is often some question as to what is covered. For example, while a rat or mouse is
definitely considered vermin, a squirrel is questionable.
Since insurance is constantly changing as needs or desires
change, such policies are only limited by the ingenuity of those involved. It is not unusual for the Nationwide Marine
Definition to change in order to accommodate the needs of the consumers of
insurance.
Scheduled and
unscheduled floaters
Scheduled Floaters are
those in which the individual items or groups of similar items are listed along
with a specific amount of insurance applying to each item or group of items.[1] Unscheduled
floaters have one amount of insurance that applies to any of the
items within the scope of the policy.
Unscheduled floaters are also known as blanket floaters. To avoid underinsuring, with resulting rate
inequities, limitations on applicable amounts of coverage are written into the
contract. The personal property floater is an example of
underwriting through the contract.
Standard provisions
Like fire insurance, there are basic forms that are used for
personal property floaters and commercial property floaters of inland marine
insurance. The Insurance Services (ISO)
and the American Association of Insurance Services (AAIS) are the two bureaus
that prepare and file these basic forms in several of the states. The wording may vary between the two
organizations, but the intent is the same.
The two basic forms used are called the Personal Property Floater and the Personal Articles Floater. Both
contracts consist of several standard provisions together with a declarations
page. The desired floater will be
attached to one of these two policies.
Either one of these basic policies is more flexible than the rigid 165
lines of the Standard Fire Policy. The
provisions of either floater will deal primarily with loss adjustment,
cancellation, subrogation, and general conditions.
Terminology of the Personal
Property Floater
Concealment
Concealment or
misrepresentation of a material fact, before or after a loss, will void the
policy. The clause found in the
Standard Fire Policy is similar.
Valuation
The insurers
liability is limited to actual cash value
at the time of loss unless the contract specifically states otherwise. This is true even if the items covered under
the policy are scheduled. The insurer
may elect to either repair or replace the lost item. Repair is more likely to be used in floaters than in fire
policies because items such as furs or jewelry can be purchased at wholesale
and often for less than the actual value of the property that was insured.
Pair
or Set Clause
Some types of
property exists in pairs. When property
that is lost or damaged is part of a pair or set, the financial loss may be
greater than the value of the single item.
Despite this fact, policies often state that the loss of one of the set
or pair cannot be considered a total loss of the set or pair. Rather the loss will be prorated based on a fair
proportion of the total value, which requires consideration of the
significance of the lost articles relationship to the value of the set. Some policies may allow the insured to give
the insurance company the remaining piece of the set and then collecting the
total value. Perhaps the company can
obtain the missing piece through another insured.
Other
Insurance
The other
insurance provision in the basic policy states that the inland marine policy is
considered to be excess coverage over any other collectible insurance policy
that may exist on the same loss.
Commonly, there will be specific forms attached to the basic policy,
which deal with other insurance. Of
course, other insurance may also have provisions dealing with other
coverage. Its not unusual for
insurance companies to share the coverage of the loss on a pro rata basis.
Loss
Clause
Inland Marine
General Terminology, as formally stated by the American Association of
Insurance Services (AAIS) states:
RESTORING THE COVERAGE AMOUNT. The payment of a claim will not reduce the coverage amount. If we pay a loss for items that are separately listed and the coverage amount that applies to these items is reduced at your request, we will return the unearned premium for these items to you.
The ISO form is
quite similar. The inland marine
insurers have followed the practice of fire insurers in providing continuous
policies.
Notice
of Loss
Written notice of
a loss is required by most insurance policies.
The notice must be given to either the agent or the home office as soon
as possible or practical. Of course, proof
of loss must also be submitted.
Most insurers require proof of loss within 90 days after discovery of
the loss. If the loss is due to
suspected theft, quick notification is especially important since it may be
possible to recover the stolen property.
Suit
Legal action
against an insurance company must be filed within twelve months following
discovery of the loss. The clause
recognizes that such an abbreviated limitation may be in conflict with the law
of some states. Where that is the case,
the policy requires the shortest permissible statute of limitations to apply.
Protection
of Property
When there is a
loss, the insured is required to protect the property from further damage. This is the sue and labor clause that
provides for reimbursement of such expenses in proportion to the insurers
liability for loss to the property involved.
No
Benefit to a Bailee
Some types of
property are routinely entrusted to others who have a primary responsibility
for its safekeeping. Because of this,
the policy provides that the insurance shall not benefit those who are paid to
assume custody of the covered property.
This clause reinforces the subrogation rights of the insurer.
Subrogation
The insured must
agree to safeguard the insurers rights of recovery from a third party
responsible for the loss. When there is
payment for a loss, the insured must assign any rights to the company and
execute a loan receipt. If it is
necessary for the insurer to sue a bailee for recovery, it will be done in the
name of the insured. If it is
successful, the insured then repays the loan to the insurer. If there is no recovery of loss, there is no
obligation under the terms of the loan receipt.
Settlement
of a Loss
The insurer
promises to pay or make good the loss within thirty days after acceptance of
satisfactory proof of interest and proof of loss. If the loss was covered or paid by someone else, the clause
states that they will not cover it.
This relates to subrogation.
Examination
Under Oath
The insurance
company reserves the right to examine the damaged and undamaged property, as
well as related accounts and records.
As often as may be reasonably necessary, the company may examine under
oath those parties who have an interest in the property. This right would likely only be exercised
when a claim was incomplete or there was some reason to question its accuracy. It is hoped that this clause will also
discourage fraudulent claims. The
policy has already stated that filing fraudulent claims, whether before or
after the loss, voids the policy entirely.
Appraisal
Should the
insured disagree with the payment on an insured loss, the policy has an
appraisal process that is very much like that found in the Standard Fire
Policy.
Floaters
Personal property floater
Inland marine companies use two different approaches in writing
the coverage for personal property normally found in a residence. One is the Personal
Property Floater and the other is the Personal
Effects Floater. The Personal Property Floater provides all
risk protection on personal property that has not been specifically excluded
from coverage. The Personal Effects
Floater provides all risk protection to wearing apparel and some other personal
articles when outside of the home. The ability to endorse the Personal Articles Floater onto ones
Homeowners policy has greatly reduced the demand for both of these separate
policies, but prior to that ability they were widely used. There is still call for them, however, in
specific situations.
The Personal Property Floater
covers all members of the family residing together, including sons and
daughters away at school. All personal
property that is owned, used, or worn by the insured members is covered. Besides personal clothing, personal property
means furniture, appliances, electronic equipment, cameras, sports or hobby
items, jewelry, watches, and furs. In
fact, this floater covers practically all personal property, which means
everything that is not real property.
Real property means land and those items that are attached to it. Personal property is everything else. In some cases, there may even be some
coverage for real property. If the
insured chooses to purchase it, there may even be coverage on the property of
other people who are on the insureds premises.
Because this includes such wide coverage, there are three classes
of coverage in the Personal Property Floater.
The majority of the property is insured on a blanket basis. The declaration page provides for thirteen
general classes of personal property, except for personal property floaters
issued by some mutual companies, which does not use the same breakdown. The insured states an aggregate value for
all goods falling within each category.
A separate amount of insurance is assigned to each of the thirteen
categories of property. The amount of
insurance stated is the maximum that the insurer will pay for any one loss to
property within that category.
The blanket part of the policy limits recovery in any one loss of
jewelry, watches, and furs to a specified amount (usually $500). Some companies may omit the stated limitation
if the cause of the loss is due to fire, lightning, or one of the extended
coverage perils. The stated dollar
amount is the maximum amount that will be paid for any one loss, regardless of
the actual value of the items. The
limit may be increased by endorsement, but of course there will be additional
premium charged.
Recovery on cash and securities is also limited. Generally, the limit on cash is $100 and
securities are limited to $500. Like
jewelry, watches, and furs the limitation may be increased by endorsement for
extra premium.
Even when an endorsement does increase the amount that may be
recovered, there is still a limitation on the maximum recovery. Usually, these endorsements limit the
recovery on jewelry, watches, and furs at $1,000. Money may be raised to $500 and securities to $1,000.
Policies do provide for scheduling of personal jewelry, watches,
furs, and fine arts, in order to adequately protect these individual items that
have a high value. Scheduled coverage
is not excess over the blanket policy.
Due to this it is important to have adequate coverage on expensive
items. Scheduling of high-value items
removes them from the valuation of the unscheduled property.
If a loss occurs to a newly acquired unscheduled item, there is
an extension of coverage. The policy
will pay up to 10 percent of the amount of the blanket policy on all
unscheduled property, or $2,500 (whichever is less) for loss to newly acquired
unscheduled property. This includes
$2,500 for real property damage to the residence of the insured resulting from
theft, or interior residence damage as a result of vandalism or malicious
mischief. Unscheduled property
located at a secondary residence must be insured with a specified limit of
coverage.
Every policy has exclusions.
The insuring agreement states that the property covered is personal
property owned, used, or worn by the insured and by members of the insureds
family of the same household. The
exclusions eliminate coverage for animals, autos, motorcycles, aircraft, and
boats. Business property also is
excluded although books and equipment owned by the insured will be covered
while they are located at the residence.
Property that is on exhibition (away from the residence) is also
excluded from coverage.
There are some perils that are excluded from coverage. These include breakage of fragile articles,
mechanical breakdown, wear and tear, deterioration, insects, vermin, inherent
vice, war, and nuclear energy.
Unscheduled property at the insureds premises is not covered against
flood, damage from animals, or birds belonging to the insured. Also excluded is damage resulting from
refinishing, renovating, or repairing.
The repairing exclusion does not apply to jewelry, watches, or furs.
Personal effects
floater
The Personal Effects Floater
gives worldwide protection against nearly every loss or damage to personal
effects carried by tourists and travelers (although some companies offer a more
limited version which is called the Tourist Floater or Tourists Baggage
Policy), or belonging to, used by, or worn by the insured, including the spouse
and their unmarried children that reside with them.
The policy will specifically list items that are not covered,
including motor vehicles, bicycles, boats, accounts, currency, evidence of
debts, letters of credit, money, securities, tickets, passports, household
furniture, animals, contact lenses, artificial teeth or limbs, professional or
business equipment or samples, and any merchandise for sale or exhibition. Personal property that is specifically
insured elsewhere or under another policy is also excluded.
Specified perils are also excluded, as they are with any all-risk
policy. In this type of policy, those
perils excluded would be gradual deterioration, inherent vice, moths, vermin,
or damage done to the property while being worked on, war, and breakage of
fragile articles. The exclusion would
not apply to loss by theft or fire, or resulting from an accident to a
conveyance transporting the articles.
Although this policy gives worldwide protection, it does not
apply when the property is on the residence premises of the insured, in
storage, or in the custody of students away from school, with the exception of
loss by fire. The exclusion of
students property can be covered for additional premium.
One blanket amount of insurance applies to any and all eligible
property. The policy does contain
dollar limitations, but no coinsurance.
Although the deductible amount will vary, it is commonly $25 or
$50. There are policy limitations. Jewelry, watches, articles of gold, silver
or platinum, and furs are not covered for more than 10 percent of the total
insurance amount, nor for more than $100 on any one article. The 10 percent limitation would apply
collectively to all items lost in a single occurrence. Because of these limitations other forms of
coverage are often bought rather than the Personal Effects Floater.
Personal articles
floater
The Personal Articles Floater is used to insure personal items of
value, including furs, jewelry, silverware, fine arts, stamp and coin
collections, musical instruments, cameras, and athletic or hobby
equipment. Each specific item is listed
by class with a total amount of insurance for the class, with its own rate and
premium.[2] Only listed personal property
owned by the insured or in his or her custody and members of his or her
household would be covered. Coverage is
written on an all-risks basis. Each
insured article will be specifically stated, described, and scheduled. A specific amount of insurance equal to full
value must be indicated for each item in the schedule. Coverage is automatic for newly acquired
jewelry, watches, furs, cameras, and musical instruments for thirty days if
there is existing insurance on the same type of property at the time of
purchase. Fine arts, silverware, and
stamp and coin collections will not be automatically covered. Newly acquired items in this group must be
reported and coverage arranged. Newly
acquired items must be added to the schedule and a pro rata premium paid from
the acquisition date.
The Personal Articles Floater has the typical exclusions of wear
and tear, gradual deterioration, insects, vermin, inherent vice, war, and
nuclear energy.
When a claim occurs, recovery is on an actual cash value basis despite the items being scheduled
with a specific amount of insurance. In
other words, it is not possible to over-insure an item. The policy will typically state that
recovery will not exceed what it would cost at the time of loss to repair or
replace with material of like kind and quality. Words such as valued at may be added to the insuring agreement
by endorsement. When this is the case,
it changes it from an actual cash value to a valued policy. Fine arts would be the exception to this
since the value is scheduled. Although
there may be variations in wording, the policy often states that the scheduled
amounts on fine arts are agreed to be the value of said articles for the
purpose of this insurance.
Any item can be valued with a specific amount of insurance. Property that is not considered to be highly
valued is usually insured with a blanket policy. With the exception of scheduled fine arts, all items are insured
at actual cash value, even if scheduled at higher rates. Fine arts will have an agreed value that is
listed in the contract. Fine arts that
are scheduled have an agreed value basis.
Fine arts insured on a blanket basis are insured at actual cash value
and are usually limited to no more than 10 percent of total fine arts
coverage. The limit may be increased if
the underwriter agrees to do so.
The insured property is covered wherever it may be
located. Insurance on fine arts is the
only exception to the absence of territorial limits.[3] Then limits in this type of coverage are the
continental United States, Hawaii, and Canada.
A further restriction excludes coverage for fine arts on exhibition at
fair grounds or national expositions, unless such premises are specifically
added by endorsement.
Government service
floater
The Government Service Floater is designed for the personal
property of those on active duty with the Armed Forces. Some policies will be for any person fitting
this definition, while others will insure officers only. Those with the Diplomatic Service of the
United States may be covered as well.
The policies generally cover property located in North America and the
United States insular possessions (but not in the permanent residence of the
insured), but the contract may be broader by endorsement. Being an all-risk policy, there are the
standard exclusions of wear and tear, inherent defect, war, loss to motor
vehicles, fragile articles, or loss of securities, money, and other currencies.
Snowmobile floater
policy
The snowmobile Floater Policy is now routinely written since it
has become a sport that nearly anyone may participate in. Many businesses also use them in off-road
transportation in ski resort areas and similar situations. Alaska residents have nearly given up dog
sleds in favor of snowmobiles. Although
snowmobile prices are not cheap, they are affordable, which is another reason
they have gained in popularity.
Snowmobiles are often covered with an endorsement on an automobile
policy or attached to a Homeowners policy, or as a separate Inland Marine Policy. The Inland Marine Policy is not
standard. Rather it is an uncontrolled line.
Premiums for Snowmobile coverage under Inland Marine Policies
vary depending upon the judgment of the underwriter. Premium rates are influenced by the value of the snowmobile, the
speed and horsepower, use, age of the drivers, geographical area, deductible
amounts, and the breadth of coverage purchased.
The policy may be an all-risk or on a named-perils basis. Named-perils policies typically cover fire,
lightning, windstorm, sinking, and upset or overturn of conveyances. Broader policies may include collision,
theft, vandalism and malicious mischief.
It would be unlikely that all of these additional perils
would be covered but one or two of them may be. There is usually a deductible listed on the policy of $25 to
$100. Of course, any deductible amount
is possible. It depends upon the
underwriter and the desires of the insured.
Like all policies, there are exclusions. Those typically seen in this coverage include
loss occurring while the snowmobile is involved in a race, while being used as
a public conveyance, or while rented or leased to others. If the policy is written on an all-risks
basis, exclusions would further include marring and scratching, wear and tear,
freezing, mechanical breakdown, and inherent vice.
Nearly anything is
possible
Coverage may be purchased for just about anything. For example, it is possible to buy a Wedding Presents Floater. No
detailed description would be given in the policy of the items insured since
the bride would have no way of knowing what items she would receive as
gifts. There are exclusions in the
policy on real estate, animals, automobiles, aircraft, bicycles, boats, evidence
of debt, letters of credit, passports, money, and securities.
The Cold Storage Locker Floater
is a special form of the Personal Articles Floater. This type of coverage insures food and articles put in a
commercial frozen food locker or cold storage plant. This coverage goes beyond the insurance that would be carried by
the owner of the locker.
The Snowmobile Floater Policy is a type of Mobile Machinery
Coverage. Another type of Mobile
Machinery Coverage is the Bicycle Floater Policy. This would cover scheduled bicycles on an
all-risks basis if they are owned by individuals and are used for
pleasure. This coverage would not apply
to mopeds or other types of motorized bicycles. This is often a $5 deductible on the policy.
Also under the Mobile Machinery Coverage comes the Mobile Agricultural Equipment Floater. This type of coverage has two forms or bases
of coverage: Section A is blanket and Section B is scheduled. Both contain an 80 percent coinsurance
clause. Companies prefer that the
insured schedule specific equipment if they have significant value. The policy will not apply to equipment held
for sale, on consignment, in the process of manufacture, or to self-propelled
harvester-threshers or cotton pickers used for hire, or machinery used in
logging operations.
Commercial property
floater risks
Business floaters have tended to be written on a named-perils
basis rather than on an all-risks basis.
Today all-risk policies are more widely used. There are many types of floaters that come under the commercial
category including the Physicians and Surgeons Instruments Floater, Patterns
and Dies Floater, Salesmens Sample Floater, Exhibition Property Floaters,
Theatrical Floater, Builders Installation Floater, Mobile Machinery and
Equipment Floater, Property in Custody of Bailee Floater, Installment Sales
Floater, plus many more.
Livestock
floater
A common commercial floater is
on livestock. Livestock is considered
to be domesticated animals.
Livestock, including horses, mules, cattle, swine, sheep, and poultry,
are covered while on the described premises under the Farm Property Form, which
would be attached to the Standard Fire Policy.
Floaters are used to broaden that coverage.
There are four forms of inland marine coverage available for
domesticated animals: (1) livestock form A, (2) livestock form B, (3) a monthly
reporting form used especially by dealers and feed lot operators, and (4) a
winter range form that is used primarily for seasonal coverage on range stock
in Colorado, Kansas, Nebraska, New Mexico, and Oklahoma.
Section A: blanket coverage for livestock by classes
subject to a stated limit of liability on any one animal in each class. There is an 80 percent coinsurance clause.
Section B: scheduled coverage of individual animals
with an agreed amount of insurance or value.
Monthly Reporting
Livestock Floater: blanket
coverage that is similar to Section A.
Winter Range
Floater: adds the peril of freezing since the stock is on the
range. The insurer is not liable for
more than the lesser of 75 percent of the actual cash value of the animal, nor
for more than the stated limit of liability on any one animal. Usually the insured period is from October
first through May first. The insured
may not cancel during this time and the company can only cancel by giving seven
days notice and returning the entire premium.
It would be easy to confuse the Livestock Floater with the
Livestock Mortality coverage. The
Livestock Floater is more in the nature of an accident policy, whereas the
typical mortality policy indemnifies the owners of horses and valuable farm
livestock for loss due to death from natural causes, fire and lightning,
accidents, acts of God and people, and necessary destruction for humane
purposes. Specifically, the Livestock
Floater covers the loss or the death or destruction resulting from or made
necessary by the perils of fire and lightning, wind, hail, explosion, riot,
civil commotion, aircraft, smoke, earthquake, flood, collapse of bridges,
collision or overturn of a vehicle used for transport, stranding or sinking of
vessels, general average or salvage charges, and theft (excluding escape and
mysterious disappearance). Additional
perils can be added for additional premium.
Those that may be added, if acceptable by the underwriter, include
accidental shooting, drowning, artificial electricity, attack by dogs or wild
animals, and collapse of buildings.
Exclusions may include conversion, infidelity, loss due to
acceptance of counterfeit money or bad checks, loss caused by snow or sleet, or
by accident or nuclear war, loss by seizure or destruction under quarantine or
customs regulations, confiscation by order of any government or public
authority (destruction to prevent spread of disease), or illegal transportation
or trade.
Accounts receivable
insurance
Credit insurance covers losses occurring because a
customer-debtor of the business cannot or will not pay an outstanding
debt. In contrast, Accounts Receivable
insurance covers a loss that the insured incurs due to the loss of the records
proving debt. This is often referred to
evidence of debt. The insured is
unable to collect the debt owed because they are unable to prove evidence of
it. A common reason for this is fire
that destroys all records thereby preventing the business owner from knowing who
to bill.
Coverage is all-risk, but it applies only while the records are
on the premises. The policy requires
records be kept in a specific manner, such as in a vault or fireproof safe when
not in use. Exclusions include fidelity
losses, losses due to bookkeeping errors, losses where no evidence existed, and
losses due to nuclear destruction and war (its hard to imagine Sears sending a
bill following nuclear bombing). Also
excluded is loss due to electrical or magnetic injury or to disturbance or
erasure of electronic recordings, except by lightning. Most business do, therefore, also keep hard
copies of debt.
Loss adjustment must be based on the preceding years receipts
since the current records have been destroyed.
They are adjusted for the increase or decrease in the volume of business
in the current year. The policy may be
written on a non-reporting basis if the required limit of insurance is less
than $100,000. Reporting will be
required on higher amounts.
Valuable papers &
records insurance
It is common for a business to have papers and records that have
value. This may include such things as
manuscripts, notebooks detaining results of experiments, maps, mailing lists,
drawings, deeds, or mortgages. The loss
of these items or records means a financial loss for the business. The loss goes far beyond the actual value of
the paper or material the information was on.
The value is not the record itself, but rather the value lies in the
information or uniqueness of the item.
The loss is the cost of reproducing the information found in the records
or papers. Sometimes it may be
impossible to reproduce the information lost.
This might especially be true if the information was based on facts that
must also be reproduced, such as experiments.
It could also be the case if the lost item was a manuscript. Even the original author may be unable to
exactly reproduce the written material.
In the case of artwork or a book that is out of print, replacement may
be impossible.
The policy is designed to reimburse the insured on an all-risks
basis for the financial loss. The
policy will require that the insured keep the records in a specific manner,
such as a fireproof safe. The
protection, unlike the Accounts Receivable Policy, covers the items even off
the premises, but to a lesser degree.
The insurers limit of liability will not exceed the actual cash value
of the item no matter how much insurance has actually be purchased. Commonly, the policy will state an agreed
value for each item. The exclusions
tend to be the same as listed for Accounts Receivable Insurance.
Floor plan
merchandise policy
Inventory items of high value are often used as collateral for
loans by businesses. As the items are
sold, the secured loan is repaid. This
is common for businesses that sell cars, motor homes, or mobile homes. The Floor Plan Merchandise Policy is an
all-risks policy that is often written to cover the risks of the lender. Coverage ends when the item is sold. The policy amount is determined by the
inventorys value.
Signs and street
clocks form
The United States probably has more signs than any other
country. Just the signs used by a motel
chain can easily represent an investment of more than $50,000. It would not be unusual for a chain of signs
to cost more than $500,000. Obviously,
something that represents this much money must be insured. Both liability insurance and direct damage
insurance is needed.
Signs that are attached to the building may be covered by a
Standard Fire Policy unless excluded specifically by the policy. Signs that are attached to leased property
may be insured under an improvements and betterments policy. It is the general rule that detached signs
located more than 100 feet away from a building are not covered unless
specifically scheduled in the policy.[4]
The Inland Marine form gives all-risk coverage with the standard
exclusions for wear and tear, mechanical breakdown, electrical damage, and
war. Lightning is covered. Also excluded is loss from faulty
manufacture and breakage during installation or repair. Coverage is not limited to a fixed location
so the form qualifies as a floater.
Each sign must be scheduled and full insurance to value is
provided. There will usually be a deductible.
Dealers block
insurance
Dealers Block Insurance has been supplied by inland marine
underwriters on an all-risks basis for years.
Originally only the Jewelers Block coverage was specifically permitted
by the older marine definition, although the stocks of fine arts dealers and
stamp and coin dealers were also underwritten.
Today there are many more forms.
The Jewelers Block Policy is
an all-risks policy. To be issued there
must be a written application submitted containing information about the
prospective insureds business. Once
issued, the application will be part of the policy. The Jewelers Block Policy will cover three types of property:
(1) pearls, precious and semiprecious stones, jewels, jewelry, watches, gold
and silver, and other stock usual to the conduct of the business which is owned
by the insured; (2) property as just described, delivered or entrusted to the
insured but owned by another person or entity that is not a dealer; (3)
property as just described, delivered or entrusted to the insured by others who
are dealers in such property or engaged in the jewelry trade in some
manner. Merchandise that is owned by
someone other than the insured is covered by the policy only to the extent of
the insureds interest in it.
The Jewelers Block Policy insures against all risks of loss, but
there are several exceptions. Not
covered are losses due to theft or other dishonest acts of the insured and his
or her employees. Also not covered are
losses under the following situations:
Damage or loss occurring while the property is being
worked on or on display at any public exhibition.
Damage or loss caused by such events as wars, strikes,
riots, storms, earthquakes, and other land disturbances.
Damage or loss resulting from an unattended automobile.
Damage or loss from breakage if it occurs under specific
circumstances.
Unexplained shortages, including those discovered while
taking inventory.
Dishonesty on the part of the insured.
The basic policy also excludes losses from smashing windows or
showcases, although this can be covered by adding an endorsement to the policy.
When a claim does arise, the policy contains limits of
liability. The insurer is not liable
for more than the actual cash value of the property destroyed or the cost to
repair or replace the property with material of like kind and quality. Typically, there is also a deductible of
$1,000 or more.
The policy is actually intended to cover the business premises of
the insured. Transportation coverage is
incidental to the main intent of the policy.
While in transit, liability is limited to a stated amount for any loss
of property. Even if the property is
not actually in transit, but merely at a different location than stated in the
policy, coverage will be limited. The
limitations are known as travel and outside limitations.
The insured must agree to keep an inventory and other records so
that a loss can accurately be determined by the insurance company. The policy may also require a watchman or
security devices.
The Jewelers Business-owners Policy was established because so many retail jewelers
had not purchased the Jewelers Block Policy.
This newer approach to insurance is a combination of the CMP with a
Difference-in-Conditions endorsement for the on-premises crime exposure. There is usually a smaller deductible than
seen in the Jewelers Block Policy, which may be more advantageous for the
smaller companies with smaller inventories (under $100,000). Because it is a package policy, the
Business-owners Policy includes Storekeepers Legal Liability along with
coverage for the jewelers building and contents, and of course the crime
coverage.
The Camera Dealers Floater
and Musical Instrument Dealers Floater
are identical except for the stock description. The coverage is all-risks on the insureds stock in trade. It does include theft. Where the dealer would be liable, it also
covers similar property of others. Once
the property has been sold by the dealer it is no longer covered under the
insurance. This is true even if the
dealer still has a financial interest in it.
Policies written on a specified amount basis typically has an 80 percent
coinsurance clause that applies to the total value of all insured property,
except when in transit. If the policy
is written under a reporting form, the insured must report all values monthly.
Electronic data
processing
A new area for insurance is
Electronic Data Processing. It is still
a nonstandard segment of the insurance market. Although large companies have been using large computer
installations for a long time, smaller and mid-sized companies have not. The introduction of mini computers has
changed the insurance problems involved.
There are three areas involved:
1. The
computer itself and the related equipment (such as printers),
2. The
software used, and
3. The
consequential loss exposure.
At one time there was a fourth element: loss resulting from the
termination of an insured lease agreement, which was insured under a Computer
Equipment Lease Indemnity Policy. That
element is seldom used today.
Insuring the equipment is insured either by treating the
equipment as one would any other type of business property or by the use of the
inland marine Electronic Data-Processing Policy, called an EDP. Both methods cover loss from fire and
lightning along with the extended-coverage perils. The perils may be extended to include earthquake, interior water
damage, and vandalism. Both methods
leave gaps of coverage for damage from mechanical breakdown, damage from
artificially generated electricity, and malfunctioning of the computer.
Insuring the software will require computer
insurance, which is essentially a special form of valuable papers
insurance. It covers the cost of reproducing
what has been lost. It may be bought as
a separate inland marine coverage or alternately it may be added by
endorsement.
The consequential loss exposure is often the biggest loss of the
three. With todays technology, many
businesses exist because of their ties to the computer and the internet. For those firms whose existence ties closely
to their computer use, some form of consequential loss coverage is
essential. The exact type of coverage
will depend upon the needs of the business and the underwriters willingness to
provide it.