Property Insurance Unit 12

Ocean marine insurance

provides coverage against loss or damage to a ship. Also covers in transit cargo losses or damages over waterways, air or land

Inland marine insurance

indemnifies loss to moveable or specialized types of property, historically developing as an outgrowth of ocean marine insurance. Known as “floaters”. Has grown to include property that just involves an element of transportation, or better described as coverage for “property on land”

Inland marine insurance covers

exposures that involve property and merchandise while in transit or “floating”. Valuable papers and docs, as well as mobile equipment and other supplies are covered by these types of poles. Generally broader than other property forms. Typically one of the following:

• actually in transit

• held by a bailee

• at a fixed location that is an instrument of transportation

• a movable type of goods that is often at different locations

As a general rule, does not cover stationary property, such as real estate, furniture, fixtures or merch while it is being manufactured.

Nationwide Marine Definition of 1933

adopted by the insurance industry in 1933, lays out what types of property are eligible for inland marine insurance coverage

6 categories of eligible marine risks

• imports (ocean marine insurance)

• exports (Ocean marine insurance)

• personal floateres (personal inland marine insurance)

eligible for commercial inland marine:

• domestic shipments (covered through a variety of inland marine transportation forms that cover property being transported)

• instrumentalities of transportation or communication (include forms that cover property related to transportation or communication, such as bridges, pipelines and tv towers)

• commercial property floater risks (embrace a number of subcategories of inland marine forms including bailee’s customer forms, equipment forms and business floaters)

Inland marine coverage common features

• written open peril instead of named 

• do not require the property to be at a specific location when a loss occurs 

• called floaters because insurance moves with the property as it moves 

Commercial Inland Marine Common Conditions

• many are similar to those in other policies such as abandonment, pair and set, appraisal, and no benefit to bailee.

• duties after a loss

• other insurance condition

Duties in the event of loss

• similar to what is found in other property forms

• insured must: 

  • notify the police if a law may have been broken

  • give insurer prompt notice of the loss and describe property involved

  • give the insurer a description of how, when and where the loss occurred as soon as possible

  • take reasonable steps to protect property from further damage, and keep record of expenses related to loss

  • make no statement that assumes any obligation or admits any liability without insurer’s consent

  • permit the insurer to inspect property & records proving loss

  • submit under oath to questioning if requested

  • send a signed, sworn statement of loss within 60 days if requested

  • promptly send the insurer any legal papers or notices concerning the loss

  • cooperate with the investigation or settlement of the claim

Other insurance condition

States that if the insured has other insurance that is written on the same basis as the commercial inland marine form, the commercial inland marine form pays on a pro rata basis. If the other coverage is not written on the same basis, commercial inland marine coverage is excess over any other insurance that applies to the loss, regardless of whether the insured can collect under the other insurance. 

Losses are valued on an

ACV basis or the cost to restore or replace the property, whichever is less. Property’s value is determined at the time of loss.

Commercial Articles Coverage Form

• defines covered property as cameras, projection machines, films, musical instruments, related equipment and accessories that are in the insured’s care, custody or control.

• provides coverage for professional photographers and musicians

• additional acquired property is automatically covered for up to 30 days if it is a type of property already covered by the form. In the event of loss, the insurer will pay the lesser amount of 25% of the policy limit or $10,000

Accounts Receivable Coverage Form

• an accounts receivable is a debt owed a business by its customers because of goods and services that were provided 

• this coverage form reimburses the insured for amounts that can’t be collected from customers because of damage to the company’s accounts receivable records. Damage to the records may prevent a business from being able to prove a debt is owed. It also covers extra collection expenses and interest on any loans the insured must obtain to stay in business while collections are impaired. Accounts receivable records in storage away from the premises are not covered. Any loss that requires an audit of records or inventory computation to prove its existence is not covered. 

• insured must keep all accounts receivable records in receptacles described in the declarations when the business is closed and when the records are not in use. 

Valuable Papers and Records Coverage Form

reimburses the insured for the cost of replacing damaged items, such as manuscripts, films, maps, drawings, deeds and books that belong to the insured or are in the insured’s care, custody or control.

• Architects, engineering businesses, or movie production companies may need this coverage.

• The value of each item of property that is specifically declared and described in the declarations is the applicable limit for that item.

• the insured must keep all valuable papers and records in receptacles described in the declarations when

inland marine sign coverage form

• covers the insured’s signs and similar property of others in the insured’s care, custody or control. Includes neon, fluorescent, automatic, or mechanical signs or lamps.

• breakage during transportation or installation, repairing or dismantling of the sign is not covered.

• also excluded is artificially generated current that creates a short circuit or other electric disturbance within a covered item

Jewelers Block Coverage Form

• covers the insureds stock in trade, which includes jewelry, precious/semiprecious stones, precious metals, alloys, and other stock used in the business

• covers property that is sold but not delivered

• contains 2 optional coverages

  • show window coverage

  • money coverage

does not cover property:

• exhibited in showcases or show windows away from premises

• while being worn by insured, an employee, family member of either

• in transit by mail (unless sent by registered mail)

in addition to exclusions common to commercial inland marine forms, coverage also excludes:

• water damage to property at insured’s premies

• theft from any vehicle unless the insured, an employee or other person whose only duty is to attend the vehicle is actually in or on the vehicle when the theft occurs

• unexplained disappearance

• shortage found upon taking inventory

• dishonest or criminal acts by insured, employees or anyone to whom the premies is entrusted

• breakage of fragile articles

show window coverage

covers theft of stock from a show window when the window is cut or smashed

money coverage

covers theft of money from locked safes or vaults on the insured’s premises

jewelers block coverage form Safeguards condition

insured must maintain protective safeguards such as security service or automatic fire alarm system, that were in effect at the beginning of policy period. if the insured fails to keep these safe guards in working condition and in operation when business is closed, coverage is suspended until the safeguards are back in operation

jeweler’s block coverage form inventory condition

insured must take physical inventory at least once every 12 months and maintain detailed records of inventory, purchases, sales, property of others, and property off premies. must be retained for 3 years after policy ends

equipment dealers coverage form

used to cover dealers of mobile equipment and construction equipment. It covers the dealers stock in trade, consisting primarily of mobile agricultural equipment and construction equipment.

also covers property of others in dealers care, custody or control. 

does not cover: 

• automobiles, trucks, motorcycles, aircraft, watercraft

• money, securities, accounts, bills 

• property in the course of manufacture

• property that is leased, rented or sold, including property sold under a deferred payment sales agreement

• furniture, fixtures, office supplies, improvements and betterments, machinery, tools, patterns, dies, molds, models

• property of others described in the declarations

Domestic Shipments

category of the nationwide definition that includes a number of inland marine transportation forms that provide coverage for shipments traveling by truck, train, air or mail. 

Common carriers must accept a certain amount of liability for losses to cargo. These obligations are set fourth in the bill of lading.

However, there are many losses for which the carrier is not responsible. Even when the carrier is liable for loss to cargo while in its custody, reimbursement of the loss may be uncertain. The various inland marine forms were developed to cover this exposure. 

bill of lading

identifies carrier’s responsibilities. 

must be issued to each business for whom the carrier ships goods

Annual Transit Policy

protects the shipper or receiver of goods against loss to goods in transit. Coverage is available on a named-peril basis protecting against such losses as fire, windstorm, collision, theft - or on an open peril basis. Policy covers all of the insured’s incoming or outgoing shipments during the year

Trip Transit Policy

Similar to the annual transit policy. However, it is used to insure single shipments of goods for companies that have only occasional shipments to insure. Coverage extends from the time and point of origination to the time and point of destination

Motor Truck Cargo - trucker’s form

liability insurance that covers cargo up to a set monetary limit that the trucker determines when he buys a policy. In addition to paying for the cost of the lost or damaged cargo itself, some policies also pay costs to remove debris or pollutants caused by debris, if a load accidentally lands on a roadway or waterway.

carrier has a responsibility to deliver goods entrusted to it unharmed.

only a few things for which the carrier is not liable - acts of god, shippers own neglect

Acts of God

floods, tornadoes, etc

Shipper’s own neglect

ex: poor packaging

Motor truck Cargo - shippers (or owner’s) form

a variation of motor truck cargo insurance provides coverage known as owner’s goods on owner’s trucks to companies that transport their own goods. It provides direct damage coverage instead of liability.

Instrumentalities of Transportation and Communication

Inland marine also covers instrumentalities of transportation and communication, including forms that cover such property as bridges, tunnels, oil pipelines, loading docks and radio and TV towers.

Although not easily moveable, it is directly connected with transportation

Bailment

delivery of property by the owner to someone else to be held for a special purpose, and then to be returned to owner. An example: leaving your computer at the repair shop to have a virus removed.
The bailee (computer repair shop) and the bailor (customer)

Bailee responsibility

Bailee’s have responsibility for property in their custody. 

If property is damaged through bailee’s own fault, bailee will be liable to the customer for damage. 

Even if property is damaged in a fire or other disaster which is not the bailee’s fault, the customer will expect to get the property back undamaged or be compensated for loss. 

To retain goodwill, bailee will probably reimburse customer. 

Bailee’s customer policy

pays the insured’s customer for damage to a customer’s property that is in the insured’s care, regardless of whether the insured is liable for damage, as long as the damage resulted from a covered peril.

does not pay insured, but pays insured’s customer

Contractor’s equipment floater

Covers the heavy machinery, equipment and tools a contractor needs to conduct business. Covers contractor on an open-peril or named-peril basis for loss to all types of tools, machinery, and equipment owned, rented or borrowed by insured. Commercial building and personal property coverage form does not provide the extensive coverage that can be obtained under the contractor’s equipment floater

Installation policy floater

an inland marine coverage that insures against loss to machinery, equipment, building materials, and supplies in transit to, being used with, or during the course of installation, testing, building, renovating or repair

Electronic Data Processing Equipment floater

provides open peril coverage for computer hardware, software and data that is owned by the insured or in the insured’s care, custody or control. Property in transit is covered. Extra expense and business interruption coverage is also included.