RMI 300 Final

Overview of Inland Marine Insurance

Was developed as a way to cover emerging loss exposures linked to transportation

Inland Marine Insurance

Insurance that covers many different classes of property that typically involve an element of transportation on land

Marine Insurance

Insurance (in the US), includes both ocean and inland marine coverage and (in the rest of the world) is limited to insurance for vessels and cargo

Nationwide Marine Definition

Statement of the types of property that may be insured on inland marine and ocean marine forms

Examples of Nationwide Marine

• Imports

• Exports

• Domestic Shipments

• Bridges, tunnels, additional forms of transport,

• Various types of property owned or used by individuals (jewelry, furs, etc.)

• Various types of property pertaining to a business (mobile equipment, builders risk, etc.)

Filed Classes of Business

Policy forms/rates must be filed with state insurance department

• Greater number of potential insured and homogenous loss exposure

• Ex: musical instruments and photographic equipment

Non-Filed Classes of Business

Neither policy forms nor rates must be filed with the state insurance department varies by state

• Small number of potential insureds and diverse loss exposures (or both)

• Unique and volatile

Role of Judgement Rating in Inland Marine

• Filed rate with commercial lines manual (CLM)

• No CLM for non-filed but has become standardized over time

• Unique non-filed items, UW go with the best judgment with outside expertise and influence of market conditions

Non-Filed Classes of Inland Marine Insurance

1. Contractors Equipment (Floater)

2. Builders Risk

3. Transit

4. Motor Truck Cargo Liability

5. Difference in Conditions

6. Electronic Data

7. Bailees

8. Instrumentalities of Transportation and Communication

Contractors Equipment

• Covers mobile equipment or tools while located anywhere in the coverage territory

• Largest class of inland marine insurance

• Can have a schedule of limits or blanket coverage

• Open or named perils

• Rental reimbursement coverage

  Specialized and not under commercial property

Rental Reimbursement Coverage

Pays cost of renting substitute

Examples of Contractors Equipment

• Cranes

• Earthmovers

• Tractors

• Stone Crushers

• Bulldozers

• Mobile Asphalt Plants

• Portable Offices

• Scaffolding

Builders Risk (Liability)

• Covers a building in the course of construction, including building materials and supplies while on or away from the building safe

• Preferred due to better coverage and flexibility

• Open Perils (flood, earthquake, theft of materials)

• Soft Cost Coverage

• Installation Floater

Soft Cost Coverage

Covers additional incidental expenses that might result from a physical loss

• Lease renegotiation

• Real estate taxes

• Additional Interests

Installation Floater

Contractor’s interest in building supplies/fixtures

Transit

Covers owners of property against damage to their property while in transit by land, air, or water carriers

Property can be damaged and carrier has no legal obligation to pay for shippers loss

• Trip Transit

Trip Transit

Covers a particular shipment of goods specified in the policy Occasional shippers and 1 year to and from

• No contraband, likely to be stolen items, and high risk commodities (electronics, tobacco, alcohol, food and drinks)

• Open perils NO flood and earthquake

• Applies to continental US, Alaska, and Canada NO Hawaii, PR, Overseas

• Valued at amount of invoice and shipping charges of ACV

Motor Truck Cargo Liability

Covers a trucker’s liability for damage to cargo of others being transported by the trucker

• Some policies limit liability to specified perils / some cover regardless

• Covered only while in or on a land vehicle or while located at terminal

• Terminal coverage limited

Difference in Conditions (DIC)

Covers on an “all-risks” basis to fill gaps in the insured’s commercial property coverage, especially gaps in flood and earthquake

• Excess limits for flood and earthquake

• Covers loss exposures not covered in basic policies (Prop. in transit, BI due to theft)

• Covers property at overseas location

Electronic Data Processing Equipment

Covers computer equipment, software, and electronic date owned by insured and additional property in care, custody, or control

• Can cover medical equipment, robotics, and computerized gaming (additional benefits)

• Covers perils (Open-Peril) that are not usually covered in commercial property, like mechanical/electrical breakdown (added with separate deductible)

• Includes extra expenses, BI can be added

• Equipment valued at ACV, RC, or upgraded value/ Media valued at ACV or agreed value

  Can be tailored to meet needs

Equipment

Mainframe computers, servers, server racks/ farm, monitors

Data

Computer programs (direct processing of data) and data files (store processed data)

Bailees

• Covers loss to a customer goods only if the insured bailee is legally liable for the loss

• Covers damage to a customers’ goods, regardless whether the insured bailee is legally liable for the loss

Instrumentalities of Transportation and Communication

Covers property essential to transportation or communication

• Bridges

• Tunnels

• Pipelines

• Radio/ TV Broadcasting Equipment

Filed Classes of Inland Marine Insurance

1. Commercial Articles

2. Camera and Musical Instrument Dealers

3. Equipment Dealers

4. Physicians and Surgeons Equipment

5. Theatrical Property

6. Film

7. Floor Plan

8. Jewlers Block

9. Mail

10. Accounts Recievable

11. Valuable Paper and Records

Covered on open-perils and valued at ACV

Commercial Articles

Covers photographic equipment and musical equipment used commercially by photographers, motion picture producers, professional musicians, etc.

No dealers and blanket or schedule basis

Camera and Musical Instrument Dealers

Covers inventory of camera dealers or musical instrument dealers and similar property in care, custody, or control

Endorsements can cover other types of equipment while on insured’s premises

Equipment Dealers

Covers inventory of dealers that sell agricultural or construction equipment in care, custody, or control of others

Physicians and Surgeons Equipment

Covers professional equipment, materials, supplies and books of physicians, surgeons, and dentists

• Office equipment / improvements and improvements to a leased building

Physicians and Surgeons Equipment Endorsements

• Office Equipment off Premises (less than 30 days)

• Extra Expenses

• Money and Stamps on Premises

• Valuable Records

• Personal Effects on Insureds and Others on Premises

Signs

Covers neon, fluorescent, automatic, or mechanical signs Scheduled with a limit

Theatrical Property

Covers stage scenery, costumes, and other personal property used in theatrical products Intent must be stated and 3c’s

Film

Covers exposed motion picture, film, and magnetic tapes or videotapes, including related soundtracks or sound records Covers cost of reshooting

Floor Plan

Covers merchandise that is being held for sale and financed through a floor plan Retail

Jewlers Block

Covers the merchandise of retail jewlers. Designed to meet needs of small jewlers Filed has many coverages

Mail

Covers the insured against loss of securities and other negotiable instruments while in transit by first-class mail, certified mail, express mail, or registered mail.

Accounts Recievable

Covers losses (including uncollectible accounts) resulting from destruction of the insured’s records of accounts receivable

• Pays the amount unable to collect

• Covers cost to reconstruct, interest from inability to pay loans, and increased collection loss

Valuable Papers and Records

Covers printed or otherwise recorded items such as blueprints and cost neccessary to reconstruct

Ocean Marine Loss Exposures

1. Cargo owners (shippers)

2. Vessel owners

3. Carriers

Cargo Insurance

Covers loss of or damage to property shipped primarily by water, or if in foreign trade, by air

• Manufacturer’s importers and exporters

Hull Insurance

Covers physical damage to vessels, including their machinery and fuel, but not their cargo

Hull Insurance Perils

• Action of wind and waves

• Striking of rocks / other vessels

• Shifting of cargo

• Fire

• War

• Breakage of Machinery

Loss of Freight

When freight is guaranteed, the shipper is primarily exposed to loss of freight

Protection and Indemnity Insurance (P&I)

Covers shipowners against various liability claims due to operating the insured vessel Liability

Role of Judgement Rating in Ocean Marine

Rates created with judgment of UW (Not subject to rate-filing laws)

Factors in Judgement Rating in Ocean Marine

• Past loss experience

• Product being shipped

• Type of packing

• Trade route

• Time of year

• Volume of shipments

• Port conditions

• Ocean and inland carriers

• Suppliers reputation and quality of management

Hull & PI Judgement Factors

• Past loss experience

• Size/type/age of vessel

• Area of navigation

• Trade type

• Nation vessel is registered

• Vessel owner reputation and quality of management

Cargo Insurance

2 Types

• Voyage Policy

• Open Cargo Policy

Warehouse to Warehouse Clause

Sea and labor clause

General average

Voyage Policy

Covers single trip during policy period

Open Cargo Policy

Open covers all goods shipped and received. No set expiration date

Insured periodically makes payments based on reports from insured of covered shipments

Warehouse to Warehouse Clause

Covers the insured cargo during the ordinary cause of transit from time of leaving to time of meeting its final destination

• Supplemented by a marine extension clause

Martime Extension Clause

Expands coverage to include unavoidable deviations from the ordinary course due to natural disasters, orders of civil authorities, or strikes of port workers

Sue & Labor Clause

Covers the cost of reasonable measures that the insured is required to take to protect property from damage at time of loss

General Average

Partial loss that must, according to martime law, be shared by all parties to a voyage (cargo & vessel owners)

Open Marine Insurance Policies

1. Cargo Insurance

2. Hull Insurance

3. PI Insurance

Barratry

Misconduct by vessel’s master / crew

Hull Insurance

• Barratry

• Valued at agreed value

• Defense costs covered

• Liability is a separate amount with limit equal to vessel

PI Insurance

• Damage to bridges, piers, wharves, and other structures along waterways

• Injury to passengers, crew, and other persons injured on vessel

• Injury to persons on other vessels

• Damage to cargo of others aboard the insured vessels

• Expenses incurred to remove reckage and unscheduled port for medical expenses

  NO POLLUTION

3 Coverages

1. Coverage A

2. Coverage B

3. Coverage C

Coverage A - Bodily Injury and Property Damage

Premises Operations / Products-Completed Operations Liability

Coverage B

Personal and Advertising Liability

Coverage C

Medical Expenses; NOT Liability Insurance

2 Forms

1. Bodily Injury and Property Damage Liability

2. Personal and Advertising Injury Liability

Coverage B Injuries

• Loss of Reputation

• Humiliation

• Economic Loss

• Consequential Bodily Injury

Coverage B Offenses

• False Arrest

• Wongful Eviction

• Libel

• Slander

• Infringing upon Copyright in Insured’s Advertisement

Additional Coverages

• Owner’s and Contractor’s Protective Liability

• Railroad Protective Liability

• Liquor Liability

• Electronic Data Liability

• Product Withdrawl

• Various Pollution

Owner’s and Contractor’s Protective Liability

Covers operations performed by contractor and NI’s negligence supervision of contractor’s operations

Railroad Protective Liability

Protects from operations of contractor. Is bought by contractor at railroads request

Various Pollution Liability

Covers BI, property damage, or cleanup costs from pollution incidents not covered under the CGL form

2 Coverage Forms

• Claims Made

• Occurence

Claims-Made Form

Provides coverage for claims made during the policy period, regardless of when the event causing the claim actually occurred

Trigger: The claim must be made and reported during the policy period

Occurence Form

Provides coverage for incidents that occur during the policy period, no matter when the claim is made

Trigger: The event or incident that caused the claim must occur during the policy period

Special Damages

Out-of-pocket costs ie. medical expenses and loss of earnings

General Damages

Intangibles; pain and suffering

Punitiive Damages

Awarded to punish or make an example of the wrongdoer

Types of Damages

1. Special

2. General

3. Punitive

Bodily Injury

Bodily injury, sickness, or disease sustained by a person, including death, resulting from any of these at any time (includes pain and suffering)

Property Damage

Physical injury to tangible property, including resulting loss of use of that property. Loss of use on tangible property that is not physically injured (For example; BI)

NO electronic data

Occurence

Accident, including continuous or repeated exposure to substantially the same general harmful conditions. Accident is not defined

“Accident”

Unintended results of intentional acts generally qualify as accidents

Coverage Territory

• US (territories and possessions), PR, and Canada

• Airspace and water is covered if injury or damage occurs in the course of travel or transportation within coverage territory

• Extened to the world if g/s made or sold by the named insured in the basic coverage territory

Occurence Coverage Trigger

BI or property damage during the policy period

Injury or Damage Not Known Before the Policy Period

Elimantes coverage for BI or damage that was known by designated insureds / employess of the insured before policy inception

Designated Insureds

Those described in the “who” is an insured section of the CGL Form

Designated Employee

Authorized by named insured to give or receive notice if an occurence or a clam ie. risk manager

Continuous Injury Trigger

Injury or damage is deemed to occur continuously over time as long as an injury continues, triggers coverage under all occurenece based policies that were in effect throughout the injury

Insureres Duty to Defend

• Insurer has the right and duty to defend the insured against any suit which insurance applies.

• Insurer must defend insured regardless.

• If at least one of the alleged acts or omissions may concievably be covered, insurer is obligated to defend the insured against the entire complaint

Coverage A Insuring Agreements

1. Insurer’s Duty to Pay Damages

   • Bodily Injury and Property Damage

   • Injury or Damage to Which the Insurance Applies

   • Caused by an Occurence

   • Coverage Territory

   • Injury or Damage Occurring During the Policy Period

   • Injury or Damage Not Known Before the Policy Period

2. Insurer’s Duty to Defend

Coverage A Exclusions

• Expected or Intended Injury

• Contractual Liablility

• Liqour Liability

• Worker’s Compensation and Employer’s Liability

• Aircraft, Auto, or Watercraft

• Mobile Equipment

• War

• Damage to Property

• Damage to Your Product

• Damage to Your Work

• Damage to Impaired Property or Property not Physically Injured

• Removal of Products, Work, or Impaired Property

• Personal and Advertising Injury

• Electronic Data

• Recording and Distibution of Material Information In Violation of Law

• Fire Legal Liability Coverage

Expected or Intended Injury

Bodily injury resulting from the use of reasonable force to protect persons / property is covered

Contractual Liability

Eliminates coverage for liability assumed by the insured under a contract

Liquor Liability

Does not apply to organizations that are not in the alcoholic beverage business BYOB is murky

Pollution

• BI or property damage caused by heat, smoke, or fumes from a hostile fire

• BI or property damage due to escape of fuels, lubricants, or other operating fluid needed to perform normal functions of mobile equipment Must come from vehicle part designed to hold them and be accidental

Hostile

Uncontrollable or breaks out from where it was intended to be

Auto

• A land motor vehicle, trailer, or semitrailer designed for travel on public roads, including machinery or equipment

• Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.

  No mobile equipment

Exceptions to Auto

1. Watercraft while ashore on insured’s premises

2. Watercraft that NI doesn’t own and is less than 26 ft long and not used to carry any persons or property for a fee

3. Parking an auto on or next to the insured’s premises if the auto is not owned by, rented to, or loaned to any insured Valet Service

4. Liability assumed under an insured contract for the ownership, maintenance, or use of aircraft or watercrafts NOT AUTOS & No coverage for damage

5. Operation of certain types of equipment attached to autos

Mobile Equipment

• No coverage for transportation of mobile equipment by an auto that is owned, operated, renteed, or borrowed by an insured

• Use of mobile equipment in a prearranged racing, speed, or demolition contest or in a stunting activity

Damage to Property

• Premises the NI has sold, given away, or abandoned if the damage arises out of any part of such premises

• Property loaned to the NI

• “That particular part” of any real property being done by NI or contractor if damage arises OR must be restored, repaired, or replaced b/c NI’s incorrect work No coverage for faulty work

Insured’s Products and Work

• Damage to Your Product

• Damage to Your Work

• Damage to Impaired Property or Property not Physically Injured

• Recall of Products, Work, or Impaired Property

Damage to Impaired Property or Property Not Physically Injured

Damage that arises from a defect in the insured’s product or work or failure of the insured or anyone acting on their behalf to complete a contract