INTRODUCTION
When discussing Personal Inland Marine Floaters, the question arises ‑ when is it economical to schedule property?
When we discuss Ascheduling@, we are referring to describing and listing separately on another policy or on an Endorsement particular items that must be listed separately.
ENDORSEMENT
The Scheduled Personal Property Endorsement is used to provide coverage for Risks of Direct Loss for certain classes of Scheduled Property. Scheduled Coverage may be provided for jewelry, furs, cameras, musical instruments, silverware, golfing equipment, fine arts, postage stamps, rare and current coins. The rating for this coverage is based on Standard Inland Marine Rating Procedures. A different rate per $100 of value applies to each category of property. The question will usually be asked ‑ ADoesn’t my Homeowners Policy cover it? Why do I need a separate endorsement"? Thus, the question remains: AWhen should Personal Property be scheduled'?
An Unendorsed Homeowners Policy covers Unscheduled Personal Property on a Named Perils Basis, however, many clients own valuable Personal Property that should be scheduled and specifically insured under a Floater Policy. It is generally agreed that, in addition to High Value Property such as diamond rings and fur coats, the following types of Personal Property may be appropriate for Scheduled Coverage:
1. Unique Objects. This includes works of art, rare antiques, paintings and collections of unusual property, such as a valuable Stamp or Rare Coin Collection. The value of the property should be established in advance to avoid the problem of proving its value after the loss occurs.
2. Business or Professional Equipment ‑ The Homeowners Policy provides only limited coverage for Business or Professional Equipment. Business or Professional Property is covered only for a maximum of $2,500 on the residence premises and $250 away from the residence premises. Business and professional property can be more adequately insured by scheduling the property with a stated amount of insurance shown for it.
3. Portable Property ‑ Certain types of Portable Property (cameras and equipment, musical instruments, or sports equipment) can be scheduled and specifically insured under a Floater Policy.
4. Fragile Articles ‑ Certain Fragile Articles with high value could be scheduled and specifically insured, such as glassware, statuary, scientific instruments, typewriters, or home computers.
BE CAREFUL WHEN SCHEDULING PERSONAL PROPERTY!!
Standard Homeowners Policies exclude Personal Property that is separately described and specifically insured by any other insurance!!
The amount of insurance under a Floater Policy must be sufficient to pay for losses to Covered Property in full, since the exclusion rules out any contribution by the Homeowners Policy. In addition, Unscheduled Personal Property under the Homeowners Policy may be insured on a Replacement Cost Basis by adding the Homeowners HO‑04‑90 Endorsement. Replacement Cost Insurance on Personal Property that is scheduled and specifically insured generally is available only under the HO‑04‑61 scheduled Personal Property Endorsement when the underlying Homeowners Policy also is endorsed to provide Replacement Cost Coverage. Thus, the advantage of Risks of Direct Loss Coverage under the Personal Property Floaters must be carefully weighed against the possibility of being underinsured at the time of loss.
COMPARISON OF THE PERSONAL PROPERTY FLOATER AND THE HO‑3 POLICY
The question often arises ‑ AWhy do I need a Personal Property Floater when we have a Homeowner's Policy@ (specifically a HO‑3 Policy)? We have made the following comparison, while focusing on 6 specific areas of coverage to help determine the feasibility of one coverage over another.
1. With a Personal Property Floater, Risks of Direct Physical Loss Coverage are on Unscheduled Personal Property, while under a HO‑3 Policy there is Named‑Perils Coverage on Unscheduled Personal Property.
2. Under the Personal Property Floater there is a $500 limit on securities, evidences of debt, valuable papers, passports, tickets and stamp collection. Under the HO‑3, the limit is $1,000 for such coverage.
3. With the Personal Property Floater, there is a $500 aggregate limit on watches, jewelry and furs. With a HO‑3 Policy, the aggregate limit is $1,000.
4. Under Personal Property Floaters, there is an exclusion on property located at other than the insured's residence throughout the year. HO‑3 has no such exclusion.
5. With a Personal Property Floater, there are 13 categories of Property, with a specific limit of insurance for each category. The HO‑3 has no such provision.
6. With a Personal Property Floater, there is a $100 limit on money while the HO‑3 has a $200 limit.
COMPARISON OF THE PERSONAL EFFECTS FLOATER AND THE HOMEOWNER'S POLICY
A comparison of both coverages revolves around 8 different areas:
1. Under the PEF, AAll‑Risks@ Coverage is included while the HO‑3 has Named‑Perils Coverage.
2. The PEF has coverage only while Personal Effects are off the residence premises while the HO‑3 has coverage on and off residence premises.
3. The PEF has no coverage on property of students while at school (except for fire) while the HO‑3 covers the risk.
4. With the PEF, only Personal Effects are covered which is narrow, but with the HO‑3 Unscheduled Personal Property is covered which offers broader coverage.
5. With the PEF, there is no coverage on passports, tickets, securities, or valuable paper. The HO‑3 has a $1,000 limit.
6. Under the PEF there is no coverage on money while the HO‑3 has a $200 limit.
7. With the PEF there is no coverage for borrowed property while the HO‑3 offers coverage for Borrowed Personal Property.
8. The PEF has a limit of 10% of the amount of insurance up to $100 on any single article. The HO‑3 will cover jewelry, watches and fur up to $1,000.
CHAPTER 6 ‑ QUESTIONS
1. What endorsement is used to provide for Risks of Direct Loss for certain classes of scheduled property?
a. All Inclusive Endorsement
b. Scheduled Personal Property Endorsement
c. Unscheduled Personal Property Endorsement
d. none of the above
2. An Unendorsed Homeowners Policy covers Unscheduled Personal Property on a/an _____ Basis?
a. Named
b. AAll‑Risks@
c. Scheduled
d. Unscheduled
3. Under a Personal Property Floater, Risks of Physical Loss Coverage are on _________ Personal Property?
a. AAll‑Risk@
b. Scheduled
c. Unscheduled
d. Limited
4. The PEF covers property of students while at school?
a. fire only
b. does
c. at times
d. none of the above
5. Which policy offers coverage for borrowed property?
a. PEF
b. HO‑3
c. neither a or b
d. both a & b
answers
1. b
2. a
3. c
4. a
5. b