Another coverage would be theft damage to the building. The policy will pay for any damage caused directly by theft to any part of the building containing any Covered Property or equipment within the building used to maintain or help service the building. The stipulation is that the insured must own the building or is legally responsible for it. Exclusions to this coverage would be damage by fire, damage to glass, damage to lettering or artwork on the glass.

 

The policy also covers Collapse. Direct Loss that results from Collapse of all or part of a building from any of the following listed perils:

 

»  fire, lightning, smoke

 

»  explosion

 

»  windstorm, hail

 

»  weight of snow, ice or sleet, weight of rain that collects on a roof, weight of people or Personal Property.

 

»  vehicles, aircraft and falling objects

 

»  riot, civil commotion, vandalism, breakage of glass

 

»  hidden decay, hidden insect or vermin damage

 

»  use of defective materials or methods in construction, remodeling or renovation if the collapse should occur during the course of the work.

 

The property that is not covered would be structural glass, contraband or property in the course of illegal transportation or trade.

 

There are 10 hazards that are not covered:

 

1.      Governmental Action ‑ the policy will not apply to loss caused by seizure or destruction of property by order of any government authority.

 

2.      War, Military Action ‑ there is no coverage for any losses due to war, whether declared or not. Also considered under this exclusion would be any warlike action, insurrection, rebellion or revolution.

 

3.      Nuclear Hazard ‑ there would be no coverage for loss resulting from nuclear reaction or radiation, or from radioactive contamination or any related incidents.

 

4.      Acts, Decisions ‑ the policy does not cover Acts or Decisions, or any failure to Act or Decide of any person, group, organization or governmental body.

 

5.      Faulty or Defective Work ‑ there is no coverage for the following:

 

 

    »   faulty, inadequate or defective planning

 

       »     faulty zoning, development,  surveying

 

»     defective design, specifications and workmanship

 

»     faulty remodeling, grading, compaction

 

»     faulty materials used in repairs, construction, renovation, remodeling or maintenance

 

  6.    Weather Conditions ‑ the policy will not pay for loss by foul weather conditions.

 

  7.    Marring and Scratching ‑ there is no coverage for any loss by marring, scratching, and exposure to light, breakage of tubes, bulbs, lamps or articles made largely of glass. Remember, the policy will pay for such losses if caused directly by fire, lightning, explosion, windstorm, vandalism, rioter, aircraft, strikers, theft or attempted theft or by accident to the vehicle carrying the property.

 

  8.    Processing ‑ no coverage is provided for damage due to processing or work on the property   unless fire or explosion ensues. The loss would be covered if these perils were insured under   the coverage form.

 

  9.    Fraudulent Scheme ‑ the policy will not cover any property voluntarily given by the insured to anyone entrusted with the property if the insured was induced to do so by any fraudulent scheme, trick, false pretense, device or unauthorized instructions to transfer property to any person or place.

 

10.    Wear and Tear ‑ the policy will not cover any loss due to Wear and Tear or any quality in the property that causes it to destroy itself.

 

The property will be valued at the lowest of 3 figures:

 

»  the cost of replacing the property with substantially identical property

 

»  Actual Cash Value

 

»  the cost of restoring the property to its previous condition before the loss.

 

As to improvements, valuation is estimated by:

 

1.   the percentage of the property's original cost  and the amount of time remaining on the n insured's rental agreement bears to the period from the improvements date, or

 

2.   the Actual Cash Value of the property at the time of the loss.

 

The property covered has an 80% Coinsurance Clause which simply means that the insurer will cover 80% of the covered loss. This way the insured shares in some portion of the loss.

 

The insured is also required to maintain the protective safeguards, which are in effect when the policy coverage begins. If the insured fails to comply with the requirement, the policy will be suspended until all protective safeguards are restored. Also, the protective devices must be maintained in working order at all times especially when the premises are closed for business.

 

EQUIPMENT DEALERS COVERAGE POLICY

 

This policy is used to protect the insured's Stock‑ in‑Trade that consists basically of mobile construction and agricultural equipment. Also, similar property that the insured is in charge of in his/her custody or control.

 

The policy also covers theft damage to building and collapse. Also any equipment used in the service of the building would be protected from theft damage.

 

There are 6 categories that are not covered by the policy. They are:

 

1.   contraband

 

2.   property this is leased, rented or sold

 

3.   automobiles, motor trucks, motorcycles, aircraft or watercraft

 

4.   property while in the course of manufacture

 

5.   accounts, bills, currency, deeds, money, notes, securities and evidence of debt

 

6.   furniture, fixtures, office supplies, improvements and betterments, machinery, tools, fittings, patterns, dies and molds.

 

The policy will cover Risks of Direct Loss but will not cover the following hazards:

 

»  governmental action

»  nuclear hazard

»  war, military action

»  wear and tear

»  weather conditions

»  fraudulent scheme

»  electrical disturbances

»  dishonest acts

»  marring, scratching and breakage of glass

»  water damage

 

The policy will pay 80% of the Covered Loss but there is a mandatory deductible that will range from $200 to $250. The deductible is not deducted from the Limit of Liability. When a loss  exceeds the amount of the limit by the amount of the deductible the insured can now collect the full limit.

 

The insured must furnish a complete inventory of the damaged, destroyed and undamaged property, show in detail quantities, costs, Actual Cash Value and amount of loss claimed.

 

The insured must also protect the property from further loss by doing the following:

 

1.   separate the damaged property from the undamaged

 

2.   to give immediate written notice of loss to the company

 

3.   to put it in the best possible order

 

4.   to notify the police if a crime has been committed

 

CAMERA AND MUSICAL INSTRUMENT DEALERS COVERAGE POLICY

 

This policy covers what it says. Basically Stock‑ in‑Trade that consists of cameras and musical instruments and related equipment and accessories. Also, the policy will cover all accessories and like property of others that the insured has in his/her custody or control.

 

The policy also covers any theft damage to buildings that contains Covered Property or equipment. The insured must either own the property or be legally responsible for it. Damage by fire, or damage to glass or lettering or artwork on the glass would be excluded.

 

Also covered would be property in the course of incidental manufacturing by a dealer. Labor and material associated with negatives, positives and prints would be covered. Collapse would also be covered.

 

 

The policy will not cover 4 broad areas of property:

 

1.   Structural Glass ‑ there is coverage on buildings but not on structural glass.

 

2. Accounts, Bills, Currency ‑ the policy does not cover accounts, bills, currency, deeds, evidence of debt, money, notes or securities.

 

3.   Sold Property ‑ there is absolutely no coverage on property, which has been sold and delivered to customers, including property, which has been sold under a Deferred Payment Agreement.

 

4.   Office Furniture, Fixtures and Supplies ‑ the policy does not cover any furniture, fixtures, office supplies and improvements. Also, molds, models, dies, tools, fittings and machinery are not covered.

 

Hazards that are not covered number 13:

 

»  earthquake

 

»  water damage

 

»  marring, scratching, breakage of glass

 

»  theft from unattended vehicle

 

»  dishonest acts

 

»  unexplained disappearance, inventory shortage

 

»  damage due to processing

 

»  electrical disturbance

 

»  fraudulent scheme and unauthorized instructions

 

»  weather conditions

 

»  wear and tear

 

»  government actions such as a nuclear hazard, war or military action

 

»  delay or loss of market

 

How property is valued is important in the Camera and Musical Instrument Dealers Policy.

 

Unsold Property ‑ valued at the lowest of the following:

 

a.   cost of replacing the property with identical property

b.   cost of restoring the property to its original condition

c.   Actual Cash Value of the property

 

Property of Others ‑ property of others in the insured's care, custody or control will be valued at the amount for which the insured is liable. Also the value of labor and needed materials are added.

 

The Actual Cash Value, plus labor/materials, will be added. Whichever method is less than is the method that will be implemented by the insurer.

 

Sold Property ‑ property that has been sold but not yet delivered will be valued at the insured's net selling price after all allowances and discounts.

 

Negatives, Positives, Prints ‑ are not included in Sold or Unsold Property but are valued at the cost of unexposed film. This will also include material and labor the insured has incurred.

 

The policy is also written with an 80% Coinsurance Clause.

 

It is the insured's duty to maintain any protective safeguards, which were in effect at the location when the policy was issued. If not, the policy will be suspended until the protective safeguards are restored. The protective device must always be kept in working order when the premises are closed for business.

 

VALUABLE PAPERS AND RECORDS INSURANCE

 

This policy offers extensive coverage for the following:

 

»  files

»  deeds

»  drawings

»  mortgages

»  abstracts

»  books

»  papers

»  records

»  other records which are critical to the continuation of the business.

 

The coverage is also extended to the property of others, which the insured has in his/her custody.

 

There are 6 areas that are not covered:

 

1.   Data Processing Operations ‑ programs or instructions used in the insured's data processing operation would not be covered. Also, the material on which the data is recorded would not be covered.

 

2.   Illegal Trade ‑ contraband or property in the course of illegal transportation or trade would be excluded.

 

3.   Irreplaceable Property ‑ if the property that is damaged cannot be replaced with like property, then there is no coverage. In order for Irreplaceable Property to be recovered, it must be specifically declared and described in the Policy Declarations.

 

4.   Money and Securities ‑ these classes of property are not covered.

 

5.   Storage ‑ no coverage is provided for storage that is away from the premises.

 

6.   Samples and Property for Delivery ‑ the policy will not cover samples or property that is being held for delivery after the sale.

 

This policy is covered for AAll‑Risks@. Of course, the policy is subject to the stated exclusions in the policy.

 

There are 7 perils that are not covered:

 

1.   Libraries Endorsement ‑ usually libraries will purchase this type of policy but a special endorsement is usually attached. The Endorsement excludes loss due to failure to return borrowed property, vandalism or mutilation by anyone using the property on the premises. Also, the policy will exclude unexplained disappearance or loss that depends on an audit of records to actually prove that a loss did occur.

 

2.   Wear, Tear. Inherent Vice ‑ these vices are simply not covered.

 

3.   Government Authority ‑ interestingly, the policy would cover seizure of property by any government authority except if it were taken to prevent the spread of fire, which would be covered anyway under the policy.

 

4.   War and Nuclear Perils ‑ this is a common exclusion under property policies.

 

5.   Dishonest Acts ‑ the policy will not cover Dishonest Acts by the insured or anyone with an interest in the property, employees or anyone entrusted with the property.

 

6.   Collapse ‑ There is no coverage for loss due to collapse except for direct loss of any part of or whole building caused by:

 

fire                               riot

lightning                      civil commotion

windstorm                   vandalism

hail                              glass breakage

explosion                     falling objects

smoke                          weight of ice, snow

aircraft                         hidden decay

vehicles                       weight of people

weight of property      weight of rain

 

   use of defective materials/methods in construction or renovation if it occurs during these operations

 

7.   Processing Errors ‑ Errors or omissions in processing or copying, with the exception of direct loss by fire or explosion.

 

This policy will pay up to the Actual Cash Value of the property at the time of loss. It will also pay up to the cost to repair or replace the property with a like kind and quality.

 

The insured may take any dispute to arbitration but may not bring any suit against the insurer for at least 30 days after Proof of Loss has been filed. The insured is limited to 2 years in which to bring suit against the insurer.

 

If the insured carries other insurance on the property that may be covered under the Valuable Papers and Record Policy, the policies will be endorsed to indicate that the property covered under the policy will not duplicate any other coverage.

 

COMMERCIAL ARTICLES COVERAGE POLICY

 

This policy covers the following:

 

»  Musical Instruments and Related Equipment

»  Films and Related Equipment

»  Projection Machines

»  Cameras

 

The policy will also cover the above property that is in the insured's care and custody and is another's property.

 

The policy protects against AAll‑Risks@. Of course any causes that are specifically excluded would not be covered.

 

The policy also covers Collapse and Newly Acquired Property.

 

With Newly Acquired Property, if the insured acquires similar property under the policy, the insurance will cover such property automatically for 30 days. The maximum the insurer will pay for a loss is 25% of the total shown in the Policy Declarations for that type of property, or $10,000, whichever is less.

 

Under Collapse, the policy will cover Direct Loss resulting from Collapse of all or part of a building from any 1 of the following perils:

 

»  use of defective materials or methods in construction, remodeling or renovation if the collapse occurs during the course of the work.

 

»  fire, lightning and smoke

 

»  windstorm and hail

 

»  explosion

 

»  vehicles, aircraft and falling objects

 

»  hidden decay, hidden insect or vermin damage

 

»  weight of snow, ice or sleet

 

»  weight of rain that collects on a roof

 

»  weight of people or Personal Property

 

»   riot, civil commotion, vandalism and breakage of glass

 

The policy will not cover contraband or property in the course of illegal transportation.

 

 

There are 5 hazards that are not covered:

 

1.   voluntary parting

2.   wear and tear

3.   weather conditions

4.   irrational acts and decisions

5.   faulty or defective work

 

The covered property is subject to any Coinsurance Provisions.

 

ACCOUNTS RECEIVABLE COVERAGE POLICY

 

This policy will cover the following:

 

» interest on loans

» uncollectible monies

» cost to reestablish records

» collapse

» removal

» property away from premises

» property at other locations

The policy will not cover contraband or property being transported illegally. The policy covers risks of Direct Physical Loss but is subject to exclusions that are written in the policy.

 

There are 11 exclusions in the policy, all of which have been discussed previously. The 11 exclusions are listed below:

 

  1.    faulty or defective work

 

  2.    acts and decisions

 

  3.    weather conditions

 

  4.    electrical or magnetic injury

 

  5.    fraudulent schemes or tricks

 

  6.    bookkeeping errors

 

  7.    record alterations, falsifications or concealments

 

  8.    dishonest acts

 

  9.    war and military action

 

10.    nuclear hazard

 

11.    governmental action

 

The policy has an 80% Coinsurance Clause, except on property in transit.

 

The questions will arise, AHow to Determine the Receivables"?  If the insured cannot accurately establish the amount of Accounts Receivables outstanding at the time of a loss, the policy specifies how to make the determination.

 

1.   the total of the average monthly earnings for the 12 months preceding the month in which the loss occurs is determined and this total is adjusted for any normal fluctuations in the amount of Accounts Receivables for the month in which the loss occurs or for any demonstrated variance from the average for that month.

 

2.   Deductions:

 

a.   the amount of receivables for which there is no loss

 

b.   the amount of the accounts that can be established or collected

 

c.   the amount to allow for probable bad debts

 

d.   all unearned interest and service charges.

 

INTEREST ON LOANS

 

The policy also has a provision that will cover interest charges on loans the insured is forced to pay due to not being able to collect the monies owed.

 

 

CHAPTER 9 QUESTIONS

 

1.   All of the following are Commercial Inland Marine Policies except:

 

a.   Equipment Dealers Coverage

b.   Valuable Papers

c.   Commercial Articles Coverage

d.   Homeowners

 

2.  This policy covers various Dental and Medical Equipment:

 

a.   Physicians & Surgeons Equipment Coverage

b.   Valuable Papers Coverage

c.   Commercial Articles Coverage

d.   Equipment Dealers Coverage

 

3.   This policy is used to protect the insured's Stock‑In‑Trade?

 

a.   Physicians & Surgeons Equipment Coverage

b.   Valuable Papers Coverage

c.   Commercial Articles Coverage d.

d.   Equipment Dealers Coverage

 

4.   This policy offers extensive coverage for valuable records?

 

a.   Physicians & Surgeons Equipment Coverage

b.   Valuable Papers Coverage

c.   Commercial Articles Coverage

d.   Equipment Dealers Coverage

 

5.   This policy covers films and related equipment?

           

          a.     Physicians & Surgeons Equipment Coverage

          b.     Valuable Papers Coverage

          c.     Commercial Articles Coverage

          d.     Equipment Dealers Coverage