TABLE OF CONTENTS
INLAND MARINE COVERAGE
CHAPTER ONE - INTRODUCTION AND DEFINITION......
HISTORY......
1976 NATIONWIDE MARINE DEFINITION......
MONOLINE INSURANCE POLICIES......
MULTILINE POLICIES......
THE ROLE OF THE INSURANCE SERVICES OFFICE......
RATES & FILED/NONFILED FORMS......
INLAND MARINE LOSS EXPOSURES......
INLAND MARINE PERILS......
ALL-RISKS APPROACH......
NAMED PERILS APPROACH......
WHO IS AFFECTED WHEN PROPERTY IS LOST, DAMAGED OR DESTROYED....
FINANCIAL CONSEQUENCES......
INCREASED EXPENSES......
LOST INCOME......
CHAPTER TWO - TREATMENT OF INLAND MARINE LOSS EXPOSURES......
INLAND MARINE UNDERWRITING......
RATES AND RATE-MAKING......
CLASS (MANUAL) RATES......
INDIVIDUAL RATES......
JUDGEMENT RATES......
RATE-MAKING......
INLAND MARINE POLICY PROVISIONS......
OPEN PERILS BASIS......
COVERAGE......
EXCLUSIONS......
COMMON POLICY CONDITIONS......
A. CANCELLATION......
B. CHANGES......
C. EXAMINATION OF BOOKS AND RECORDS......
D. INSPECTIONS AND SURVEYS......
E. PREMIUMS......
F. TRANSFER OF RIGHTS AND DUTIES UNDER THIS POLICY......
CHAPTER THREE - COMMERCIAL INLAND MARINE CONDITIONS......
LOSS CONDITIONS......
A. ABANDONMENT......
ABANDONMENT CLAUSE......
B. APPRAISAL......
C. DUTIES IN THE EVENT OF A LOSS......
D. INSURANCE UNDER TWO OR MORE COVERAGES......
E. LOSS PAYMENT......
F. OTHER INSURANCE......
G. PAIR, SETS OR PARTS......
H. PRIVILEGE TO ADJUST WITH OWNER......
I. RECOVERIES......
J. REINSTATEMENT OF LIMIT AFTER LOSS......
K. TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO THE INSURER.
GENERAL CONDITIONS......
A. CONCEALMENT, MISREPRESENTATION AND FRAUD......
B. LEGAL ACTION AGAINST THE INSURANCE COMPANY......
C. NO BENEFIT TO BAILEE......
D. POLICY PERIOD......
E. VALUATION......
OTHER CONDITIONS......
CHAPTER FOUR - TRANSPORTATION RISK AND LOSS EXPOSURES......
PROPERTY SUBJECT TO LOSS......
PERILS THAT CAN AFFECT PROPERTY WHILE IN TRANSIT......
CONSEQUENCES OF PROPERTY-IN-TRANSIT LOSSES......
PARTIES TO A LOSS......
CARRIERS......
LIABILITY OF CARRIERS......
LIMITATIONS ON LIABILITY......
BILL OF LADING......
BEGINNING AND ENDING OF EXPOSURES......
CLAIMS AGAINST A COMMON CARRIER......
PASSING TITLE OF PROPERTY......
INSURABLE INTEREST IN PROPERTY......
THE MEASURING OF TRANSIT LOSS EXPOSURES......
CHAPTER FIVE - INSURING THE TRANSPORTATION EXPOSURES......
ANNUAL TRANSIT INSURANCE......
NEEDS FOR THE COVERAGE......
PROPERTY EXCLUSIONS......
COVERED LOCATIONS......
VALUATION OF THE PROPERTY......
LIMITS OF INSURANCE......
RECOVERIES FROM COMMON CARRIERS......
PASSING OF TITLE......
PREMIUM PAYMENTS......
UNDERWRITING......
MOTOR TRUCK CARGO INSURANCE......
COVERAGES......
PROPERTY COVERED......
LIMITATIONS......
TIME PERIOD......
COVERED LOCATIONS......
SCHEDULING......
LIMITS OF INSURANCE......
EXTENSION OF COVERAGE......
OTHER PROVISIONS......
FILINGS FOR FEDERAL AND STATE AUTHORITIES......
OWNERS FORMS......
SPECIALIZED MOTOR TRUCK CARGO POLICIES......
HOUSEHOLD GOODS CARRIERS......
GOVERNMENT AGENCY CONTRACTS – MILITARY TRAFFIC MANAGEMENT AGENCY ENDORSEMENT.
CARLOADING COMPANIES OR FREIGHT CONSOLIDATORS......
UNDERWRITING......
RATING......
CHAPTER SIX - TRIP TRANSIT & MAIL INSURANCE......
ARMORED CAR AND MESSENGER INSURANCE......
MAIL COVERAGE......
COVERED PERILS......
LIMITS OF INSURANCE......
CONDITIONS......
CANCELLATION......
TERRITORY......
DUTIES IN CASE OF LOSS......
PAYMENT OF LOSS......
OTHER INSURANCE......
RATING......
ENDORSEMENTS......
PARCEL POST INSURANCE......
COVERED PERILS AND PROPERTY......
LIMITS OF INSURANCE......
DUPLICATION OF COVERAGE......
PREMIUMS......
UNDERWRITING......
TRANSIT CASH LETTER......
CHAPTER SEVEN - INSTRUMENTALITIES OF TRANSPORTATION AND COMMUNICATION
INTRODUCTION......
BRIDGES......
BRIDGE PROPERTY DAMAGE FORMS......
BUILDERS RISK FORM......
BRIDGE USE AND OCCUPANCY FORM......
UNDERWRITING OF BRIDGE POLICIES......
BUILDERS RISK EXPOSURES......
COMPLETED BRIDGES......
TUNNELS......
DAMS......
PIERS, WHARVES, DOCKS AND SLIPS......
PIPELINES......
POWER AND TRANSMISSION LINES......
RAILROAD ROLLING STOCK......
CHAPTER EIGHT - CONTRACTORS EQUIPMENT INSURANCE......
PROVISIONS......
PROPERTY COVERED......
PROPERTY EXCLUSIONS......
COVERED PERILS......
EXCLUDED PERILS......
DEDUCTIBLES......
VALUATION......
LIMIT OF INSURANCE......
COINSURANCE......
COVERAGE EXTENSIONS......
UNDERWRITING......
TYPES OF OPERATIONS......
PROBABLE MAXIMUM LOSS......
INSURANCE TO VALUE......
BUSINESS INTERRUPTION AND EXTRA EXPENSE......
RATING......
CHAPTER NINE - BAILEE/BAILOR COVERAGES......
INTRODUCTION......
COMMON EXCLUSIONS......
LIABILITY OF BAILEES......
DEGREE OF CARE......
BAILEE LIABILITY POLICY......
LAUNDRIES AND DRY CLEANERS INSURANCE......
BAILEES ALL-RISKS POLICIES......
FURRIERS’ CUSTOMERS POLICY......
MISCELLANEOUS BAILEE FORMS......
WAREHOUSEMEN’S LEGAL LIABILITY......
PRESSING OR TAILOR SHOPS......
REPAIR SHOPS......
DEPARTMENT STORES & FURNITURE STORES......
CONSIGNMENT STORES......
AUCTIONEERS......
COLD STORAGE LOCKERS......
SELF-STORAGE UNITS......
AUTO REPAIR......
OTHER BAILEE COVERAGES......
BAILOR COVERAGES......
GARMENT CONTRACTORS’ FLOATER......
GARMENT CONTRACTORS ALL-RISKS FLOATER......
PATTERN AND DIE FLOATER......
CHAPTER TEN - COVERING BOTH REAL AND PERSONAL PROPERTY......
BUILDERS RISK POLICIES & INSTALLATION FLOATERS......
PROPERTY COVERED......
COVERAGE PERIOD......
LIMITS OF INSURANCE......
EXTENSIONS OF COVERAGE......
VALUATION BASIS......
UNDERWRITING......
DIFFERENCE IN CONDITIONS COVERAGE......
PROPERTY AND PERILS COVERED......
LIMITS......
DEDUCTIBLES......
VALUATION OF PROPERTY......
OTHER INSURANCE......
UNDERWRITING......
CHAPTER ELEVEN - DEALERS POLICIES......
JEWELERS BLOCK......
PROPERTY COVERED......
PROPERTY EXCLUDED......
GOOD IN TRANSIT......
EXCLUDED CAUSES OF LOSS, THEFT, ETC......
OPTIONS AND EXTENSIONS......
DEDUCTIBLES......
SPECIAL PROVISIONS......
CAMERA AND MUSICAL INSTRUMENT DEALERS......
PROPERTY COVERED......
LIMITS OF INSURANCE......
EQUIPMENT DEALERS......
PROPERTY COVERED......
LIMITS OF INSURANCE......
FINE ARTS DEALERS......
STAMP AND COIN DEALERS......
FURRIER’S BLOCK......
FLOOR PLAN......
VALUATION......
CHAPTER TWELVE - OTHER COMMERCIAL COVERAGES......
ACCOUNTS RECEIVABLE......
DETERMINATION OF RECEIVABLES......
COINSURANCE......
PROTECTION OF RECORDS......
VALUABLE PAPERS AND RECORDS......
PROPERTY NOT COVERED......
COLLAPSE......
COVERED PERILS......
ADDITIONAL CONDITIONS......
LIBRARIES ENDORSEMENT......
PHYSICIANS AND SURGEONS EQUIPMENT......
COVERED PROPERTY......
EXCLUSIONS......
COVERAGE EXTENSION......
VALUATION......
COINSURANCE......
PROTECTIVE SAFEGUARDS......
UNDERWRITING......
SIGNS......
FILM......
PROPERTY NOT COVERED......
EXCLUSIONS......
VALUATION......
THEATRICAL PROPERTY......
COVERED PROPERTY......
LIVESTOCK......
DETERMINING AMOUNT OF INSURANCE ON LIVESTOCK......
COVERED PERILS......
EXCLUSIONS......
MOBILE AGRICULTURAL EQUIPMENT......
COVERED PROPERTY......
EXCLUSIONS......
RADIUM FLOATER......
COMMERCIAL ARTICLES COVERAGE FORM......
COVERED PROPERTY......
UNDERWRITING......
CHAPTER THIRTEEN - MISCELLANEOUS NONFILED COMMERCIAL COVERAGES
SALESMEN’S SAMPLES......
COVERED PERILS......
LIVE ANIMAL FLOATERS......
HORSES......
VETERINARIAN COVERAGE......
POULTRY......
ANIMALS RAISED FOR FUR......
ANIMAL LIFE INSURANCE......
INSTALLMENT SALES AND LEASED PROPERTY......
INSTALLMENT SALES......
LEASED PROPERTY......
WOOL GROWERS......
TANKS AND CONTENTS OF TANKS......
TANKS......
CONTENTS OF TANKS......
ELECTRONIC DATA PROCESSING POLICIES......
COVERAGE......
EXTRA EXPENSE AND BUSINESS INTERRUPTION......
BUSINESS INTERRUPTION......
CHAPTER FOURTEEN - PERSONAL ARTICLES & WATERCRAFT......
THE PERSONAL ARTICLES FLOATER......
PERSONAL PROPERTY FLOATER......
PERSONAL PROPERTY COVERED......
NEWLY ACQUIRED PROPERTY......
PROPERTY NOT COVERED......
EXCLUSIONS......
PERSONAL EFFECTS FLOATER......
COVERAGE OF PERSONAL EFFECTS......
PROPERTY NOT COVERED......
COVERAGE......
OTHER EXCLUSIONS......
LIMITATIONS ON CERTAIN PERSONAL EFFECTS......
SCHEDULED PERSONAL PROPERTY ENDORSEMENT......
ENDORSEMENT......
HAZARDS OF SCHEDULING PERSONAL PROPERTY......
COMPARISON OF THE PERSONAL EFFECTS FLOATER AND THE HOME OWNERS POLICY
WATERCRAFT INSURANCE......
INTRODUCTION......
HULL AND TRAILER LOSS EXPOSURES......
THE HOMEOWNERS POLICY AND PHYSICAL DAMAGE COVERAGE......
PHYSICAL DAMAGE COVERAGE UNDER THE PERSONAL AUTO POLICY......
LIABILITY LOSS EXPOSURES......
OUTBOARD MOTOR AND BOAT INSURANCE......
PERSONAL YACHT INSURANCE......
HULL INSURANCE:......
UNINSURED BOATERS COVERAGE......
ETHICAL ISSUES
THE APPLICATION PROCESS –PROPERTY AND CASUALTY......
FIELD UNDERWRITING......
COMPANY UNDERWRITING AND RATING......
SELLING TO NEEDS......
PROPERTY AND CASUALTY INSURANCE COVERAGE......
PROPERTY – CASUALTY INSURANCE MARKETING SYSTEMS......
INDEPENDENT AGENCY SYSTEMS......
EXCLUSIVE AGENTS......
DIRECT WRITERS......
ROLE OF INSURANCE IN SOCIETY......
DECEPTIVE ADVERTISING MATERIAL......
DECEPTIVE SALES PRESENTATIONS......
RECENT SCANDALS......
REPLACEMENT......
PRODUCT MISREPRESENTATION......
IMPROPER LICENSING......
FRAUD......
NO NEEDS SELLING......
REDLINING......
QUESTIONS OF UNISEX RATING FOR AUTO INSURANCE......
BUSINESS DILEMMA: IS IGNORANCE A VIABLE EXCUSE?......
PROFESSIONAL OBLIGATIONS......
Summary......
BIBLIOGRAPHY......
1
INLAND MARINE COVERAGE
CHAPTER ONE - INTRODUCTION AND DEFINITION
HISTORY
During the period of time when civilization moved from an agrarian society to an industrial society, goods and methods of production of the population became more concentrated. With this concentration, the possibilities of losses increased due to situations beyond the control of the owners; primarily by fire, wind and water. While farmers have always suffered such losses, they compensated for part of the cost by helping each other in time of need. The “barn - raising” of rural America was well documented as part of history, particularly in situations where property was destroyed because of fire.
As the industrial society expanded, protection against losses was very conservative, originally covering only losses by fire. Policies were written by hand covering each situation differently. As more and more businesses required this protection, more standardized wording became available, and with financial institutions investing in commercial ventures, insurance had to be provided to protect the investors interests. This further pushed the burgeoning insurance industry to standardize coverage’s and policy provisions.
Marine Insurance is considered as one of the oldest (if not the oldest) types of insurance, as ships and their cargoes were protected against losses at sea by consortiums of wealthy persons who “underwrote” the protection by signing “under” the contract and noting their share of the risk. London shipowners and “capitalists” gathered at Lloyd’s Coffee House where pools would be set up covering the possible loss of ship cargoes during transport between India and the New World, and England. From this early beginning several hundred years ago, Marine Insurance has progressed to the Lloyd’s of London of today, and several large Marine insurance companies. Throughout the years certain words used in the contracts became standardized and recognized by law as having specific meanings. To this day, many Marine policies contain language that may seem archaic, such as referring to risks as “perils”, but is used because of the legal interpretations that has evolved.
While the word “Marine” implies “wet” coverages, it has been expanded to where it now can cover all types of perils and risks when cargoes are shipped on land, sea or in the air. The name, “Marine Insurance” today implies coverage of cargoes and materials on the high seas, which was the original function and is still a major type of insurance.
Inland Marine implies movement on land, but inland waterways are considered as “land” for this purpose. Basically, Inland Marine insurance covers moveable property – with the exceptions of motor vehicles and airplanes which have their own insurance that is designed for the peculiarities of the inherent risks of motor vehicles and airplanes.
Other forms of insurance has changed so that it is easier to understand by the consumer, and most of the antiquated language is no longer present.
Both fire and Marine insurance companies cover certain risks, such as fire and windstorm damage, and both casualty and Marine insurance policies can cover theft. So, obviously, there is some overlapping. But today many large companies can have departments providing coverage to various risks, and any conflict would just be between two departments.
Originally Marine insurance was written only by companies specializing in “wet”, or Marine coverages and because of laws at that time, there was very little regulation of Marine insurance companies, therefore they could (and did) write insurance for risks that weren’t “wet” risks at all. Further, they were not subject to the same regulations as fire and casualty insurance companies, so they could (and did) write insurance that really did not have anything to do with the movement of property or cargo. Since they had little regulation, they could write coverages that fire and casualty companies normally wrote, and at provisions and premiums that were not available to these fire and casualty companies.
As one can imagine, there were screams that echoed in the hallowed halls of the state insurance departments, particularly in the New York Insurance Department. So in 1932, there was a ruling issued by this department that clearly defined the powers of Marine insurance companies. The following year, the National Convention of Insurance Commissioners (predecessor to the National Association of Insurance Commissioners, the NAIC) issued a rule that is now known as the Nation-Wide Marine Definition.
The “Definition” states the types of exposures classified under Marine, Inland Marine or Transportation Insurance by placing them in the following categories:
Imports
Exports
Domestic Shipments (Goods in transit)
Communication Vehicles (tunnels, bridges, piers and power transmission lines)
Personal Property Floaters (stamp collections, coin collections, fine arts, paintings, musical instruments, silverware and furs.
Commercial Property Floaters (accounts receivable, valuable papers, valuable records, and physicians’ and surgeon’s instruments).
The Definition also made use of the following differences in condition:
Electronic Data
Property in Bailee’s custody
Property for sale by a dealer (e.g., musical instruments, cameras, fine arts & jewelry)
This Definition is now the definitive clarification of the powers granted to both Marine and Inland Marine insurance companies.
This Marine Definition is so important to students of Inland Marine, that the student must be familiar with its terms. The following Marine Definition is in use in the majority of the states, but Texas has its own definitions. An earlier version (1953) may still be in use in a very small number of states.
1976 NATIONWIDE MARINE DEFINITION
The purpose of this instrument is to describe the kinds of risks and coverages which may be classified or identified under State Insurance Laws as Marine, Inland Marine or Transportation insurance, but does not include all of the kinds of risks and coverages which may be written, classified or identified under Marine, Inland Marine or Transportation insuring powers, nor shall it be construed to mean that the kinds of risks and coverages are solely Marine, Inland Marine or Transportation insurance in all instances.
This instrument shall not be construed to restrict or limit in any way the exercise of any insuring powers granted under charters and license whether used separately, in combination or otherwise.
1. Marine and/or Transportation policies may cover under the following conditions:
A. Imports
Imports may be covered wherever the property may be and without restriction as to time, provided the coverage of the issuing companies includes hazards of transportation.
An import, as a proper subject of Marine or Transportation insurance, shall be deemed to maintain its character as such, so long as the property remains segregated in such a way that it can be identified and has not become incorporated and mixed with the general mass of property in the United States, and shall be deemed to have been completed when such property has been:
(a) sold and delivered by the importer, factor or consignee; or
(b) removed from place of storage and placed on sale as part of importer's stock in trade at a point of saledistribution; or
(e) delivered for manufacture, processing or change in form to premises of the importer or of another used for any purposes.
B. Exports
Exports may be covered wherever the property may be without restriction as to time, provided the coverage of the issuing companies includes hazards of transportation.
An export, as a proper subject of Marine or Transportation insurance, shall be deemed to acquire its character as such when designated or while being prepared for export and retain that character unless diverted for domestic trade, and when so diverted, the provisions of this Ruling respecting domestic shipments shall apply, provided, however, that this provision shall not apply to long established methods of insuring certain commodities, e.g., cotton.
C. Domestic Shipments
1. Domestic shipments on consignment, [provided the coverage of the issuing companies includes hazards of transportation] for sale or distribution, exhibit, or trial, or approval or auction, while in transit, while in the custody of others and while being returned, provided that in no event shall the policy cover on premises owned, leased or operated by the consignor.
2. Domestic shipments not on consignment, provided the coverage of the issuing companies includes hazards of transportation, beginning and ending within the United States, provided that such shipments shall not be covered at manufacturing premises nor after arrival at premises owned, leased or operated by Assured or purchaser.
D. Bridges, Tunnels and Other Instrumentalities of Transportation and Communication (excluding buildings, their improvements and betterments, furniture and furnishings, fixed contents and supplies held in storage).
The foregoing includes:
1. Bridges, tunnels, other similar instrumentalities, including auxiliary facilities and equipment attendant thereto.
2. Piers, wharves, docks, slips, dry docks and marine railways.
3. Pipelines, including online propulsion, regulating and other equipment appurtenant to such pipelines, but excluding all property at manufacturing, producing, refining, converting, treating or conditioning plants.
4. Power transmission and Telephone and Telegraph lines, excluding all property at generating, converting or transforming stations, substations and exchanges.
5. Radio and Television Communication Equipment in use as such including towers and antennae with auxiliary equipment, and appurtenant electrical operating and control apparatus.
6. Outdoor cranes, loading bridges and similar equipment used to load, unload and transport.
E. Personal Property Floater Risks covering individuals and/or generally
1. Personal Effects Floater Policies.
2. The Personal Property Floater.
3. Government Service Floaters.
4. Personal Fur Floaters.
5. Personal Jewelry Floaters.
6. Wedding Presents Floaters for not exceeding 90 (ninety) days after the day of the wedding.
7. Silverware Floaters.
8. Fine Arts Floaters covering paintings, etchings, pictures, tapestries, art glass windows, and other bonafide works of art of rarity, historical value or artistic merit.
9. Stamp and Coin Floaters.
10. Musical Instrument Floaters. Radios, televisions, record players and combinations thereof are not deemed musical instruments.
11. Mobile Articles, Machinery and Equipment Floaters (excluding motor vehicles designed for highway use and auto homes, trailers and semi-trailers except when hauled by tractors not designed for highway use) covering identified property of a mobile or floating nature pertaining to or usual to a household. Such policies shall not cover furniture and fixtures not customarily used away from premises where such property is usually kept.
12. Installment Sales and Leased Property Policies covering property pertaining to a household and sold under conditional contract of sale, partial payment contract or installment sales contract or leased, but excluding motor vehicles designed for highway use. Such policies must cover in transit but shall not extend beyond the termination of the seller's or lessor's interest.