AAIS Scheduled Property Floater

AAIS SCHEDULED PROPERTY FLOATER ANALYSIS

(February 2024)

 

Introduction

Eligibility

Policy Construction

IM 7506–Schedule of Coverages–Scheduled Property Floater

IM 7500–Scheduled Property Floater Analysis

   Introduction

   Agreement

   Property Covered

   Property Not Covered

   Coverage Extensions

   Supplemental Coverages

   Perils Covered

   Perils Excluded

   What Must Be Done in Case of Loss

   Valuation

   How Much We Pay

   Loss Payment

   Other Conditions

   Definitions

Endorsements and Schedules

Underwriting Considerations

INTRODUCTION

The American Association of Insurance Services (AAIS) Scheduled Property Floater insures the named insured's property and property of others in its care, custody, and control. The type of property covered under this coverage form is usually subject to periodic or frequent movement and changes in location. Property types come in various sizes, shapes, and forms but usually have significant value and transit exposure. Some examples are camping equipment, engineering instruments and supplies, catering equipment, religious articles, relics, and artifacts.

AAIS has developed one Scheduled Property Floater that has its own corresponding schedule of coverages.

ELIGIBILITY

Any commercial business with property subject to periodic movement and location changes not better or more adequately insured under another insurance coverage form or policy is eligible.

POLICY CONSTRUCTION

AAIS Scheduled Property Floater coverage requires at least these four forms:

Related Article: CL 0100–AAIS Commercial Lines Common Policy Conditions

IM 7506–SCHEDULE OF COVERAGES–SCHEDULED PROPERTY FLOATER
(01 12 changes)

This Schedule of Coverages is used with IM 7500–Scheduled Property Floater. IM 7506 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Covered Property

The item number(s), description of the covered property, and the limits are entered in the spaces provided.

Coverage Extensions

The limit for this coverage on the Schedule of Coverages applies to all covered locations:

Additional Debris Removal Expenses

The limit is $5,000 unless a different limit is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

The limit is $15,000 unless a different limit is entered.

The limit is $10,000 unless a different limit is entered.

Deductible

The deductible amount must be entered in the space provided.

Coinsurance

One of the following coinsurance options must be selected:

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7500–SCHEDULED PROPERTY FLOATER COVERAGE FORM ANALYSIS

This analysis is of the 10 09 edition. Changes from the 04 04 edition are in bold print.

Introduction

The lead-in language defines the terms "you" and "your" as the parties identified on the declarations as the insured. "We", "us," and "our" are defined as the insurance company that provides coverage. Further definitions can be found later in the coverage form in the section labeled Definitions. This section is very important because the common definition of terms and words that are set off with quotation marks are either restricted or broadened.

Agreement

The insurance company agrees to provide the coverage described in the coverage form and the schedule of coverages. It does this only when the named insured pays the promised premium. The entire agreement is subject to all the coverage form's terms, conditions, endorsements, and definitions.

Property Covered (10 09 Change)

Coverage applies to the property that is described below. It is important to read further because of very important exclusions or limitations that significantly modify coverage

1. Coverage

Covered property is the named insured's property and property of others that is in its care, custody, and control.

Note: The 04 04 edition used the word “or.”

Coverage applies to direct physical loss or damage to this covered property but only when caused by a covered peril.

2. Coverage Limitation

Only the named insured’s property and the property of others in its care, custody, and control listed and described on the schedule of coverages are covered.

Example: Courtney purchased the air compressor and hi-lift in the attached photo but never told her insurance company about it. Because of this coverage limitation, this property is not covered.

Property Not Covered

Six specific types of property are not covered:

1. Aircraft or Watercraft

Aircraft and watercraft coverage forms and policies should be used to cover these items because they are not covered under this coverage form and are more correctly covered elsewhere.

2. Buildings and Land

No building or land is covered, regardless of where the land or building is.

3. Contraband

Property that is illegal to possess is not covered. Property that is legal to possess but is being used as part of an illegal trade or transported illegally is also not covered.

4. Money and Securities

To clarify what is meant by securities and money, a number of types of property are listed. Accounts, bills, currency, food stamps, evidence of debt, and lottery tickets not held for sale are listed as not covered property as are money, notes, or securities.

Note: This property should be insured under commercial crime coverage forms.

Related Article: Commercial Crime Coverage Analysis

5. Vehicles

Self-propelled vehicles, including automobiles, are not covered if designed for use on highways.

Note: This property is more correctly insured under commercial automobile coverage forms.

Related Article: CA 00 01–Business Auto Coverage Form Analysis

Example: Martin listed a 2009 Mini Van on his schedule of coverages. The van was parked on his property and was not licensed for road use. Coverage was denied when a loss damaged the vehicle because it was an automobile designed for road use. The fact that it was scheduled and not licensed did not change the fact that such a vehicle was not covered.

6. Waterborne Property

Property that is waterborne is covered in transit and in the custody of carriers for hire. All other waterborne property is not covered.

Coverage Extensions

Provisions That Apply To Coverage Extensions (10 09 Change)

There is one coverage extension. The limit is either the limit on the schedule of coverages or the default limit in the coverage form. This limit is part of the applicable limit for covered property and not in addition to it unless otherwise indicated. It is not added to or combined with limits for any other coverage extension, supplemental coverage, or other coverage and is not subject to any coinsurance provisions that apply elsewhere in the coverage form.

Debris Removal (10 09 changes)

When a covered peril damages or destroys covered property, the cost to remove any created debris is covered under this extension. The 10 09 edition defines debris removal as the costs to demolish, clear, and remove debris.

Debris removal does not include any costs for removing, restoring, or replacing polluted land or water or extracting pollutants.

There are two parts of the Limit section. The first is restricting any debris removal payment to no more than 25% of the amount paid for the actual direct physical loss or damage. To calculate the 25%, only the direct physical damage loss is considered. This means any debris removal costs must be excluded before the calculation is made. (10 09 addition).

The second part is that when the debris removal and the physical damage loss are added together, no more than the limit of insurance is paid.

An additional $5,000 (or a higher amount entered on the schedule of coverages) is available if the debris removal expense is more than 25% of the loss amount or if the combined cost of loss and debris removal is more than the limit of insurance for the covered property.

The named insured must report debris removal expenses to the insurance company within 180 days of the loss date for this coverage extension to apply.

Supplemental Coverages

Provisions That Apply To Supplemental Coverages (10 09 Change)

There are two supplemental coverages. Each has its own default limit that can be increased by entering a higher limit on the schedule of coverages. Limits for any supplemental coverage are separate from the applicable limit for the covered property, not part of it.

The limit available for coverage described under a supplemental coverage is the only limit available for it. It is not the total of the limit for a supplemental coverage and the limit for covered property. The limits are not added to or combined with limits for any other supplemental coverage, coverage extension, or other coverage, and are not subject to any coinsurance provisions that apply elsewhere in the coverage form.

1. Newly Acquired Property (10 09 addition)

When the named insured acquires new property during the policy period, coverage is automatically provided for that new property for a maximum of 30 days. The only provision is that the property must be similar to property already listed on the schedule. The limit is $15,000 or the property’s value, whichever is less. Coverage ceases when the property is reported when the policy expires or after 30 days, whichever occurs first. This is not free coverage since additional premium for the coverage must be paid starting from the acquisition date. The $15,000 limit can be increased.

 

Example: The city of Happyville lists 14 voting machines on its schedule of coverages. It also describes four projectors and fifteen boxes of Christmas decorations.

On 10/14, the city purchased four additional voting machines, another box of Christmas decorations, and three metal signs at an auction. On 10/16, the city manager is sideswiped while transporting the items back to Happyville in a box truck. The truck goes into a ditch and flips over, destroying the newly acquired contents.

The voting machines and Christmas decorations are covered because they are similar to the other scheduled items on the coverage form. The metal signs are not covered because they are not similar. The loss is limited to not more than $15,000.

2. Pollutant Cleanup and Removal

a. The insurance company pays the named insured's expenses to extract pollutants from land or water if a covered peril that occurred during the policy period caused the pollutants to be released or discharged.

b. This is immediate coverage, so any expenses to extract pollutants are only paid when reported to the insurance company within 180 days of the date of loss.

c. Costs related to testing, evaluating, observing, or recording pollutants are excluded except for those costs that are part of the extraction process.

d. The most paid is $10,000 for all such expenses that occur during each separate 12-month policy period. This limit can be increased.

PERILS COVERED (10 09 Change)

Coverage applies to risks of direct physical loss or damage unless the loss is limited or caused by an excluded peril.

Perils Excluded

1. Primary Exclusions

The first group of exclusions is essentially absolute. Subject to specific exceptions, loss or damage by each is totally excluded, regardless of any other cause or event that contributes to a loss, either concurrently or in any other sequence. The insurance company does not pay for any direct or indirect loss or damage caused by or that results from any of these events.

a. Civil Authority

There is no coverage for a loss that results from an order any civil or government authority issues. These orders may include seizure, confiscation, destruction, or quarantine of property, but this exclusion is not limited to only these. The only exception is when the loss or damage is caused by a civil authority destroying property as a means of controlling a fire. This exception only applies if the fire results from a covered peril.

b. Earth Movement (10 09 changes)

Earth movement is not covered except for the following four exceptions:

c. Flood (10 09 changes)

The insurance company does not pay for loss or damage caused by flood or by material that the flood carries or moves. This exclusion applies even if the water is driven by wind. Damage caused by material that mudslide or mudflow carries or moves is also excluded.

There are two exceptions:

 d. Nuclear Hazard

The insurance company does not cover loss or damage caused by or that results from any nuclear reaction, radiation, or contamination. This is absolute and applies whether or not the nuclear incident was controlled, and by whatever means caused. Any loss the nuclear hazard causes is not treated as a loss that fire, explosion, or smoke causes. The only exception is when a fire results from the nuclear incident, direct loss or damage from that fire is covered but the damage from the nuclear hazard remains excluded.

e. Sewer, Septic Tank, Sump, or Drain Backup and Water below the Surface (10 09 changes)

Coverage does not apply to loss or damage that any of the following causes:

There are two exceptions:

Example: The City of Happyville stores all of its voting machines in the basement of city hall. It retrieved the machines in March to prepare them for the upcoming vote and discovered water in the room that caused damage to the machines. The water had entered the room through a crack in the foundation that resulted from the pressure on the foundation due to the ground being saturated after a water main broke. There is no coverage for this loss.

f. War and Military Action

The insurance company does not pay for loss or damage caused by any act of war. Undeclared and civil war or warlike action by a military force is all considered war. All actions taken to hinder or defend against an actual or expected attack by any government or sovereign authority that uses military personnel or other agents are also considered war and excluded. In addition, acts of insurrection, rebellion, revolution, or unlawful seizure of power and any action any government authority takes to prevent or defend against any such acts are excluded. If any action within the terms of this exclusion involves nuclear reaction, radiation, or contamination, this exclusion applies in place of the nuclear hazard exclusion.

Note: This means that the exception for resulting fire under the nuclear hazard is not covered when it results from war.

2. Secondary Exclusions

The second group of exclusions applies to loss or damage caused by or resulting from any of the following loss events. Some of these exclusions have exceptions, conditions, or limitations that should be noted and reviewed carefully. The insurance company does not pay for any loss or damage caused by or that results from any of these events.

a. Contamination or Deterioration (10 09 change)

Loss or damage that is caused by contamination or deterioration is excluded. This applies to corrosion, decay, fungus, mildew, mold, rot, and rust. It also applies to any quality, fault, or weakness in covered property that causes it to damage or destroy itself. However, this exclusion is not limited to only these described causes.

b. Criminal, Fraudulent, Dishonest, or Illegal Acts (10 09 change)

Coverage does not apply to loss or damage caused by or that result from criminal, fraudulent, dishonest, or illegal acts that any of the following commit alone or in collusion with another:

Coverage applies if employees destroy property. It does not apply if employees steal.

This exclusion does not apply to covered property in a carrier for hire’s custody.

c. Electrical Currents (10 09 change)

Loss caused by electrical currents or arcing is not covered unless the source of the electricity is lightning. The exception is that loss is covered when caused by a specific peril resulting from the electrical current or arcing.

d. Explosion, Rupture, or Bursting (10 09 change)

The insurance company does not pay for loss or damage caused by or that results when steam boilers, pipes, engines, or steam and gas turbines explode, rupture, or burst. This exclusion is limited to only loss or damage to the object in which the loss occurred.

Note: This means that loss or damage to the building and personal property adjacent to the damaged object is covered.

e. Loss of Use (10 09 change)

There is no coverage for loss or damage caused by or resulting from delay, loss of use, or loss of market.

f. Mechanical Breakdown (10 09 change)

Loss or damage that is due to any mechanical breakdown is excluded. Any loss or damage caused by structural or electrical breakdown or malfunction is excluded, as is any breakdown or malfunction resulting from a structural, mechanical, or reconditioning process.

g. Missing Property

The unexplained or mysterious disappearance of the covered property is excluded. This applies when there is no physical evidence to suggest what happened to the property and when the only proof that a loss occurred is because of an audit or physical inventory. The only exception is when the loss occurs while the covered property is in the custody of a carrier for hire.

h. Pollutants (10 09 change)

There is no coverage for loss or damage caused by or that results from any release, discharge, seepage, migration, dispersal, or escape of pollutants. There are three exceptions:

i. Temperature/Humidity (10 09 change)

Loss or damage that dryness, dampness, humidity, changes in, or extremes of temperature cause is excluded. If any of these events results in a specified peril occurring, the resulting loss or damage that specified peril causes is covered.

j. Theft from an Unattended Vehicle

Coverage does not apply to theft of covered property from an unattended vehicle unless the vehicle was locked, its windows securely closed, and there was visible evidence of forced entry into it. The one exception is for property in a carrier for hire’s custody.

k. Voluntary Parting (10 09 change)

There is no coverage for loss or damage to covered property when voluntarily given to others, even if the surrender was due to a fraudulent scheme, trick, or false pretense.

l. Wear And Tear (10 09 change)

Loss or damage caused by wear, tear, marring, or scratching is excluded.

What Must Be Done In Case Of Loss

1. Notice

The named insured must promptly notify the insurance company or its agent of a loss. The notice must include a description of the property lost or damaged. If a criminal act caused the loss, the appropriate law enforcement agency must also be notified. The insurance company has the right to require that the notice is in writing.

2. You Must Protect Property

During and after a loss, the named insured must take reasonable steps to protect covered property from further loss. The insurance company pays reasonable costs the named insured incurs, but only when the named insured maintains accurate records to substantiate the costs. Paying these costs is not in addition to the policy limits. There is no coverage for any repairs or emergency measures performed on property not already damaged by a covered peril.

Note: Any reimbursed costs will reduce the amount available to pay the actual loss.

3. Proof of Loss

The named insured must complete and return the insurance company's prescribed proof of loss forms within 60 days after the company requests it. The information provided must include the time, place, and circumstances involved with the loss and information on any other insurance coverage that may apply. It must also include the named insured’s interest and the interest of others with respect to the property involved, including lienholders, loss payees, and mortgagees. Any changes in the title to the property during the policy period must be disclosed, in addition to providing any other reasonable information the company may require to adjust and settle the loss.

4. Examination

Examination under oath may be required in matters that relate to the loss. The insurance company may request these examinations more than once, but such requests must be reasonable. If multiple persons are examined, the company has the right to examine each individual separately.

5. Records

The named insured is required to produce records, but only those related to the loss. The insurance company must be allowed to make copies and take extracts of them as often as it reasonably requests. Records include tax returns and bank microfilms of all related cancelled checks, but records are not limited to just these.

6. Damaged Property

Damaged and undamaged property must be made available for the insurance company's inspection as often as reasonably necessary. Samples of the property that are needed to adjust and settle the loss may be taken.

7. Volunteer Payments

The named insured may not voluntarily make payments, assume obligations, pay or offer rewards, or incur other expenses without the insurance company's express approval. If it does, it does so at its own expense. The only exceptions are those costs incurred to protect property, as item 2. above describes.

8. Abandonment

The named insured does not get to choose when it turns over property ownership to the insurance company. Such change in ownership takes place only when the insurance company agrees to do so in writing.

9. Cooperation

The named insured must cooperate with the insurance company and perform all acts this coverage form requires.

Valuation

1. Actual Cash Value

The value of covered property is based on its actual cash value as of the date of loss. Actual cash is replacement cost new minus depreciation.

2. Pair or Set

The value of a loss that involves damage to or loss of one part of a pair or set is more than the value of the one part but not as much as the value of the entire pair or set. Instead, it is based on a reasonable proportion of the item's value to the entire pair or set.

Note: This recognizes that the value of the whole is greater than the value of individual parts but that the remaining parts still have value as separates.

3. Loss to Parts

The value of a lost or damaged part of property that consists of several parts is the cost to repair or replace only the lost or damaged part.

How Much We Pay

1. Insurable Interest

The insurance company does not pay more than the named insured's insurable interest in the covered property at the time of loss.

Note: A question that may arise is what is the named insured’s insurable interest in property of others? This limitation could be a problem because a customer may expect a settlement based on the limit of insurance purchased.

2. Deductible

The insurance company pays only the amount of loss that exceeds the deductible amount on the schedule of coverages.

3. Loss Settlement Terms

Subject to other items in this section, the insurance company pays the least of the following:

4. Coinsurance

a. When Coinsurance Applies

When coinsurance applies to a coverage provided, the insurance company pays only part of the loss if the limit is less than the percentage of the covered property’s value on the schedule of coverages.

b. How We Determine Our Part of the Loss

The following are the three steps to determine the amount of loss to be paid:

Step 1. Multiply the percentage on the schedule of coverages by the covered property’s value at the time of loss.

Step 2. Divide the limit for covered property by the result determined in Step 1.

Note: There is no coinsurance penalty if the result is 1.00 or higher.

Step 3. There is a coinsurance penalty when Step 2. is less than 1.00. Subtract the deductible from the amount of loss and then multiply the total amount of loss by the percentage determined in Step 2.

The insurance company does not pay more than the amount determined in Step 3. or the limit, whichever is less. It does not pay any remaining part of the loss.

c. If There is More Than One Limit

If there is more than one limit on the schedule of coverages, this procedure applies separately to each limit.

d. If There is Only One Limit

If there is only one limit on the schedule of coverages, this procedure applies to the total of all covered property insured under that limit.

e. When Coinsurance Does Not Apply

This coinsurance provision does not apply unless a coinsurance percentage entered on the schedule of coverages.

5. Insurance under More Than One Coverage

Two or more coverages in the coverage form may apply to the same loss. In that case, the insurance company does not pay more than the value of the actual claim, loss, or damage sustained.

6. Insurance under More Than One Policy

a. Proportional Share

The named insured may have other coverage subject to the same terms as this coverage form. In that case, this coverage form pays only its share of the covered loss. That share is the proportion that its limit of insurance bears to the limits of insurance of all insurance that covers on the same basis.

b. Excess Amount

There may be other coverage available to pay for the loss other than as described in 7. a. above. In that case, this coverage form pays on an excess basis. It pays only the amount of covered loss that exceeds the amount due from the other coverage, whether collectible or not. Any payment is subject to the limit of insurance that applies.

Loss Payment

1. Loss Payment Options

a. Our Options

The insurance company has four loss payment options if a covered loss occurs.

b. Notice of Our Intent to Rebuild, Repair, or Replace

The insurance company must notify the named insured of its intent to rebuild, repair, or replace within 30 days after receiving a properly completed proof of loss.

2. Your Losses

a. Adjustment and Payment of Loss

The insurance company adjusts all losses with and pays the named insured unless another loss payee named in the policy is involved.

b. Conditions for Payment of Loss

The insurance company pays a covered loss within 30 days after it receives a properly prepared proof of loss and the amount of loss is established. The amount of loss is determined by either a written agreement between the company and the named insured or after an appraisal award is filed with the company.

3. Property of Others

a. Adjustment and Payment of Loss to Property of Others

The insurance company has the option to adjust and pay losses that involve property of others either to the named insured acting on the property owner’s behalf or to the property owner.

b. We Do Not Have to Pay You if We Pay the Owner

The insurance company is not obligated to pay the named insured when it pays the property owner. In addition, if the property owner sues the named insured, the company has the option to defend the named insured in that suit.

Other Conditions

1. Appraisal

The insurance company and the insured may not always agree on the value of a covered claim. This condition provides one method to resolve disputed claims.

Either party can request an appraisal to determine the value of a disputed claim. Once requested, the parties have 20 days to obtain their own independent and competent appraisers and give their appraiser's name to the other party. The two appraisers then have 15 days to select a competent impartial umpire. If they cannot agree on an umpire within that time period, either can request that a judge in the court of record in the state where the property is located appoint one.

The appraisers then determine the claim’s value. They submit any differences to the umpire. Once any two of the three parties agree, the amount of loss is set.

Each party pays its own appraiser. Both parties share the umpire’s cost and other expenses equally.

2. Benefit to Others

The insurance provided does not directly or indirectly benefit any party that has custody of the named insured's property.

3. Conformity with Statute

Any condition in this coverage form that conflicts with any applicable law is amended to conform to that law.

4. Estates

Note: This condition applies only if the named insured is an individual.

a. Your Death

When the named insured, an individual, dies, the person who has custody of the named insured's property is an insured until a qualified legal representative is appointed. The named insured’s legal representative becomes an insured once appointed. Both are insureds, but only with respect to the property insured under this coverage form.

b. Policy Period Is Not Extended

This coverage does not extend past the policy expiration date.

5. Misrepresentation, Concealment or Fraud

This coverage is void if any insured at any time willfully concealed or misrepresented a material fact that relates to the insurance provided, the property covered, or its interest in the property. It is also void if fraud or false swearing by any insured took place concerning the insurance provided or the property covered.

Note: The named insured must deal with the insurance company honestly. Its rights of recovery may be voided if it intentionally misrepresents or conceals a material fact or information. This means the insurance is treated as simply having never existed versus denying a particular claim.

6. Policy Period

Only covered losses that occur during the policy period are paid.

7. Recoveries

Paying the loss does not end the obligations of the named insured and the insurance company toward one another. Additional provisions apply if the insurance company pays a loss and the lost or damaged property is subsequently recovered, or the parties responsible for the loss pay for it.

Either party that recovers property or payment must inform the other. Recovery expenses that either party incurred are reimbursed first. If the named insured keeps the recovered property, it must refund the amount of the claim the insurance company paid unless the company agrees to a different amount. If the claim paid is less than the agreed loss due to applying a deductible or another limitation, any recovery is prorated between the named insured and the insurance company based on the company's respective interest in the loss.

8. Restoration of Limits

Payment of a claim does not reduce the limit available for future claims.

9. Subrogation

The insurance company acquires the named insured's rights of recovery from third parties after it pays a loss. The named insured must help the insurance company secure those rights. The company is not obligated to pay a loss if the named insured hinders or impairs the company's rights of subrogation. However, the named insured can agree in writing to waive rights of recovery from others before a loss occurs.

10. Suit against Us

The insurance company cannot be sued by anyone for any coverage until all the terms of the coverage form are met. Suits must be brought within two years after the named insured first knew about a loss. If a state law invalidates this condition, any suit brought must comply with the provisions of that law and begin within the shortest period of time allowed by law.

Note: It is normal for a basic coverage form to be modified by mandatory state-specific endorsements that address issues related to that specific state.

11. Territorial Limits

Covered property must be located in the United States, its territories and possessions, Canada, or Puerto Rico for coverage to apply.

Definitions

Defined terms are used throughout the coverage form. Restricting their meaning to their definition is how all parties have a clearer understanding of the intended coverage. Nine terms are defined:

1. Earth movement (10 09 changes)

All of the following:

Earth movement does not include sinkhole collapse.

2. Flood (10 09 changes)

Water that overflows into or inundates areas that are usually dry or at least not covered by water. Flood can be caused by natural or artificial means, by animals or humans, or by natural events. It includes the following but is not limited to just these:

3. Limit

This is the amount of coverage that applies to the insured property.

4. Pollutant

This is a broad and expansive term. It includes solids, liquids, thermal or radioactive contaminants, and irritants including, but not limited to, acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. Waste also includes materials intended for recycling, reclamation, and reconditioning, as well as for disposal. Visible and invisible electrical or magnetic emissions and sound emissions are also considered pollutants.

5. Schedule of coverages

This is any page labeled as such that contains coverage information, including declarations or supplemental declarations.

6. Sinkhole collapse

The earth’s surface suddenly settling or collapsing into an underground opening created by water that acts on limestone or some other rock formation. Sinkhole collapse does not include either the land’s value or the cost to fill sinkholes.

7. Specified perils

The named perils of aircraft, civil commotion, explosion, falling objects, fire, hail, fire extinguishing equipment leakage, lightning, riot, sinkhole collapse, smoke, sonic boom, vandalism, vehicles, volcanic action, water damage, the weight of sleet, snow or ice and windstorm. Two terms need further explanation.

Falling objects does not include loss to personal property stored in the open. Damage to the interior of buildings or personal property stored in buildings is not a falling object unless that object first breaches the building's exterior.

Water damage starts with the cracking or breaking of a part of the system or appliance holding the steam or water, and then the sudden or accidental discharge or leakage of water or steam occurs.

8. Terms

These are all policy provisions, limitations, exclusions, conditions, and definitions that apply to this coverage.

9. Volcanic action

Airborne volcanic blast or shock waves, ash, dust, and particulate matter but not the cost to remove dust, ash, or particulate matter when it did not directly damage covered property. Lava flow is also volcanic action.

ENDORSEMENTS AND SCHEDULES

AAIS has developed the following endorsement for use with this coverage form:

IM 7512–Named Perils Endorsement

This is a restrictive endorsement. It deletes the risks of physical loss or damage (except as excluded or limited) to eight specific perils. These are fire, lightning, windstorm, hail, collision, transporting conveyances overturning or derailing, bridges or culverts collapsing, theft, and vandalism.

Note: Additional company specific endorsements may be available and used. Each should be examined to determine its effect on coverage, especially when some may impose restrictions or controls that may be minimum requirements or prerequisites for the company to provide coverage or accept a specific exposure.

UNDERWRITING CONSIDERATIONS

Type of Property

All underwriting must start with the type of property being insured. The type of property, its value, its damageability, and how attractive it is to thieves must be carefully considered. Because all items must be listed and described on the schedule, the underwriter is aware of the property and can make appropriate decisions. High deductibles, packing requirements, security controls, specialty transport, and other loss mitigating controls can be required as part of the writing of the risk.

Pictures and serial numbers of all items should be maintained at a secure location away from the storage location that can be used when reporting a loss and assisting the police in locating it.

Some examples are camping equipment, engineering instruments and supplies, voting machines, catering equipment, religious articles, relics and artifacts, and any other type of equipment that is subject to frequent moves.

Where Located

The property will be covered while in storage, while in use and while in transit between the storage and in use locations. Each of these potential loss locations must be evaluated.

 

Storage Location

Underwriting property at a storage location is similar to underwriting a commercial property coverage form.

Related Article: Commercial Property Underwriting Considerations

A very important component of property in storage is how long it is kept at the location without being taken out. When there is significant time between its being used, it is important to determine the security of the location and the frequency of it being reviewed. Water damage is a particular concern because when such damage is quickly discovered, the loss may be kept small but when left for a period time could result in a total loss. Theft and vandalism are also concerns when items are left unattended for a time. The amount of security and frequency of checking in required will vary based on the type of and value of the property.

In Transit

The property will be in transit for at least part of the policy period. It is important to understand how it is transported and who transports it. The type of property will dictate the packing and transport requirements. The more delicate an item, the greater the need for professional packing. Carriers in hire specializing in a particular type of property transport may be needed. Some named insureds may transport all items on their own vehicle or may use volunteers in the transport. The distance traveled is also important.

At The Location Where Being Used

Knowing how long the property will remain at the location is important. If it remains more than a month, it is important to underwrite as you would any storage location.

Related Article: Commercial Property Underwriting Considerations

Location-specific underwriting is unrealistic in most scheduled property situations because of the frequency of moves.

Responsibility

Method and accountability are the most important part of underwriting this property.

A standard procedure must be followed whenever property is removed from the storage location. At a minimum, there must be a sign-out sheet where the person who removes the property is listed, along with the mode of transportation and the place where it is going. When the property is returned, the returning party identifies the time and date of return. An electronic version of this sheet should be in place for more valuable items. This version would permit only those listed as permitted users to remove the items.

Regardless of the system used, it is important when items are valuable, only those permitted to remove items be able to do so. This means consistent key control.

When the property is taken to the location where it is being used, a single person must be designated as the person in charge of the property. Only that designated person should be permitted to move the property once it has been transported to the location.

An electronic tracking system is a plus so the property can be located wherever it is.