(February 2024)
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IM 7510–Schedule of Coverages–Sales Representative Floater IM 7504–Sales Representative Floater Analysis |
The American
Association of Insurance Services (AAIS)
IM 7504–Sales Representative Floater insures samples of the named insured's
merchandise or stock in trade, including containers used to carry the items. Coverage
applies only when the property is in the custody of the named insured's sales
representatives or agents, the named insured's custody as a sales representative or is in transit between the
named insured's premises and its sales representatives.
Any commercial
business enterprise that provides sales representatives with samples to show or
demonstrate for clients is eligible. Any commercial operation that acts as a
sales representative for other commercial operations and carries samples of those
companies’ merchandise is also eligible.
AAIS Sales Representative Floater coverage requires at least these four forms:
Related Article: CL 0100–AAIS Commercial Lines Common Policy Conditions
This Schedule of Coverages is used with IM 7504–Sales Representative Floater. IM 7510 contains the following information:
The 01 12 edition added a space to enter the policy number.
A description of the covered property is entered in the space provided.
Limits for any one sales representative and any one occurrence are entered in the spaces provided.
This is the most paid for loss to samples of the named insured's stock in trade in the custody of any single sales representative.
This is the most paid for loss to samples of the named insured's stock in trade in a single occurrence.
The 01 12 edition added the word Limit with quotation marks around it (“Limit”)
because Limit is a defined word.
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Example: Head First Swimming required all sales
representatives to attend a meeting at the Good Convention Hotel. A flash
flood occurred during the meeting resulting in 20 of the sales
representatives losing both their cars and the sales samples inside of them.
The limit of $15,000 per sales representative was adequate, but the
occurrence limit of $30,000 resulted in a significant loss that was not
covered. |
The limit on the Schedule of Coverages for this coverage
applies to all covered locations.
The limit is
$5,000 unless a different limit is entered.
This coverage provides additional coverage.
The limit is $10,000 unless a different limit is entered.
The Deductible
Amount must be entered in the space provided.
One of the following coinsurance options must be selected:
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.
This analysis is of
the 06 04 edition.
The insurance company agrees to provide the coverage as
described in the coverage form and on the schedule of coverages. The named
insured agrees to pay the premium. The agreement between the two parties is
subject to all of the coverage form's terms, conditions, endorsements, and
definitions, including those on the
CL 0100.
Defined terms are used throughout the coverage form. Restricting their meaning to the definition in it is how all parties have a clearer understanding of the coverage intended. Nine terms are defined:
1. You and your
The party(ies) named on the declarations as the insured.
2. We, us, and our
The insurance company that is providing the coverage.
3. Limit
The amount of
coverage that is available to the insured property.
4. Pollutant
This is a broad and
expansive term. It is solids, liquids, thermal or radioactive contaminants, and
irritants. It includes, but is not limited to, acids, alkalis, chemicals,
fumes, smoke, soot, vapor, and waste. Waste 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
Any page that is
labeled as such that contains coverage information. Declarations or
supplemental declarations are also included.
6. Sinkhole collapse
The earth’s surface
suddenly settling or collapsing into an underground opening created by water acting
on limestone or some other rock formation. The collapsing land’s value and the
cost to fill sinkholes are not considered sinkhole.
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 do not include loss to personal property stored in the
open. Damage to the interior of buildings or personal property stored in buildings
by a falling object is not included unless that falling object first breaches
the building's exterior.
The cracking or breaking of a part of a system or appliance holding
water or steam, causing a sudden or accidental discharge or leakage of water or
steam is water damage.
8. Terms
All provisions,
limitations, exclusions, conditions, and definitions that apply to this
coverage.
9. Volcanic action
An airborne
volcanic blast or shock waves, ash, dust, and particulate matter. However, it
does not include the cost to remove dust, ash, or particulate matter that does
not directly damage covered property. Lava flow
is volcanic action.
Coverage applies to
the property described below, subject to any exclusions or limitations.
1. Coverage
Samples of the named insured's stock in trade and similar property of others in the named insured's care, custody, and control are covered when a covered peril causes direct physical loss by a covered peril. The containers holding the property are also covered.
2. Coverage Limitation
Coverage applies to
only the property described on the schedule of coverages. The named insured can
own it, or it can be property others own.
This described property is covered only under one or more of the following
circumstances:
Six specific types of property are not covered
1. Property at Your
Premises
When the property
is at a location that the named insured owns, leases, or operates the property
is not covered.
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Example: Head First Swimming keeps all sales
samples in its warehouse prior to shipping them to its sales representatives.
These samples are covered as business personal property until they are loaded
on a vehicle and sent to the sales representatives. |
2. Contraband
Property that is illegal to possess is not covered. Property that is legal to possess but being used as part of an illegal trade or being transported illegally is also not covered.
3. Jewelry, Stones, and
Metals
Jewelry of every
type and description, precious and semi-precious stones, gold, silver,
platinum, and other precious metals and alloys are not covered.
Note: This type of
property is more correctly written on a Jewelers Block Coverage Form.
Related Articles:
4. Loaned, Leased, or
Rented Property
Any property the named insured loans, leases, or rents to others is not
covered.
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Example: Jeremy felt that he almost had the sale lined up, so when Ashley
asked if she could use the product for two days just to test it out, he felt
comfortable giving her one of his samples. Unfortunately, a fire occurred on
Ashley’s premises that destroyed Jeremy’s product. The sale fell through. To
make matters worse, Jeremy’s claim was also turned down because the property
had been loaned to others at the time of the loss. |
5. Money and Securities
Several types of property are not covered under this item. Accounts, bills, currency, food stamps, evidence of debt, and lottery tickets not held for sale, in addition to money, notes, or securities are all not covered.
Note: This property should be insured under commercial crime coverage forms.
Related Article: Commercial Crime Coverage Analysis
6. Waterborne Property
Property that is waterborne
is not covered. The only exception is when it is in transit while in a carrier
for hire's custody.
Note: Property on board vessels on bodies of water (other than inland waterways) where the water transportation is significant and no longer incidental to the land transportation should be covered under ocean marine coverage forms or policies.
Provisions That Apply To Coverage Extensions
There is one coverage extension. Its limit is either the limit on the schedule of coverages or the default limit included in the coverage form. This limit is part of the applicable limit for covered property and not in addition to it unless otherwise indicated. This limit is not added to or combined with limits for any other coverage extension or supplemental coverage and is not subject to any coinsurance provisions that apply elsewhere in the coverage form.
Debris Removal
When a covered
peril damages or destroys covered property, the cost to remove any created
debris is covered under this extension.
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. 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 in order for this coverage extension
to apply.
Provisions That Apply
To Supplemental Coverages
There is one supplemental coverage. Its limit is the limit for the supplemental coverage unless there is a limit for that coverage on the schedule of coverages. This limit is separate from and not part of the applicable limit for the covered property.
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 the covered property. The limits are not added to or combined with limits for any other supplemental coverage or coverage extension. They also are not subject to any coinsurance provisions that apply elsewhere in the coverage form.
Pollutant Cleanup and Removal
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.
This is immediate coverage, so any expenses to extract pollutants are paid only when reported to the insurance company within 180 days of the date of loss.
Costs related to testing, evaluating, observing, or recording pollutants are excluded except for those costs that are part of the extraction process.
The most paid is $10,000 for all such expenses that a covered
peril that occurs during each separate 12-month policy period causes. This limit
can be increased.
Coverage applies to risks of direct physical loss unless the loss is limited or caused by an excluded peril.
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.
Related Article: Concurrent Causation and Anti-Concurrent
Causation Clauses–A Discussion
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 to control a fire. This
exception applies only if the fire results from a covered peril.
b. Nuclear Hazard
The insurance
company does not cover loss or damage caused by or resulting 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 fire.
Direct loss or damage from that fire is covered, but the damage from the
nuclear hazard remains excluded.
c. 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 are 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
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.
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Example: Head First Swimming’s sales
representatives demonstrate most of their products underwater. Jill forgot to
thoroughly dry the products before placing them in her car's trunk. She left
for a weeklong vacation. She returned, opened the trunk to prepare for her
upcoming calls, and discovered the product covered in mildew. This loss is
not covered. |
b. Criminal, Fraudulent, Dishonest, or Illegal Acts
Coverage does not
apply to loss caused by, or that results 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 the custody of
carriers for hire.
c. Electrical Currents
Electrical arcing or currents caused loss or damage is
excluded unless lightning is the cause. When the excluded arcing or currents
result in the occurrence of a specified peril any resulting loss from that
specified peril is covered.
d. Loss of Use
There is no coverage for a loss that results from delay, loss of use, or loss of market.
e. Mechanical Breakdown
When mechanical, structural, or electrical breakdown or
malfunction causes a loss, it is excluded. The loss is excluded even if a
breakdown results from a structural, mechanical, or reconditioning process. There
are no exceptions.
f. Missing Property
The
unexplained or mysterious disappearance of covered property is excluded
when there is no physical evidence to suggest what happened to it, and the only
proof that a loss occurred is based on an audit
or physical inventory. The one exception is that this does not apply to
covered property in the custody of carriers for hire.
g. Pollutants
There is no coverage for loss caused by or resulting
from any release, discharge, seepage, migration, dispersal, or escape of
pollutants. There are three exceptions:
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Example: Oliver left his product poolside at a convention
hotel. A container of chlorine leaked and migrated to the product causing it
to be discolored and unusable. Scenario 1: The leak was due to a puncture
in the container. There is no coverage. Scenario 2: The leak occurred when protestors took over the pool area
as a flash mob, and one of the members kicked the chlorine container. The
loss is covered because a specified peril caused the loss. |
h. Processing Work
Loss or damage due
to any processing or other type of work
done on the property is not covered. The only exception is that if a specified
peril results from the processing, coverage applies to the specified peril
loss.
i. Temperature/Humidity
Coverage does not apply to loss that dryness, dampness, humidity, changes in, or extremes of temperature causes. However, if a specified peril occurs due to any of these, coverage applies to the loss or damage that specified peril causes.
j. Theft from an Unattended Vehicle
Coverage does not apply to theft of covered property from an
unattended vehicle. There are two exceptions. If the vehicle was locked, its
windows securely closed, and there is visible
evidence of forced entry into the vehicle, coverage applies. In addition, when
the covered property is in the custody of
carriers for hire, coverage applies.
k. Voluntary Parting
Loss to
covered property voluntarily given to others is not covered, even if the
surrender was due to a fraudulent scheme, trick, or false pretense.
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Example: Mark is met at his client’s door by a security officer who informs
him that no briefcases or other containers can be taken into the building.
Mark is asked to relinquish his property so that it can be inspected, and is
assured that it will be returned to him inside the building. Mark surrenders
his property and walks into the building. He meets his contact, whom he
congratulates on such an efficient security system. The contact is quite
surprised. Yes, Mark’s property was never returned to him, and Mark was even
more upset when the property was not covered when he turned in the theft
claim. |
l. Wear and Tear
Loss or damage
caused by wear, tear, marring, or scratching is excluded.
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 any notice to it be in
writing.
2. You Must Protect
Property
During and after a
loss, the named insured must take all reasonable steps to protect covered
property from further loss. The insurance company pays reasonable costs the
named insured incurs, but to do so the named insured must maintain 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: Such costs incurred 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
must produce any records 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. It must also be allowed to take
samples of the property to the extent necessary to adjust and settle the loss.
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
may not abandon damaged property to the insurance company without its written
consent.
9. Cooperation
The named insured
must cooperate with the insurance company and perform all acts this coverage
form requires.
1. Actual Cash Value
The value of covered property is its actual cash value at
the time 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 based on a
reasonable proportion of the value of the entire pair or set. However, the loss
of one part of a pair or set is not considered a total loss.
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.
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: Insurance is meant to restore a person’s pre-loss
financial position, not to improve or enhance it.
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 to a coverage provided, the insurance company pays only part of the loss if the limit is less than the percentage of the value of the covered property on the schedule of coverages.
b. 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 covered property’s limit 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 on the schedule of coverages, this procedure applies separately to each limit.
d. 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. This coinsurance provision does not apply unless there is 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 6. 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.
1. Loss Payment
Options
a. Our Options
The insurance company has the following 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
either through 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.
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 with 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
If the named
insured 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 he or she is appointed. Both are
insureds, but only with respect to the property this coverage form insures.
b. Policy Period
is not Extended
This coverage does
not extend past the policy’s 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.
Note: As with all floaters, it is important to
remember that the policy period is based on the time at the mailing address.
This means that an 11:00 PM loss on the west coast may not be covered because
it is 3:00 AM on the east coast.
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 recovery rights 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 that relate 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.
AAIS has developed the following endorsement for use with this coverage form:
This endorsement restricts the perils covered to only the named perils of fire, lightning, windstorm, hail, collision, overturn, or derailment of a transporting conveyance, collapse of a bridge or culvert, 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 to accept a particular exposure.
Underwriting sales
representative samples coverage involves evaluating the samples and the persons
who carry them.
Coverage does not
apply to regular merchandise and/or property similar to the sample and held for
sale. The evaluation must focus on the sample’s susceptibility to loss or damage from many different causes of
loss. The sample's dollar value will help determines its desirability because the greater its value, the more likely
that it will be a target for theft. The sample's size also plays into its value
and attractiveness to thieves. Small, high-valued items are much more
attractive than large items with the same or even greater value.
The salesperson or
authorized sales representatives must also be evaluated relative to the samples
carried. The salesperson's experience must be considered along with his or her
individual loss experience for this coverage. Criminal and other background
checks should be done before hiring any
employee, and that person should not be hired unless his or her record is
acceptable. Salespersons who are employees are more easily and better
controlled than authorized representatives, similar to independent contractors.
Samples while in
transit present some of the biggest underwriting challenges. The theft exposure
is always present and affects certain types of property more than others.
Samples transported in rural or country settings are usually less subject to
theft than samples transported in larger urban areas. Samples should always be
concealed, to the extent possible, when the vehicle is unattended. Depending on
the type of property, concealment may not be enough, and the vehicles may need
burglary and break-in systems and alarms. The packing materials and packaging
used are important factors if the property is delicate or fragile. Persons
skilled and experienced in packaging should always package fragile or delicate
property. The number of days the salesperson and the samples are on the road is
another important element to analyze and may determine if additional theft
deterrents in the motor vehicle are required.
Location
based exposures are at
exhibitions, fairs, expositions, and trade shows. Each must be evaluated separately,
and the exposures and characteristics determined relative to the types of
sample and its damageability and susceptibility to loss or damage from those
exposures and characteristics. When multiple salespersons attend a single event,
there is also the potential for all samples to be lost in a single occurrence.