AAIS Mobile Medical Equipment Coverage

AAIS MOBILE MEDICAL EQUIPMENT COVERAGE FORM ANALYSIS

(February 2024)

 

Introduction

Eligibility

Policy Construction

IM 7309–Schedule of Coverages–Mobile Medical Equipment Coverage

IM 7304–Mobile Medical Equipment Coverage Analysis

   Agreement

   Definitions

   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

Endorsements and Schedules

Underwriting Considerations

INTRODUCTION

The IM 7304–Mobile Medical Equipment Coverage Form insures the named insured's medical and scientific equipment. Current examples of such equipment are magnetic resonance imaging (MRI) scanners, computer-assisted tomography (CAT) scanners, x-ray equipment, and ultrasound equipment but, as technology advances, other mobile equipment can be anticipated. Similar property of others in the named insured's care, custody, or control is also covered. The coverage does not extend to any type of radioactive material, though.

Some medical diagnostic equipment can be valued in the millions of dollars, may be located in a comparatively small room or in a tractor-trailer unit, and be used in remote or unusual places, such as a mountaintop or the desert. This equipment can be difficult to underwrite because it is expensive, sensitive, vital, and mobile.

Eligibility

Any commercial business enterprise that has owned medical diagnostic equipment and related property or similar property of others in its care, custody, or control for which it is legally liable is eligible. This equipment must be considered mobile and actually change locations. If it is always at a fixed location, this equipment must be covered as business personal property.

POLICY CONSTRUCTION

AAIS Mobile Medical Equipment Coverage requires at least these four forms:

IM 7309–SCHEDULE OF COVERAGES–MOBILE MEDICAL EQUIPMENT COVERAGE
(01 12 changes)

This Schedule of Coverages is used with IM 7304–Mobile Medical Equipment Coverage. IM 7309 contains the following information:

Policy Number (01 12 addition)

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

Equipment Coverage

The 01 12 edition added quotation marks around the word Limits (“Limits”) because Limit is a defined word.

This is not listed on the schedule of coverages. The covered equipment must be listed and described on IM 7314–Equipment Schedule–Mobile Medical Equipment Coverage. Each item listed on it must have a limit.

This is the most paid in any one occurrence for loss to all covered mobile medical equipment.

Coverage Extensions

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.

Supplemental Coverages

This coverage provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

The limit is $5,000 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.

Valuation

One of the following valuation options must be checked:

Coinsurance

One of the following coinsurance options must be selected:

Income Coverage

One of two options must be selected:

If this coverage is selected, the limit must be entered in the space provided. It is the most paid for loss in any one occurrence.

Note: Income Coverage is not part of IM 7304–Mobile Medical Equipment Coverage Form. Endorsement IM 7313–Mobile Medical Equipment Coverage–Income Coverage must be attached whenever this option is selected.

Income Coverage Extension

This applies only if Income Coverage Provided is selected.

Coverage applies for up to 14 days unless a different number of days is entered.

IM 7304–MOBILE MEDICAL EQUIPMENT COVERAGE FORM ANALYSIS

This analysis is of the 12 04 edition.

Agreement

The insurance company agrees to provide the coverage described in the coverage form and in the schedule of coverages. The named insured agrees to pay a premium. The agreement is subject to all the coverage form's terms, conditions, endorsements, and definitions.

Definitions

Certain terms within the policy are subject to unique definitions within this section. These terms may broaden or restrict coverage, so it is very important to review this when evaluating coverage. Eleven 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 has agreed to provide the coverage.

3. Earth movement

Earthquake, landslide, mudflow, mudslide, and mine subsidence are earth movement as well sinking, rising, or shifting of earth and other vibration or movement of the earth's surface. Sinkhole collapse is not included as earth movement.

4. Flood

Flood is flood. It is also surface water, waves, tidal water, or overflow of bodies of water. Spray resulting from any of the above is also flood regardless of being driven by wind or not.

5. Limit

The amount of coverage that applies to the insured property.

6. 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.

7. Schedule of coverages

Any page labeled as such contains coverage information. Declarations and supplemental declarations are included in this definition.

8. 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. Neither the collapsing land’s value nor the cost to fill the sinkhole is considered sinkhole collapse.

9. 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. Falling object damage to the interior of buildings or personal property stored in buildings is not covered unless a falling object first breaches the building's exterior.

The cracking or breaking of a part of the system or appliance that holds the water or steam causing the sudden or accidental discharge or leakage of water or steam is water damage.

10. Terms

All policy provisions, limitations, exclusions, conditions, and definitions that apply to this coverage.

11. Volcanic action

An airborne volcanic blast or shock waves, ash, dust, and particulate matter. The cost to remove dust, ash, or particulate matter that does not directly damage covered property is not volcanic action, but lava flow is.

Property Covered

Coverage applies to the property described below, subject to any exclusions or limitations.

1. Coverage

Coverage applies to the named insured's mobile medical equipment for direct physical loss by a covered peril. It also applies to similar property of others in the care, custody, and control of the named insured.

Mobile medical equipment is required to be both:

Examples are mobile medical equipment, magnetic resonance imaging (MRI) scanners, computer-assisted tomography (CAT) scanners, x-ray equipment, and ultrasound equipment. However, as technology changes, the types of equipment will continue to grow.

Example: Megatropolis Mobile Screening is based in a major city but makes scheduled visits to hospitals in several smaller outlying communities that cannot afford the sophisticated equipment that Megatropolis has in its mobile screening unit. This availability is convenient for patients who do not have to travel a great distance to obtain any of a variety of tests they need that are available through this mobile screening process.

2. Coverage Limitation

Coverage applies to only covered equipment listed and described on IM 7314–Equipment Schedule–Mobile Medical Equipment Coverage.

Property Not Covered

Five specific types of property are excluded:

1. Aircraft or Watercraft

There is no coverage for the aircraft or watercraft, but medical equipment installed on the aircraft or watercraft is covered.

Example: Mobile equipment is installed on a Beechcraft airplane flown to many villages in Alaska. If a loss occurs, the equipment is covered, but the airplane is not.

2. 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.

3. Money and Securities

A number of 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

4. Vehicles

Any type of self-propelled vehicle designed and intended for use on public highways. The equipment being moved is covered, but the vehicle transporting the equipment is not.

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

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

Example: The hospital located downtown equipped a Winnebago to use for rural mobile X-ray purposes. The Winnebago cannot be covered under this form, but all of the medical equipment inside can be covered if it is scheduled.

5. Waterborne Property

No property is covered while waterborne unless in transit and in a carrier for hire's care, custody, or control.

Note: This could be a concern in areas where ferries are a regular type of transport. It is important to point this limitation out to anyone buying the coverage.

Coverage Extensions

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. It is not added to or combined with the limit for any other coverage extension or supplemental coverage. It 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 to 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. 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

There are two supplemental coverages. The limit for each is 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 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 or coverage extension. They are also not subject to coinsurance provisions that apply elsewhere in the coverage form.

1. Expediting Expenses

a. This Supplemental Coverage pays expenses the named insured incurs to speed up either the repairing of the damaged property or the replacement of it. This coverage can also be used to make temporary repairs. All expenses must be reasonable, though.

Note: Examples of such expenses are additional labor costs (including overtime) and transportation costs.

b. The only expediting expenses paid are those incurred because a covered peril has damaged covered property.

c. The most paid in any one occurrence is $5,000. This limit can be increased.

Note: This is a great coverage to consider when considering after loss contingencies. If it is vital that no delay occurs, a risk manager should determine the costs needed to keep testing running smoothly after a loss and then increase this limit to match those costs.

Example: Faring Well’s mobile MRI was damaged when the vehicle overturned. Tests were scheduled, and delay was not an option. Faring Well found a new MRI that was available and sent a team of employees to pick it up and install it. The expediting costs included the employees’ overtime pay and the travel costs involved. This Supplemental Coverage paid these costs up to $5,000.

2. 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 at any one location is $10,000 for all such expenses that a covered peril that occurs at that location during each separate 12-month policy period causes. This limit can be increased.

 Perils Covered

Coverage applies to risks of direct physical loss 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 resulting from 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 is the result of a covered peril.

b. Earth Movement or Volcanic Eruption

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

c. Flood

The insurance company does not pay for loss caused by flood.

There are two exceptions:

d. 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.

e. Sewer Backup and Water below the Surface

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

There are two exceptions:

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 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.

The only exception is that if a specified peril occurs due to any of these, coverage applies to the loss or damage that specified peril causes.

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

Loss caused by electrical arcing or currents is excluded unless the electrical is from lightning. The exception is when the excluded arcing or currents result in a covered peril any loss or damage from that covered peril causes is covered.

d. Fault, Defect, or Error

There is no coverage for loss caused by or that results from any fault, defect, or error related to planning, zoning, surveying, siting, grading, compacting, land use, or development due to acts of negligence or otherwise. Other related activities are designs, blueprints, specifications, workmanship, construction, maintenance, installation, renovations, remodeling, or repair of property, including the materials used for such activities, whether this coverage form insures the property or not. If a fault, defect, or error results in a specified peril occurring, the resulting loss that the specified peril causes is covered.

Example: Careful thought and detailed planning took place to get the diagnostic equipment into the mobile unit. Many hours had gone into it, but the first time the mobile unit was used, a door swung open and slammed about the unit, causing it to dislodge. Incorrect measurements had resulted in the door being placed too close to the equipment. This loss is not covered because the measurement error caused the door to hit the equipment. Because “door striking equipment” is not a specified peril, there is no coverage under the exception.

e. Loss of Use

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

Note: This could be one of the most expensive losses for a mobile medical equipment owner, yet it is not covered. A careful review of the expediting expense coverage is needed to mitigate this loss.

f. 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. However, if a specified peril occurs due to any of these, coverage applies to the loss or damage that the specified peril causes.

g. 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.

h. 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:

i. Temperature/Humidity

Coverage does not apply to loss that dryness, dampness, humidity, changes in, or extremes of temperature causes. There is an exception. If a specified peril occurs due to any of these, coverage applies to the loss or damage that specified peril causes.

j. 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.

Example: Jason worked at Johnson Hospital. Faring Well had left its MRI equipment at the hospital. When Patrick arrived to pick it up, Jason even helped him load it up. An hour later, David, a Faring Well employee, arrived to pick up the equipment and was told that Patrick had already done so. Patrick was not an employee of Faring Well, and the MRI was nowhere to be found. This coverage form does not cover the loss of the MRI because Jason parted with it voluntarily.

k. Wear and Tear

Loss 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 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 if 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: 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 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.

Valuation

1. Actual Cash Value

The value of covered property is based on the actual cash value at the time of loss. Actual cash is replacement cost new minus depreciation.

Note: This valuation clause applies unless Replacement Cost valuation is checked on the schedule of coverages.

2. Replacement Cost

If Replacements Cost valuation is checked on the schedule of coverage, property is valued at replacement cost subject to the following:

3. 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.

4. Loss to Parts

The value of a lost or damaged part of the 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: This may be particularly important if the equipment is held by a partnership or a joint venture. Who owns the equipment is a basic question in claims handling, and if the equipment is owned by a member of the joint venture but not actually by the named insured joint venture, the claim could be denied.

2. Deductible

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

3. Loss Settlement Terms

The insurance company pays no more than 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 a coinsurance percentage is 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.

Loss Payment

1. Loss Payment Options

a. Our Options

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

Example: GGY, LLC owns a mobile MRI that services five rural hospitals. When the MRI is damaged, GGY decides that it will apply the settlement money toward buying an open-sided unit. Unfortunately, GGY can make this decision, but the insurance company is not required to honor it.

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 it receives a properly completed proof of loss.

Example: The insurance company decides that the best settlement is to actually repair the unit. The decision is made 29 days after the proof of loss was made. GGY had already moved forward and bought the new unit. Now, they must decide how to pay for it.

 

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 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 concerning 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 related 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 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 related to that specific state.

Example: GGY decides to sue its insurance company because of its decision to repair the MRI rather than providing a cash settlement. GGY has met all of its conditions, and the suit is brought within the two-year time statute of limitations.

11. Territorial Limits

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

Example: Friends and Neighbors, a nonprofit medical treatment group, owns a mobile diagnostic unit to help provide services to those in need. They operate in a Texas border area, and a request comes from a sister city across the border. If they respond by taking the unit across the border, any damage to the unit will not be covered.

ENDORSEMENTS AND SCHEDULES

AAIS has developed two endorsements and two schedules for use with this coverage form:

IM 7311–Additional Coverages Endorsement

This endorsement extends coverage to apply to medical supplies as defined, newly acquired or leased equipment, and onboard electronics. It also adds coverage for recharge of fire extinguishing equipment, rental reimbursement, and rewards. Only items with a limit on IM 7312–Additional Coverages Schedule are covered.

IM 7312–Additional Coverages Schedule

This schedule is used with IM 7311–Additional Coverages Endorsement to indicate the additional coverages provided and their corresponding limits.

IM 7313–Mobile Medical Equipment Coverage–Income Coverage

This endorsement provides income (earnings) coverage as entered on IM 7309–Schedule of Coverages–Mobile Medical Equipment Coverage.

IM 7314–Equipment Schedule–Mobile Medical Equipment Coverage

This schedule is mandatory because it lists, describes, and provides a limit for each item of covered equipment.

Note: Additional company specific endorsements may be available and used. Each should be examined to determine its effect on policy 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 CONSIDERATIONS

Underwriting mobile medical equipment coverage must begin with management. This starts with establishing who the named insured is, especially when a partnership or joint venture is the type of business. It is very important to know who owns the equipment being covered. An analysis of the named insured’s financial condition, experience in the business, and overall loss experience is important. It is also important to know who is receiving services from the named insured, the radius of operations in addition to equipment maintenance procedures, how it keeps maintenance records, and the maintenance persons' training and experience.

A complete listing of equipment that is being covered is primary. The type and age of the equipment must be evaluated. Some equipment does not age well and must be replaced regularly. A mobile unit carrying only obsolete equipment is not an attractive prospect; however, a mobile unit containing all equipment that will age out quickly is also not attractive because of the morale hazards both situations can create.

The type of transport is another part of the underwriting. If the transport vehicle has an accident, the mobile equipment will be damaged. This means that commercial auto underwriting must be employed.

Related Article: ISO Business Auto Coverage Form Underwriting Considerations

 

Maintenance and equipment breakdown issues should be considered together. Maintenance is necessary to keep the equipment running properly, and this is in addition to complying with manufacturer warranties. This may be done by the named insured or by the manufacturer's representative. The named insured should be familiar with the maintenance agreements and determine who is responsible for issues such as obtaining replacement parts or performing certain repairs.