ISO Jewelers Block Coverage Form

ISO JEWELERS BLOCK COVERAGE FORM ANALYSIS

(April 2024)

 

Introduction

Policy Construction

IH DS 84–Jewelers Block Declarations

IH 00 84–Jewelers Block Coverage Form Analysis

Introduction

A. Coverage

   Covered Property

   Property Not Covered

   Covered Causes of Loss

   Additional Coverage–Collapse

   Coverage Extension

B. Exclusions

C. Limits of Insurance

D. Deductible

E. Additional Conditions

Endorsements

Underwriting Considerations

INTRODUCTION

The Insurance Services Office (ISO) Jewelers Block Coverage Form applies to larger retail jewelry operations. Only jewelers with stock values that exceed $250,000 are eligible. It may also be used by jewelry wholesalers and manufacturers. Covered property consists of jewelry, precious stones, semi-precious stones, precious metals, and other jewelry-related stock. Coverage also applies to property of others in the jeweler's care, custody, or control subject to unique limitations when the other party is also in the jewelry trade. It covers property at the named insured's location, off premises, and while in various types of transit.

Jewelers with less than $250,000 stock values can obtain coverage using the filed CM 00 59–Jewelers Block Coverage Form.

Related Article: ISO Jewelers Block Coverage Form

POLICY CONSTRUCTION

Jewelers Block Coverage requires at least the following seven forms:

Related Article: IL 00 17–Common Policy Conditions Analysis

Related Article: CM 00 01–Commercial Inland Marine Conditions

IH DS 84–JEWELERS BLOCK DECLARATIONS

The advisory Jewelers Block Declarations does not have spaces for the named insured, its mailing address, and other named insured information, the policy period, or the description of the insured business. That information is on the Common Policy Declarations. IH DS 84 contains the following information:

Insurance Company and Producer Name

The name of the insurance company that provides the coverage and the name of the agent or broker that produces the business are entered in the spaces provided.

Limits of Insurance

This section has spaces to enter the limits of insurance.

Note: There is no space to enter the location address. That information is in the Proposal for Jewelers Block Coverage Form.

Specific entries are required for the following:

·         Property Away From Your Premises and Not Included Above

Optional Coverages

This section has spaces to enter the limits of insurance for optional coverages.

Note: Each item below requires an entry for protected and unprotected show windows and showcases. However, the coverage form does not define the terms protected and unprotected.

·         Show Windows at Insured's Premises While Open to Business

·         Show Windows at Insured's Premises While Closed to Business

·         Money

·         Additionally Covered Property

 Note: There is no Optional Coverage for the Additionally Covered Property section within the coverage form that changes these items from Not Covered to Property to Covered Property because a limit is entered. Instead, IH 99 25–Additionally Covered Property endorsement must be attached and that endorsement provides an explanation of the coverage being provided.

Note: This item is located in a place that could cause its application to be challenged. It appears after the Additional Covered Property and could be construed to apply to only that property. It is also listed within Optional Coverages so could be construed to apply to only the Optional Coverages Property. However, because there is no other Catastrophic Limit located anywhere else on the Declarations, the intent of the limit may be to apply as a cap on overall property coverages.

Deductible

This section has a space to enter the amount of deductible that applies.

Premium

This section has a space to enter the annual premium for the coverages provided.

Special Provisions

Any special provisions are entered in the space provided.

IH 00 84–JEWELERS BLOCK COVERAGE FORM ANALYSIS

This analysis is of the 12 13 edition. Changes from the previous edition are in bold print.

Introduction

This section encourages carefully reading the entire coverage form to determine what is covered, what is not covered, rights, and duties. It defines we, us, and our as the insurance company that provides this insurance coverage. It also defines you and your as the named insured on the declarations. The reader is also pointed to the Definitions section because certain words or terms used in the form have a broader or restricted meaning.

Note: This section also states that words and phrases with special meaning appear in quotation marks. However, this coverage form does not have a Definitions section where such words are defined.

A. Coverage

The insurance company pays for direct physical loss or damage to covered property but only when that loss is from a covered cause of loss.

1. Covered Property

Covered property is the following:

a. Jewelry, precious stones, semi-precious stones, precious metals and alloys, and other stock in trade the named insured uses in its business

b. The same type of property as above that has been sold, but that has not yet been delivered

c. The same type of property described in a. and b. above but that belong to others, and that is in the named insured's care, custody, or control. This does not include such property that belongs to those in the jewelry business. 

d. The same type of property described in a. and b. above that belongs to another jewelry business while that property is in the named insured's care, custody, or control. This coverage is limited to the named insured’s legal liability for such property or for the amount of money the named insured advanced on that property.

Example: Black Rose Jewelry is a large retail jewelry store that also manufactures and repairs jewelry for both retail purchasers and other jewelers. Black Rose can use this form to cover all of the jewelry on its premises.

Note: The property this coverage form insures is significantly different than property that almost any other commercial property coverage form or policy insures. In fact, nearly all of them exclude theft of this type of property. A few provide some limited theft coverage using small limits, or restricted extensions of coverage. Most businesses that qualify for and need the insurance this coverage form provides insure the rest of their property under businessowners policies or commercial property coverage forms. They should totally exclude coverage for everything this coverage form insures to eliminate potential duplicate coverage and coinsurance issues.

2. Property Not Covered

The following described property is not covered:

a. Property that is sold under a deferred sales agreement after it is no longer on the named insured's premises

Example: Black Rose occasionally arranges financing and sells high-end merchandise under several different installment sales arrangements to its high-income upper-class clientele. Black Rose does not have coverage for its continuing financial interest in that property under this coverage form because of this exclusion. It arranges coverage for that interest under a separate Installment Sales and Leased Property Coverage Form.

Related Articles:

AAIS Installment Sales Coverage Form

ISO Installment Sales and Leased Property Coverage Form

b. Property at any exhibition that a public or government authority or trade association either promotes or financially assists

Example: Black Rose participates in a few exhibitions each year. They are part of annual fund-raising events of three different charities. Coverage applies to Black Rose's property at these events because they are not connected with any trade group or public authority. The coverage is subject to the limit for Property Away From Your Premises and Not Included Above on the declarations.

c. Property exhibited in show cases or show windows at a premises other than the insured premises

d. Property that is being worn by any of the following at the time of loss:

The one exception to this exclusion is for watches worn while being adjusted.

Note: This is an almost absolute exclusion required because of the relative ease of "snatch and run" type losses that involve jewelry, such as necklaces and pendants, that wealthy individuals wear at a variety of social events, fund raisers, banquets, and dinners. Most jewelers do not loan out jewelry to be worn at such events. The ones that do must make extensive security arrangements on their own to minimize or eliminate this type of loss.

e. Property in transit by the following:

The one exception is that property sent by United States Postal Service (USPS) Registered Mail is covered.

There are multiple exceptions. Coverage applies:

o    Property shipped by express carriers.

o    Property that is subject to a receipt issued by railroad, water, or air carrier’s passenger parcel transportation or baggage service.

o    Property sent by air carriers' passenger baggage service with delivery to the passenger at the final destination when it is treated as accompanied baggage and subject to air freight tariffs. This means this property is subject to the limit of insurance on the declarations for Property Away From Your Premises and Not Included Above instead of the property in transit limit.

The exceptions are that shipments by express carriers, similar parcel delivery services shippers, armored car services and/or passenger bus lines’ parcel transportation and baggage services are covered.

 

Example: Three men wearing hooded sweatshirts attacked a woman at the gas pump of a truck stop along an interstate highway between Indianapolis and Chicago, stole the luggage from the vehicle’s trunk, and got away with nearly $1,000,000 in jewelry and precious stones. The woman and her husband operated as couriers for a jeweler’s finished, high-end jewelry. After the husband went inside to purchase a beverage, the men broke out the passenger-side window, and one threatened the woman with a knife while the other two opened the trunk and stole the luggage. They flattened two of the tires on the couple's vehicle and escaped in a nondescript four-door sedan. This loss was not covered because the couriers were not a carrier acting as a parcel or other type of delivery service.

f. Contraband. Any property that is illegal for the named insured to own or in illegal trade or transportation is not covered.

Note: Furniture, Fixtures, and Office Supplies; Machinery, Tools, and Fittings; Patterns, Dies, Molds, and Models; and Improvements and Betterments are not specifically listed as not covered property, but they also do not meet the description of covered property. If coverage for any of these is desired, IH 99 25–Additionally Covered Property endorsement must be attached because that endorsement provides an explanation of the coverage being provided.

3. Covered Causes of Loss

Covered causes of loss are direct physical loss or damage to covered property with the exception of causes of loss that are listed in the exclusions section.

4. Additional Coverage–Collapse

This additional coverage is here because of the Collapse Exclusion. The only type of collapse that is covered is as described below.

 (1) Only an abrupt falling down or caving in of building or part of a building is considered collapse. An additional part of this definition is that the building must not be able to be occupied as intended following that collapse.

(2) Direct physical loss or damage to covered property due to such an abrupt collapse is paid only if it is the result of one of the following:

(a) Building decay not visible. This doesn’t apply if an insured knew about such decay before the collapse

(b) Damage from insects or vermin that is not visible. This doesn’t apply if an insured knew about such damage before the collapse

(c) Defective materials or methods that are used in a construction, remodeling, or renovation project. This applies only when the collapse occurs during that project

(d) Defective materials or methods that are used in a construction, remodeling, or renovation project that cause the collapse after the construction, remodeling, or renovation is complete. This applies only if one of the following is responsible for the collapse:

(3) This additional coverage does not increase the limits of insurance that this coverage form provides.

5. Coverage Extension

Theft Damage to Buildings

a. The insurance company pays for loss or damage to any part of the building that contains covered property when the reason for the loss or damage was a theft or an attempted theft. This extension also pays for such damage to building maintenance or service equipment. Coverage applies only if the named insured either owns the building or is being held legally responsible for such damage.

b. There are limitations as to what damage is paid. Theft caused fire damage is not covered. Also, damage to glass, lettering, or artwork on that glass is not covered.

This coverage extension is included in the limit of insurance that applies to covered property at the location where the loss or damage occurs.

Example: Black Rose’s owned building is badly damaged when a wannabe thief hatches a plan to break in and steal some jewelry and precious stones. He crashes his beat-up car into the building when the store is closed, grabs as much merchandise as he can, and attempts to escape. However, the thief does not consider the possibility that other parts of the structure might collapse on the vehicle and pin him in the wreckage, which is exactly what happens. The thief is apprehended, no merchandise is taken, and Black Rose recovers the full cost to repair the building and resume operations BUT only up to the limit of insurance for covered property on the declarations.

6. Coverage Options

a. Show Windows

Loss or damage to covered property due to theft or attempted theft as a result of smashing or cutting into a show window is covered if the window is on the named insured’s premises, and there is a limit on the declarations for that show window coverage. Coverage is subject to the limit on the declarations.

b. Money

Loss or damage due to theft of money is covered, provided the money is kept in locked safes or vaults on the named insured’s premises. This coverage applies only if there is a limit on the declarations for the coverage and the safes and vaults are actually broken open. This means that theft from an open vault is not covered.

B. Exclusions

1. Primary Exclusions

The first group of exclusions applies whether or not the loss event results in widespread damage or affects a significant geographical area and is essentially absolute. Subject to specific exceptions, 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. Earthquake

This exclusion applies to only earthquake – not earth movement. There is an exception that if an earthquake causes a fire, that damage from resulting fire is covered but then only if this coverage form provides coverage for that fire.

This exclusion applies only to property that is at the named insured’s premises.

Note: This exception is important. It means earthquake coverage applies when the property is in transit, at exhibitions, or anywhere else away from the described premises.

b. Governmental Action

This exclusion applies to the legal and authorized seizure or destruction of property by a government entity’s order. There is one exception. Loss or damage that is caused when the governmental entity orders property to be destroyed is covered if used as a method to prevent a fire from spreading is covered. However, this exception applies only if the fire being contained would have been a covered fire under this coverage form.

c. Nuclear Hazard

Nuclear reaction, radiation, or radioactive contamination is not covered. There is an exception. If a fire results from the nuclear reaction, radiation or radioactive contamination there is coverage for the direct loss or damage caused by that fire.

 d. War and Military Action

This exclusion lists three specific warlike activities.

e. Water

Water is flood, surface water, waves, tidal water, tidal waves, tsunami, overflow of any body of water, or their spray, all whether wind driven or not even if called a storm surge. Loss or damage from waterborne material that any water described above moves or carries is also excluded.

This exclusion applies even if an act of nature or another event causes any of the above.

There are two exceptions:

Note: This exception is important. It means that coverage for water damage applies when the property is in transit, at exhibitions, or anywhere else away from the described premises.

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 resulting from any of these events.

a. Delay, loss of use, and loss of market

These are consequential or indirect losses that develop as a result of a direct loss or damage.

b. Theft from any vehicle

There is no coverage when loss or damage is due to theft from any vehicle. There is an exception. There is coverage if the named insured or an employee is actually in or on the vehicle when the theft occurs. If the named insured or employee cannot be physically in or on the vehicle, it can hire someone to stay with it and coverage will continue to apply as long as that individual is in or on the vehicle at the time of the theft.

This exclusion does not apply to covered property shipped via the USPS or other carriers.

Related Court Case: Car-Jacked Jewelry Not Covered

Example: Black Rose employees deliver merchandise when a customer requests it as long as they are in town. Black Rose supplies a vehicle for the delivery. During one such delivery, the delivery driver was approached by a man collecting funds for a telethon while he was stopped at a traffic signal. The driver rolled down his window to make a contribution. The collector opened the car door, grabbed the driver, and threw him out of the vehicle. He then got into it and sped off. The car was recovered a few blocks away, but the merchandise was gone. A number of witnesses came forward to explain the incident to the police. As a result, Black Rose's merchandise loss was covered.

c. Unexplained disappearance

When covered property is gone, and there is no obvious cause or explanation of what happened to it.

 d. Shortage found upon taking inventory

Any loss discovered as a result of an inventory shortage and there is no explanation as to what happened to the property, similar to unexplained disappearance. This is sometimes referred to as "inventory shrinkage."

e. Shortage of property

When the contents of a shipped parcel are fewer when they arrive at the consignee than when the shipment was prepared, despite the package being in good condition with all required seals intact, there is no coverage.

Note: This intent of this exclusion is similar to the exclusions for unexplained disappearance and shortage found upon taking inventory.

f. Dishonest or criminal acts (12 13 changes)

These are any dishonest or criminal acts the named insured, its partners, employees, temporary employees, leased workers, officers, directors, trustees, authorized representatives, or members and managers of a limited liability company commit. This also includes theft.

Such acts committed by anyone with an interest in the property, their employees, temporary employees, leased workers, or authorized representatives who act alone or who act in collusion with other parties or with each other are also excluded. This exclusion also applies whether or not the acts take place during regular working hours.

This exclusion does not apply to acts of destruction by the named insured’s employees, temporary employees, leased workers, or authorized representatives. However, there is no coverage for theft by the named insured’s employees, temporary employees, leased workers, or authorized representatives.

The 12 13 edition removed the part of the exclusion that applied to dishonest or criminal acts committed by anyone entrusted with the property, except under three specific circumstances in the previous edition and created an entirely new and separate exclusion n. These exceptions relate to the way jewelers transact business.

g. Theft or attempted theft from show windows

Loss or damage that is due to theft or attempted theft of covered property that is in show windows at the named insured's location is not covered.

There are two exceptions:

Note: Refer to 6. Coverage Options a. Show Windows above.

h. Processing or work upon the property

Loss or damage that is caused when covered property is being processed or worked upon is not covered. This applies regardless of who is doing the processing. There is one exception. If a fire or explosion results from such work or processing of covered property any damage to covered property caused by that fire and explosion, is covered but only if the fire or explosion is otherwise covered under this form.

Example: Melissa was using highly flammable liquid while repairing a necklace. She then used a soldering iron on the piece to bring two pieces together. She dropped the piece, causing it to break. This loss is not covered.

Scenario1: It fell upon the cloth saturated in the flammable liquid when it dropped. The liquid ignites. All damage to covered property due to that fire is covered.

Scenario 2: When it dropped, it fell on the floor. Melissa was upset and walked away to get herself a cup of coffee and walk off her anger. She ignored the potential of fire that existed because of the heat on the necklace and the proximity to flammable liquid. When the flammable liquid on the floor eventually ignited, the damage from that fire was not covered because it was due to neglect, which is excluded.

i. Insufficient or defective packing

The named insured must properly pack covered property for transit. If it does not, any loss related to that poor packing is not covered.

Example: Black Rose usually has a professional packaging and mailing service package and mail out of town purchases. However, a diamond ring had to be express mailed overnight, and the service was closed. A Black Rose employee did the best she could to wrap the article to protect it before slipping it into the express carrier's mailing envelope. As (bad) luck would have it, the envelope fell on the floor in the express carrier's handling facility, and a forklift ran over it. The diamonds survived the impact, but the ring's mountings and other parts were crushed and destroyed. The cost to replace the ring’s mountings was not covered because inadequate packaging aggravated the loss. Fortunately, the diamonds represented most of the bracelet’s value, and none of them were damaged or lost.

j. Breakage of fragile articles

If fragile property breaks, there is no coverage for any loss or damage related to its breaking.

There is an exception. If fire, lightning, explosion, windstorm, earthquake, flood, vandalism, aircraft, rioters, strikers, theft, attempted theft, or accident to the vehicle that transports the property causes the breakage, coverage does apply but only if that cause of loss would be covered under this form.

Note: Breakage losses are usually referred to as "maintenance-type losses" because they are almost always inevitable and are most appropriately handled as a non-insured cost of doing business.

k. Voluntary parting

The named insured or anyone else entrusted with the property being tricked or deceived into giving that property away.

l. Unauthorized instructions

When covered property is transferred to another person or place because unauthorized instructions were received to do so.

m. Neglect

Neglect on an insured’s part to take reasonable measures to preserve and protect covered property from subsequent damage during and after the time of loss.

n. Theft (12 13 addition)

Theft by any person the named insured entrusts covered property to for any reason, whether they act alone or in collusion with any other party. This exclusion applies 24 hours a day/7 days a week.

There are three exceptions when coverage applies:

Note: This coverage form does not explain or define what constitutes “safe custody.”

3. Other Exclusions

This group of exclusions applies to loss or damage caused by or resulting from any of the following loss events. In every case, if loss or damage by a covered cause of loss occurs as a result of one of these excluded events, coverage applies to the loss or damage the resulting covered cause of loss causes. The insurance company does not pay for any loss or damage caused by or that results from any of these events.

a. Weather conditions

This is loss or damage to covered property that weather conditions cause. This exclusion applies only if the weather conditions contribute in any way to a cause or event that involves the following: 1. Primary Exclusions to produce the loss or damage:

·         a. Earthquake

·         b. Governmental Action

·         c. Nuclear Hazard

·         d. War and Military Action

·         e. Water

b. Acts or decisions

Acts or decisions any person, group, organization, or government entity makes that result in loss or damage. Failing to act or to make decisions is also excluded.

c. Faulty, inadequate, or defective

With respect to all or part of any property wherever located, coverage does not apply to any of the following faulty, inadequate, or defective:

d. Collapse

Collapse is excluded. This means the following property conditions are also excluded:

This exclusion has two exceptions.

e. Gradual deterioration and other miscellaneous losses

Loss or damage to covered property due to gradual deterioration or hidden or latent defect is excluded. Coverage also does not apply to the following:

Notes:

Gradual deterioration is slow or deliberate decline in covered property’s quality or serviceability.

Hidden or latent defects are concealed flaws, weaknesses, or imperfections in covered property or any quality in the property that causes it to damage or destroy itself.

Examples of insects, vermin and rodents are mice, rats, cockroaches, squirrels, beavers, spiders, ants, centipedes and ticks. Each is characterized by destructive habits that cause damage, such as gnawing and nibbling.

Rust and corrosion are low-temperature oxidation processes that result in deterioration over time due to inactivity or neglect.

Dampness and temperature extremes can affect the oxidation process which affects different forms of covered property.

C. Limits of Insurance

The most the insurance company pays for loss or damage in a single occurrence is the limit of insurance on the declarations for the applicable coverage.

D. Deductible

The insurance company does not pay for loss or damage until the amount of the adjusted loss or damage (before capping with the limit of insurance that applies) exceeds the deductible on the declarations. It then pays the amount of the adjusted loss or damage that exceeds the deductible up to the applicable limit of insurance.

E. Additional Conditions

1. Valuation

This condition replaces Valuation General Condition F. in the Commercial Inland Marine Conditions. The value used is the value at the time of loss, not the value at the inception date or the date the loss is settled. There is no consideration given to historical or antique value.

The value of lost or damaged property is the least of the following:

a. The property’s actual cash value

b. The reasonable costs to restore the property to the condition it was in just before the loss or damage occurred

c. The cost to replace the property with similar or identical property

d. The lowest value the named insured assigned to the property on the date of loss as recorded in existing inventories, books, or other records

Example: A break-in occurred at Black Rose. The target was its gold. At the time the policy was issued the gold was valued at $1,210 per ounce. The price of gold on the day of the loss was $1,360 per ounce. The price of gold at the time of settlement was $1,250. The insurance company would be required to pay $1,360 per ounce if a cash settlement was made. However, it would probably offer to replace the gold at the going price because replacement is a settlement option.

2. Other Conditions

These conditions apply in addition to the Commercial Inland Marine Conditions and the Common Policy Conditions.

a. Coverage Territory

The coverage territory is wherever covered property is within or between the United States of America, its territories and possessions, Puerto Rico, and Canada.

b. Protective Safeguards

This is a restrictive condition. It requires the named insured maintain and have operational while the business is closed all protective safeguards stated to be in effect at a location as of the inception date. If the protective safeguards are not operational, coverage is automatically suspended at that location until the protective safeguard is once again operational.

Example: The lines from Black Rose's burglar alarm system to the central station were cut during a failed break-in. Black Rose was so wrapped up in cleaning up the mess from the botched attempt that it completely forgot about the cut lines and the fact that the premises no longer had an operating alarm system. The burglars figured they would have better luck the second time around and struck the next evening, shortly after the business closed for the day. This time, the burglars removed a lot more merchandise at their leisure because they were not constrained by an alarm sounding and the police arriving. Black Rose discovered the error the next morning and was very upset and disappointed when it learned that the second loss was not covered because the protective device to protect against the loss that occurred was not operating at the time of loss.

c. Records and Inventory

The named insured must accurately maintain certain records for the insured business and keep them for at least three years after the policy expires. It must also perform a physical inventory of stock used in the business at least annually. The records include:

d. Changes to Premises

Coverage does not apply to property where the risk of loss or damage materially increases by changes at the location or to property situated in expansions of the location listed on the declarations unless the insurance company has provided written permission.

e. Attachment of Proposal

The named insured must sign the Proposal for Jewelers Block Coverage Form. It must then be attached to the Jewelers Block Coverage Form to activate coverage.

Note: Other than Furriers Block coverage, this is the only coverage in standard insurance lines of coverage that requires that the application for coverage (Proposal for Jewelers Block Coverage Form) be attached to the policy to activate coverage.

ENDORSEMENTS

ISO has developed four specific endorsements for exclusive use with the Jewelers Block Coverage Form.

IH 84 02–Registered Mail Deductible

There may be a limit of insurance on the declarations for coverage of shipments by registered mail. In that case, this endorsement is used to include a $25,000 deductible in exchange for a reduced premium charge.

IH 84 03–Limitation on Property Away From Premises

This endorsement does two things. First, it limits coverage for property away from premises to only $5,000 regardless of what limit is shown on the Declaration. Secondly, it provides the limit of insurance on the declaration to losses when only those individuals listed on the endorsement have the property off premises.

Note: This could lead to confusion because the declarations limit does not specify that its full limit applies only to those individuals listed on the endorsement. If the limits are significantly high, this could result in a court challenge due to misunderstanding.

IH 84 04–New Business–Premium Adjustment

This endorsement is used when a named insured has been in business less than six months. It allows the insurance company to rerate the risk midway through the initial coverage period.

IH 84 05–Proposal for Jewelers Block Coverage Form

This is the application for Jewelers Block coverage. The named insured must complete each section and sign it. The Jewelers Block Coverage Form and the Proposal for Jewelers Block Coverage Form are unique in the insurance industry with respect to standard lines of insurance because the proposal is attached to and becomes part of the coverage form. Without it, the policy is void and there is no coverage. A separate proposal is required for each covered location.

The proposal is extremely detailed and contains 18 sections that address virtually every physical aspect of the business. The named insured is the only one with the knowledge and information to properly complete it, but the agent must be available to guide the named insured through it.

ISO has developed two other endorsements that can be used to respond to specific situations.

IH 99 19–Additional Covered Property

This endorsement is used to include coverage for types of property ordinarily excluded.

IH 99 20–Additional Property Not Covered

This endorsement is used to exclude certain types of property the coverage form insures.

IH 99 22–Loss Payable

Loss payees with insurable interests in covered property are listed on this endorsement along with the property in which they have that interest.

Note: No commitment is made to notify them of any cancellation.

IH 99 25–Additionally Covered Property

Furniture, fixtures, office supplies, machinery, tools and fittings, patterns, dies, molds and models and improvements and betterments can be added to the policy by attaching this endorsement. It has an unusual valuation condition and is subject to coinsurance. A better approach may be to use standard commercial property coverage forms or businessowners policy.

UNDERWRITING CONSIDERATIONS

Ownership and management issues are the most important ones in underwriting jewelers block. The named insured's acceptable financial condition is essential if it is to provide adequate protection and procedures in the handling of its valuable stock. The named insured's experience in the business and its hiring practices are very important to consider. It must have the ability to develop and implement plans, procedures, protocols, and actions for emergency situations. Maintenance and care of the premises also affect the overall desirability and success of a jewelry business.

Underwriting jewelers block must focus on theft, burglary, and holdup issues. Alarm systems, vaults, and the store’s location must all be considered. Does the named insured remove property from the premises and, if it does, what precautions does it take? How are precious stones and metals handled in the store? How are the showcases and show windows locked, and who controls the keys? Showroom windows and smash and grab hazards are always key underwriting considerations.

The premises should always be protected by a good quality alarm system that covers all exterior openings and connects to a certified central station alarm facility. The premises should be equipped with video surveillance equipment. Jewelry displayed in show windows and showcases should have suitable protection, and merchandise should be removed when the premises are closed for business. The same procedures should apply to property at other locations, at exhibits, and trade shows. Background checks should be done on all persons before they are hired.

Underwriting must also evaluate the physical characteristics of the risk and the extent to which the named insured effectively controls and manages the property and exposures involved. Jewelers usually occupy a fixed location, and these locations are subject to the same fixed location exposures to loss as any other business. Jewelers stock is usually made up of several small, valuable objects that can be moved easily and, as a result, are highly attractive and susceptible to theft or burglary. Manufacturing and wholesale operations also have loose diamonds, jewelers' findings (small tools and materials that artisans use), unset mountings, and manufacturing materials, such as gold, silver, and platinum. Other property covered includes other types of precious stones and precious metals, whose values are subject to significant fluctuations because of commodities trading in international markets. These factors demand closely evaluating the make-up of the inventory of each risk. Off premises issues to consider involve goods in various forms of transit and in possession of salespersons for retail operations and sales agents for manufacturing and wholesale operations.

Location factors to consider include the exposure to losses by fire. This involves evaluating the building construction, all the features and operations of the occupancy, exposing occupancies, and private and public fire protection. Jewelry not on display should be kept in safes and vaults, and procedures should be in place to have high-valued merchandise removed in case of a fire. If the risk is equipped with automatic sprinklers, storage and display arrangements should be evaluated, and stock especially susceptible to water damage should be located away from it and protected some other way. Damage from water can be reduced or eliminated by having all storage on shelves or some other way instead of simply being on the floor. Earthquake issues may be present in certain geographical areas.

Transit exposures should be addressed by using many different modes of transportation, varying the pattern and frequency of trips, and keeping values shipped as low as possible. Strict accounting and sign-off procedures should be incorporated, and carriers evaluated to be certain they are experienced, qualified, and suitable for the task.

Salespersons and selling agents should also vary their routes and schedules to avoid developing a pattern that a would-be perpetrator could capitalize on. Security issues such as traveling by personal vehicle, taxis, or other public vehicles and by foot must be evaluated, appropriate arrangements made, and procedures followed.