ISO RAILROAD ROLLING STOCK COVERAGE FORM ANALYSIS

The Insurance Services Office (ISO) Railroad Rolling Stock Coverage Form can be used by shippers, railroads, public transit authorities, utilities, individuals, and lessees that own or are responsible for railroad rolling stock. The coverage is for owned railroad rolling stock and similar property of others in the named insured's care, custody, or control. Railroad rolling stock consists of diesel, electric, and steam locomotives, coach, baggage, diner, lounge and passenger cars, a broad range of freight cars, plus various types of maintenance equipment. Valuation is based on actual cash value, but there is an option to establish valuation according to Association of American Railroads (AAR) rules.

POLICY CONSTRUCTION

Railroad Rolling Stock Coverage requires at least the following six forms:

IL DS 00–Common Policy Declarations
IL 00 17–Common Policy Conditions

CM DS 02–Commercial Inland Marine Declarations
CM 00 01–Commercial Inland Marine Conditions

IH DS 95–Railroad Rolling Stock Declarations
IH 00 95–Railroad Rolling Stock Coverage Form

IH DS 95–RAILROAD ROLLING STOCK DECLARATIONS

The advisory Railroad Rolling Stock Declarations does not have spaces for the named insured, its mailing address, other named insured information, the policy period, or the description of the insured business. That information is on the Common Policy Declarations. IH DS 95 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 following:

A list of rolling stock items that are to be covered
Limits of insurance for each of the scheduled items
The aggregate limit that caps the limits available for all covered equipment damaged in a single occurrence

Association of American Railroads (AAR) Valuation

American Association of American Railroads (AAR) Valuation replaces the Valuation General Condition in the Commercial Inland Marine Conditions when the box in this section is checked.

Fire Department Service Charge Revised Limit

This section has a space to enter a different limit of insurance than the $1,000 limit in the coverage form.

Coinsurance

This section has a space to enter the coinsurance percentage that triggers the coinsurance additional condition.

Deductibles

This section has spaces to enter the amount of deductible that applies based on the cause of loss:

Collision or Derailment
All Other Covered Causes of Loss

Reporting

If coverage is written on a reporting basis, the named insured must state whether it will or will not report the values of leased or rented equipment.

Rates and Premiums

The following is entered when coverage is written on a non-reporting basis:

Rates per $100
Premium

The following is entered when coverage is written on a reporting basis:

Deposit Premium
Minimum Premium
Reporting Period
Premium Adjustment Period
Premium Base
Rates per $100

Special Provisions

Any special provisions are entered in the space provided.

IH 00 95–RAILROAD ROLLING STOCK COVERAGE FORM ANALYSIS

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

Introduction

This section encourages the careful reading of 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 more broadened or restricted meaning.

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 that is described on the declarations. It can be the named insured's owned railroad rolling stock or railroad rolling stock belonging to others but in the named insured’s care, custody, or control.

Note: Rolling stock includes a wide range of types of railroad equipment. It is generally defined as a collection of wheeled vehicles consisting of locomotives and railroad cars. Locomotives are the power units that pull a train of cars. Railroad cars break down into the following classifications:

Revenue cars produce income or revenue for the owner and fall into two categories:

Passenger cars or coaches transport passengers between points in return for paying for a ticket. Examples are coaches, dining cars, parlor cars, observation cars, sleeping cars, and combinations of these.
Freight cars are usually identified based on the type of property or commodity carried. Examples are auto carriers, boxcars, refrigerated cars, flatcars, gondolas, hopper cars, tank cars, stock cars, and well cars. Most freight cars fall into one of these categories or other specialized cars designed to carry very specific property, such as stone or ocean-going shipping containers.

Non-revenue cars are incidental or necessary to normal operations that involve revenue cars. Examples are maintenance-of-way cars and handcars. Cabooses fall into this category but are now mostly not used.
Military cars are relatively rare. Examples are specialized cars for artillery, infantry, anti-aircraft, anti-tank, platform, and military command operations.

2. Property Not Covered

The following property is not covered even if described on the declarations:

a. Property that is loaned, leased or rented to others

Note: This property is not covered because it is not in the named insured's possession and control, and there is no way to guarantee that it is being used correctly or safely.

b. Property that is for sale or being manufactured

Note: This coverage form specifically applies to rolling stock. Similar property being built, manufactured, or held for sale is to be insured under other property coverage forms.

c. Property that is carried on water

Note: This exposure almost never occurs. Coverage on railroad rolling stock on barges or ferries should be arranged through the barge or ferry operator.

d. Property that is contained on or in rolling stock

Note: This coverage form insures only rolling stock. Transportation coverage forms and policies cover property contained in or on the rail car.

AAIS Transportation Coverage Forms

ISO Annual Transit Coverage Form

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

Example: Wilderness Expeditions is a single track passenger railroad that provides unique travel experiences for its passengers. Perry, the train procurer, recently purchased a dining car built in the 1860’s. He added the car to the declarations, but when a derailment occurred and the car was damaged, coverage was denied because the provenance of the car revealed that it had been stolen 40 years earlier and was therefore considered contraband.

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 Coverages

Some of the following additional coverages are also additional amounts of insurance.

a. Additional Acquired Property

The named insured may acquire additional property similar to the kind this coverage form insures during the policy period. If it does, such property is covered for up to 60 days but not past the expiration date. The most the insurance company pays for loss or damage is 25% of the sum of the limit of insurance for all scheduled equipment on the declarations or $50,000, whichever is less. The named insured must report the value of the newly acquired property to the insurance company within 60 days after it takes possession of it and pays premium for it from the acquisition date. If this is not done, coverage ends after 60 days or at the expiration date, whichever occurs first.

Three important conditions apply:

The coinsurance additional condition does not apply.
This additional coverage does not increase the limit of insurance.

Example: Maize Products processes and refines raw corn to produce syrup and other liquid corn products for both industrial and consumer use. Maize has its own fleet of 40 rail tanker cars it uses to transport the liquid product from its processing and refining facilities to its customers. Because its fleet is fairly small and each unit can be readily tracked, Maize can usually report newly acquired tank cars to the insurance company as soon as it takes possession of them. However, while the financial officer was on vacation, the purchasing manager acquired three used tankers at auction. He made the purchase and arranged for transport. Unfortunately, during transportation to Maize, a mudslide event washed away the tracks and two of three cars were damaged. The financial officer was very pleased to report to the chairman that both cars were covered, even though they had not yet been reported.

b. Debris Removal

A property damage loss usually creates debris that must be removed. The insurance company pays the cost of removing the debris of a covered loss. The expenses must be reported to the insurance company in writing within 180 days of the date of loss. The most paid is 25% of the sum of the following:

The amount that is paid for direct physical loss or damage to covered property
The deductible that applies to such direct physical loss or damage

Payments under this Additional Coverage do not increase the limit of insurance that applies. However, the insurance company pays an additional $5,000 per occurrence when the direct physical loss or damage combined with the debris removal expense exceeds the limit of insurance or when the debris removal expense is more than the amount payable under the above described 25% limitation.

This coverage does not apply to costs to extract pollutants from land or water or to remove, restore, or replace polluted land or water.

Coverage does not apply to debris of property carried in or on rolling stock. This additional coverage applies to only removing rail car debris as a result of a covered cause of loss that occurs, not to the property carried that was spilled, upset, or overturned.

c. Preservation of Property

Covered property may need to be moved to keep it from being damaged by a covered cause of loss. When the named insured takes such action, the insurance company pays for any direct loss or damage that such property sustains during the move. In addition, coverage applies at the location where the property is stored for up to 30 days after the date it was moved there.

The property removed must be moved back to the covered location, or the temporary location must be added to the policy within 30 days from the date of the move. Otherwise, all coverage ends after 30 days.

This additional coverage does not increase the limit of insurance.

Notes: There are several important points to consider:

The potential loss or damage from which the property is being protected must be a covered cause of loss.

Covered property is covered for ANY cause of loss while it is being moved to and from (and while at) the "safe" location.
The property removed must be moved back within 30 days from the date of the move.

Example: Maize Products has its own railroad tanker car maintenance facility at its processing and refining location. A massive fire in a grain elevator next to it threatens to spread and involve the entire facility. Maize arranges for the county trunk railroad two miles away to remove its tanker cars from the maintenance facility and the yard to the railroad's yard until the fire is extinguished, the property is cleaned up, and normal operations resume. The financial officer visits the country trunk railroad fifteen days after the fire to inspect Maize’s property. He is surprised to discover that none of his rolling stock is there, and no one can explain where it is. He is thrilled to learn that because the stock was moved to protect it from a fire and the loss occurred within 30 days of being moved, its mysterious disappearance is covered.

d. Fire Department Service Charge

The insurance company pays up to $1,000 when the fire department is called to save or protect covered property from a covered cause of loss. This limit can be increased. It applies regardless of the number of responding fire departments, fire units, or the number or type of services performed.

This coverage applies to only the named insured's liability for fire department service charges it either contractually assumes before a loss occurs or that a local ordinance or law requires.

This limit is an additional amount of insurance.

e. Pollutant Clean Up and Removal

The insurance company pays to clean up pollutants caused by or resulting from a covered cause of loss that occurs during the policy period. The most paid is $10,000 per premises as an aggregate amount during each separate 12-month policy period. The expenses are paid only if they are reported to the insurance company in writing within 180 days of the date of loss.

This coverage does not apply to costs to evaluate the presence or effects of pollutants. However, it does pay for testing that is part of the process of extracting pollutants from either land or water.

This limit is an additional amount of insurance.

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 contributing to a loss, 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. 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 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.

b. 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.

c. War and Military Action

This exclusion lists three specific warlike activities.

War. This can be a declared war, an undeclared war, or a civil war.
Military force of a warlike nature. These activities must utilize military personnel or agents of a government or other type of authority. Actions taken to prevent any of these activities are also considered war.
Insurrection, rebellion, revolution, and attempts to usurp power. Any action a government takes to respond to such actions is also considered 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 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. Dishonest or criminal acts (12 13 changes)

These are any dishonest or criminal acts that 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 in the previous edition that applied to dishonest or criminal acts committed by anyone entrusted with the property for any reason.

c. Work upon the property

Work done on property that results in loss or damage. There is an exception. If the work done on the property results in a fire or explosion, and this insurance covers that fire and explosion, the loss or damage that the resulting fire or explosion causes are covered.

Note: The excluded work is not specific to covered property but instead is on the property. This would imply that covered property damaged because of work on ANY type of property is not covered.

d. Artificially generated electrical, magnetic, or electromagnetic energy

Loss or damage that is caused by or that results from artificially generated electrical, magnetic, or electromagnetic energy damaging, disturbing, disrupting, or interfering with any of the following:

Networks, devices, systems, wires, or appliances of an electrical or electronic nature
Cellular or satellite devices, appliances, systems, or networks

Examples of this excluded energy are electrical current, charges a magnetic or electromagnetic field produces, and microwaves, but they are not limited to just these. There are two exceptions:

If the energy described in this exclusion results in a fire or explosion, coverage applies to the direct loss or damage that fire or explosion causes, but only if the fire or exploration are considered covered causes of loss under this coverage form.
The exclusion applies only to the particular item in which the disturbance occurs

e. Unexplained disappearance

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

f. Shortage found upon taking inventory

Any loss that is 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."

g. Contamination of any kind

Contamination means to make impure or unclean by contact or mixture with other materials or to expose to or permeate with foreign substances. It is a term closely related to pollution.

Note: This could be used when the loss is due to contaminated fuel that results in damage to the locomotive or contaminated grease or oil, resulting in damage to brakes.

Example: A battle is going on between some of the local thoroughbred owners and a new “horse country” dining train. The train operates on a track close to some of their farms, and they believe the trains are causing distress to their valuable horses. A secret group meets, and a decision is made to contaminate the locomotive fuel in the hopes of damaging the locomotive and driving the operator out of business. The deed is done, and the locomotive engine is damaged. The damage to the locomotive is not covered under this policy, but the culprits are found and are forced to pay for repairs.

h. Voluntary parting

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

i. Unauthorized instructions

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

j. 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.

k. Theft (12 13 addition)

Theft by any person the named insured entrusts covered property to for any reason, whether they act alone or act in collusion with any other party. This exclusion applies 24 hours a day/7 days a week. There is one exception. Covered property in a carrier for hire’s care, custody, or control is not subject to this exclusion.

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. Wear and tear, depreciation

This is loss or damage due to wear, tear, and depreciation.

Notes:

Wear and tear is damage that occurs naturally as a result of aging or normal wear.

Depreciation is a loss of value due to wear.

b. Any quality in the property

These are any qualities in the property that cause it to destroy or damage itself.

Note: An example is a loss or damage caused by hidden or latent defects in the property.

c. Insects, vermin, or rodents

This is loss or damage to covered property caused by, or that results from insects, vermin, or rodents.

Note: Some examples are damage from mice, rats, cockroaches, squirrels, beavers, spiders, ants, centipedes, and ticks. Each is characterized by destructive habits that cause damage, such as gnawing and nibbling.

d. Corrosion or rust

This is corrosion or rust that causes loss or damage to covered property.

Note: Rust and corrosion are low-temperature oxidation processes that deteriorate over time due to inactivity or neglect.

e. Mechanical breakdown

This is loss or damage caused by or that results from machines, tools, or mechanisms failing to operate or function properly.

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. There is a limit provided for each item, but the sum of these limits is capped by all covered property in a single occurrence limit.

Note: The All Covered Property in Any One Occurrence should be reviewed whenever additional items are added to the schedule.

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.

Note: There are two deductibles. One is for loss due to a collision/derailment, and the other is for all other covered causes of loss. There is no statement as to which deductible is used when multiple causes of loss happen in the same occurrence.

E. Additional Conditions

1. Valuation

This valuation condition totally replaces the Valuation General Condition in the Commercial Inland Marine Conditions, but only if Association of American Railroads (AAR) Valuation on the declarations is selected.

The new valuation states that the value of the property is determined based on AAR rules.

2. Other Conditions

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

a. Coverage Territory

The coverage territory is the United States of America, its territories and possessions, Puerto Rico, and Canada.

Note: Unlike the Coverage Territory Condition in other ISO Non-filed Inland Marine Coverage Forms, this coverage form does not include property shipped by air within and between these points.

b. Coinsurance

This condition applies if there is a coinsurance percentage on the declarations.

The insurance company does not pay the full amount of any loss or damage if the value of the covered property at the time of loss or damage multiplied by the coinsurance percentage is more than the limit of insurance for all covered property at that location. In such cases, the amount the company pays is determined as follows:

Step 1. Multiply the value of the covered property at the time and location of the loss or damage by the coinsurance percentage on the declarations.

Step 2. Divide the limit of insurance for the covered property at the location where the loss or damage occurred by Step 1.

Step 3. Multiply the total amount of loss or damage at the loss location by Step 2. before applying the deductible (if any).

Step 4. Subtract the amount of deductible from Step 3.

The insurance company pays the lesser of Step 4. or the limit of insurance. Any amount that remains must be paid by other insurance, or the named insured must pay it from its own funds.

c. Numbering or Names

The named insured may change the numbering approach or names it gives to covered property. However, it must keep permanent records of any such changes and provide them to the insurance company in case of loss or damage to such property.

F. Definitions

There is one definition.

Pollutants

These are any solid, liquid, gaseous, or thermal irritants or contaminants. Pollutants also include smoke, vapor, soot, fumes, acids, alkalis, chemicals, or waste. Waste is any material intended to be recycled, reconditioned, or reclaimed.

ENDORSEMENTS

ISO has not developed any specific endorsements for exclusive use with the Railroad Rolling Stock Coverage Form. ISO has developed three other endorsements that can be used to respond to specific situations.

IH 99 08–Value Reporting Form

This endorsement is used to convert the coverage from non-reporting to reporting. Reports of value can be provided on a daily, weekly, monthly, quarterly, or policy year basis.

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.

UNDERWRITING CONSIDERATIONS

Underwriting railroad rolling stock starts with understanding the nature and type of property covered.

Locomotives include diesel, electric, or steam engines that provide the power to pull or operate the rest of the rolling stock. Diesel locomotives are used for both freight and passenger service, over the road, short line, and yard switching operations. Electric locomotives are also used for freight and passenger operations but are not usually used on longer, cross-country trips. For the most part, steam locomotives are no longer in regular service but are occasionally used for passenger service.

Passenger equipment includes a variety of non-powered rail cars. Examples are coaches, baggage cars, diner cars, observation cars, parlor cars, lounge cars, and Pullman or deluxe sleeper cars.

Freight operations involve many cars, each of which has specific uses and applications:

Tanker cars carry flammable, non-flammable, and food grade liquid products.
Hopper cars come in both covered and open versions. Open hopper cars carry bulk commodities such as coal and other non-perishable property. Covered hopper cars carry bulk commodities such as grain, chemicals, plastics, cement, feed, salt, and flour.
Boxcars carry any commodity that must be protected from the weather. Property on boxcars is usually palletized.
Flat cars carry large, bulky items (either within crates or not) when the weather is not a consideration.
Refrigerated cars carry commodities that require refrigeration.
Ore cars haul iron ore, copper ore, and other ores from mines to processing facilities.
Stock cars carry animals and livestock (such as cattle, hogs, and sheep) from farms and feedlots to stockyards and processing operations.
Auto carriers transport all kinds of motor vehicles from their manufacturers to a variety of delivery sites. These cars usually have three levels and are either fully enclosed or partially enclosed to protect the property against weather conditions and acts of vandalism.
Piggyback carriers haul motor cargo trailers. The fifth wheel is engaged when the trailers are hoisted on the flat car.
Roadrailers are hybrid cars that are part boxcar and part truck trailer. They have retractable rail wheels and truck tires and can be pulled by either a locomotive or a truck tractor. They are used like boxcars for any commodity that must be protected from the weather. They operate primarily on rails. They operate on roads only at the beginning of a trip and at the end of it.
Gondola cars transport property that does not need protection from the weather. Examples are sand, gravel, scrap metal, and similar property.
Pulpwood carriers transport pulpwood to paper mills. They usually have closed ends and stakes on the sides.
Circus cars transport a circus’ equipment and livestock. They are also used for advertising, office operations, and sleeping arrangements.
Cabooses used to be the operations center of trains where the conductors and brakemen controlled and maintained operations of the entire train. They are usually the last car and have either four or eight wheels. For the most part, they are no longer used.

Maintenance equipment is used to maintain other railroad equipment or the tracks and roadbed. The type of equipment varies based on the railroad’s operations. Examples are snowplows, snowplow tenders, crew cars, rail-detector cars, ballast cleaners, office cars, handcars, and miscellaneous cars used to clean catenary (cable or chain) systems, signal equipment, and pile driving equipment.

Because the covered property is primarily mobile, transit is the primary exposure and consideration, but location exposures must be taken into account. This involves a number of different factors, such as the following:

The type of operations conducted, such as freight or passenger operations or maintenance operations
Evaluating the named insured in areas such as management, financial condition, previous business success, and the way it performs operations
Type and nature of equipment used
Liability of one railroad to another on rail cars they interchange or to owners of railroad cars being hauled
Geographical and climatic conditions in the course of transit
Conditions at fixed locations, such as repair shops, switching yards, storage yards, holding areas, and terminals
Type of freight, commodity, or property transported

Railroad rolling stock coverage is usually written in the name of the railroad or the party that owns the equipment. However, other interests may be included. These include shippers, public transit authorities, utilities, individuals, lessors, and lessees. Shippers can either own or lease railroad cars. Leasing usually occurs when a shipper is involved with certain commodities that require specialized railroad cars, such as hoppers, gondolas, and ore cars.

Railroad operations insure their own equipment and equipment that belongs to other railroads it accepts in an interchange. Railroad cars accepted in interchange transactions are referred to as foreign cars, and the Rules of Interchange of the Association of American Railroads (AAR) detail the railroad’s responsibility for them.

Public utilities frequently have their own unit trains. This may include locomotives and cars or simply the cars, with the railroad providing the locomotives. The railroad occasionally provides the entire train. Unit trains operate under the guidelines of special operating agreements that establish the rights and responsibilities of each party to the transaction.

Private car lines own specialized equipment, such as refrigerated cars and tank cars. These cars move through the entire railroad system under railroad personnel direction and supervision. They move in general or specifically assigned routes according to the AAR Rules of Interchange.

Single individuals or groups of individuals may purchase railroad cars on a short line railroad operation as a tax shelter. In most cases, boxcars and hopper cars are the types of cars usually purchased under these circumstances.

If the named insured is a lessor or lessee, the lease agreement terms must be reviewed and understood to determine each party’s rights and responsibilities.

The named insured’s management issues must be addressed. Some general areas to examine include its financial condition, previous loss experience, the number of years successfully engaged in this business, and its attitude towards (and implementation of) loss control and prevention initiatives. Other areas include the experience of personnel actively engaged in operations and the extent of training, the status of labor relations, and maintenance and care of track and track bed.

Equipment details are essential. Equipment must be identified as owned, leased, loaned, or rented. Each item of insured equipment should be identified by type, manufacturer’s name, model number, serial number, year manufactured, and its current value based on the valuation method used. This coverage form includes the option to use AAR valuation. This is based on a formula that establishes settlement value based on the type and age of the car found in the AAR Rules of Interchange. More information is available at the AAR website at www.aar.org.

Location exposures are important at storage and switching yards and terminals. The fire protection service and water supply available to fight a fire must be evaluated. Fire extinguishers should be adequate, appropriate, and serviced regularly. Standpipes and hoses should also be available and be in good condition. Employees should be trained in fire prevention and their roles and duties in case of a fire. These storage and yard areas should be cleaned regularly to remove brush, trash, and other debris that accumulates. The location of the yard to adjacent industrial areas that may present fire or explosion exposures must also be evaluated. It is best for railroad cars to be spread out within a storage area and not be clustered together to reduce the number that might be involved in a fire or explosion. Location risks must be evaluated from the flood standpoint to ensure that the location has adequate elevation if it is adjacent to bodies of water. Tracks, track beds, and signals at the location should be in good condition, tracks should be level, and curves should be adequate to minimize overturn. Earthquake zones where covered property operates must also be evaluated because most equipment operates in more than one such zone.