ISO FURRIERS BLOCK COVERAGE FORM ANALYSIS

Most commercial property coverage forms and policies do not cover the theft of furs and fur trimmed garments. As a result, dealers must use Insurance Services Office (ISO) Furriers Block Coverage Form or a similar independent coverage form to adequately cover their stock. This coverage form insures furs, fur garments, fur-trimmed garments, and related accessories. Because dealers often work together, property of others in the fur trade in the named insured's care, custody, or control can also be covered.

Coverage applies at the dealer's location, off premises, and in transit by many different modes of conveyance. Coverage can also be provided when the property is in show windows at the dealer's premises.

When this coverage form is used, the value of the items covered under this form should be removed from the business personal property coverage form to prevent a duplication of coverage because, while coverage for theft is very limited, coverage for the other causes of loss is not.

POLICY CONSTRUCTION

Furriers Block Coverage requires at least the following seven 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 64–Furriers Block Declarations
IH 00 64–Furriers Block Coverage Form
IH 64 01–Proposal for Furriers Block Coverage Form

IH DS 64–FURRIERS BLOCK DECLARATIONS

The advisory Furriers Block 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 64 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.

Specific entries are:

Property at Your Premises
Property at the Premises of Any Sales Agent, Dealer, Processor, or Other Bailee in the Fur Trade
Property In Transit. A limit is required for each.

By Common or Contract Carrier
By Registered Mail
By Express Carriers or Other Parcel Delivery Service
By Railroads, Passenger Bus Lines, Waterborne, or Air Carriers as Covered by the Coverage Form
All Other Shipments Covered by the Coverage Form

· 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. However, the coverage form does not define the terms protected and unprotected.

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

In Any One Window
In All Windows

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

In Any One Window
In All Windows

· Money

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, which explains the coverage being provided.

· Additionally, Covered Property

Furniture, Fixtures, and Office Supplies
Machinery, Tools, and Fittings
Patterns, Dies, Molds, and Models
Improvements and Betterments

All Covered Property in Any One Occurrence

Coinsurance

This section has a space to enter the coinsurance percentage that triggers the coinsurance condition for Additionally Covered Property Optional Coverage.

Note: The coverage form does not have a coinsurance condition.

Deductible

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

Additional Covered Property Optional Coverage
All Other Losses

Premium

This section has a space to enter the annual premium for the coverage(s) provided.

Special Provisions

Any special provisions are entered in the space provided.

IH 00 64–FURRIERS 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.

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. Furs, fur garments, fur-trimmed garments, and other stock in trade that 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. Similar property described in a. and b. above of others in the named insured's care, custody, or control. Such property may belong to a dealer or a party engaged in the fur trade. In that case, this coverage is limited to either the money that the named insured advanced for the property or the named insured’s legal liability for it.

Example: Farlow's Furriers is primarily a large retail fur dealer. However, a portion of its premises in the building it owns is dedicated to repairs to property of others. Customers include those in the fur business and individuals who own personal furs. Farlow can insure the value of its stock in trade under this coverage form, including all property of others it has in its custody.

Note: The property this coverage form insures is significantly different than property that nearly all other commercial property coverage forms and policies insure. In fact, most of them either totally exclude the property this coverage form insures or limit the theft coverage. Most businesses that qualify for and need the coverage this form provides still need some of the coverages other standard commercial property coverage forms and policies provide because this coverage form is not designed to insure all exposures.

2. Property Not Covered

The following described property is excluded:

a. Property of others that has been accepted for storage

Note: This property should be covered by Furriers Customers Coverage.

Furriers Customers Custody Policy

ISO Furriers Customers Coverage Form

b. Animals

Note: Some animals are insured under traditional filed livestock coverage forms or farm policies. Others can be covered under animal mortality coverage forms.

Related Article: ISO Animal Mortality Coverage Form

c. Property at ranchers', breeders', growers’, or trappers' locations

d. Property that has been sold under any deferred sales agreement after it leaves the named insured's premises

Example: Farlow's occasionally arranges to finance and sells high-end merchandise under several different installment sales arrangements to its high-income, upper-class clientele. Farlow’s purchases an Installment Sales and Leased Property Coverage Form to cover its interest in the financed furs.

AAIS Installment Sales Coverage Form

ISO Installment Sales and Leased Property Coverage Form

e. Property at any trade show or exhibition that is put on by or promoted with financial assistance from a public or government authority or trade association

Example: Farlow's participates in a few exhibitions each year, but each is part of (and supports) local charities or not-for-profit organizations in their annual fund-raising efforts. Coverage applies to Farlow's property at these events because they are not connected with any excluded organizations. Any loss at one of these shows is subject to the Property Away From Your Premises and Not Included Above limit.

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f. Property exhibited in show cases or show windows at locations other than the named insured's premises

g. Property that is being worn by any of the following:

The named insured or an officer, director, employee, agent, member, or messenger of the business or any other organization that does business in the fur trade
Family members, relatives, or friends of any of the above

There is also no coverage if the property is in the custody of any of the above with the intent to wear it, even if they are not wearing it at the time of the loss.

There is an exception. Coverage does apply to furs or fur-trimmed garments that are being modeled at the named insured's location, at other dealers' locations, or at a covered exhibition.

Note: This is almost an absolute exclusion required because of the relative ease of "snatch and run" type losses that involve covered property worn by wealthy individuals at a variety of social events, fund-raisers, banquets, and dinners. Most furriers do not loan out such property to be worn at such events. The ones that do must make extensive security arrangements on their own to minimize or eliminate the possibility of "grab and go" type theft losses.

h. Property in transit by:

Mail

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

Railroads, water, or air carriers

There are multiple exceptions. Coverage applies to:

o Property shipped by express carriers.

o Property that is subject to a receipt issued by railroad, water, or air carriers’ 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.

Motor carriers

There are many exceptions. Shipments in a named insured owned or operated vehicle are covered as are shipments with contract or common carriers. Shipments by express carriers, similar parcel delivery services shippers, and passenger bus lines’ parcel transportation and baggage services are covered.

Example: Three men attack Shirley while she is putting fuel in her car at a truck stop. They steal luggage containing nearly $500,000 in furs from her trunk. Shirley is a courier for a fur dealer. This loss is excluded because the property was not being transported in one of the acceptable modes of transportation.

i. 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 except for causes of loss 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 a 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 that is not visible. This does not apply if an insured knew about such decay before the collapse.

(b) Damage from insects or vermin that is not visible. This does not apply is 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 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:

A cause of loss in (a) or (b) above
Fire, lightning, windstorm, hail, explosion, smoke, aircraft, vehicles, riot, civil commotion, vandalism, leakage from fire extinguishing devices, sinkhole collapse, volcanic action, breakage of building glass, falling objects, weight of ice, sleet or snow, or water damage. Each cause of loss applies only if this insurance would cover the that cause of loss.
Weight of personal property or people
Weight of water that accumulates on a roof

(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 or to 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: Patrick, the owner of Farlow's Furriers, is struck in the head as he leaves the store. The two thieves storm through the unlocked door. They are angry when they discover that most of the stock has been placed into the storage vault, which is locked and under a timer. They find a fire extinguisher and use it to pound on the door to open it. They grab other items throughout the store in many attempts to break open the door but finally leave when all attempts fail. The damage to the vault and all other building property and building maintenance and service equipment is covered.

6. Coverage Options

Note: The limits provided for these options are sub-limits of the limits available at the specific premises. They are not additional amounts of insurance.

a. Show Windows

Loss or damage 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 for that coverage on the declarations.

b. Money

Loss or damage to money due to theft is covered. However, the money must be 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.

Note: 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 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.

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.

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 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:

If any activity of water in the first paragraph above results in fire, explosion, or theft. Any loss or damage that resulting fire, explosion, or theft causes is covered if this coverage form otherwise covers that fire, explosion, or theft.
Property not at the named insured’s premises is not subject to this exclusion.

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 when 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 United States Postal Service or other carriers.

Example: Farlow's employee David is delivering a fur wrap to a nearby customer. When he reaches her gate, he opens the door to reach the gate intercom when two individuals jump from the bushes, drag him out of the car, and speed away with the vehicle and the wrap. The car is later recovered, but the merchandise is gone. The good news is that the surveillance camera at the gate verified that David was in the vehicle at the time of the theft, so this exclusion does not apply.

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 that is discovered as a result of an inventory shortage and there is no explanation as to what happened to the property, like 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, except for the following:

The property is deposited by the named insured or any of its officers, members, or salespersons for safe custody during their travels
Covered property is being shipped in the care of either the United States Postal Service (USPS) or other carriers
The property is in the care of a porter or employee who is not the named insured’s employee

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.

Note: This exclusion is different than the same exclusion in all other ISO non-filed inland marine coverage forms because of the three exceptions listed. These exceptions relate to the way furriers transact business.

g. Theft or attempted theft from show windows

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

There are two exceptions:

Coverage is denied ONLY if the loss or damage was due to those windows being smashed or cut.
This exclusion does not apply if there are limits on the declarations for show windows.

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

h. Processing or work upon the property

Loss or damage 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.

i. Insufficient or defective packing

Example: Farlow's usually has a professional mailing service package and mail out of town purchases. However, it decides not to use the service to send a pair of fur-trimmed leather gloves because of the small size of the package and the excessive cost of using the service. Unfortunately, the packaging does not hold up to the torrential rainfall at the destination. The gloves are completely soaked and destroyed. This loss is not covered because inadequate packaging contributed to the loss.

j. Voluntary parting

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

k. Unauthorized instructions

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

l. 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.

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:

Planning, developing, surveying, zoning, or siting
Design, workmanship, construction, remodeling, compacting, specifications, repair, renovation, or grading
Materials used to build, repair, remodel or renovate
Maintenance

d. Collapse

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

Any type of sudden caving in or falling down
When the structural integrity of the building is lost or compromised. The evidence of this could be parts of the property separating from the rest of the building or the building appearing to be in danger of caving in or falling down.
Cracking, sagging, expansion, settling, shrinking, bulging, or bending, but only as they relate to the two items above

This exclusion has two exceptions.

Loss or damage caused by coverage provided in 4. Additional Coverage–Collapse is covered.
Collapse caused by fire, lightning, windstorm, hail, explosion, smoke, aircraft, vehicles, riot, civil commotion, vandalism, leakage from fire extinguishing devices, sinkhole collapse, volcanic action, breakage of building glass, falling objects, weight of ice, sleet or snow, water damage, weight of personal property or persons, or weight of water that accumulates on a roof is covered.

e. Gradual deterioration and hidden or latent defect

Loss or damage to covered property due to gradual deterioration or hidden or latent defect.

Notes:

Gradual deterioration is a 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.

This exclusion also excludes loss or damage caused by insects, vermin, rodents, corrosion, rust, dampness, cold or heat.

Notes:

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 that 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 the Valuation General Condition in the Commercial Inland Marine Conditions.

a. Unsold property is valued at the least of the following:

The property’s actual cash value
The reasonable costs to restore the property to the condition it was in just before the loss or damage
The costs to replace the property with identical or very similar property

b. The value of the property that is sold but that has not yet been delivered is a calculated value. It is the net selling price of the property reduced by any allowances and discounts that would have been provided for that property.

c. Property of others in the named insured's care, custody, or control is valued in a two-step process. The first step is to determine the value of the labor and materials the named insured added to the property of others. The lower of the following is then added to that amount:

The amount for which the named insured is liable
The property’s actual cash value

The value of the property that sustained loss or damage is determined at the time of the loss or damage.

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

If the named insured states in the application that a protective safeguard is in place at a premises, that protective safeguard must be maintained and operational whenever the premise is not open for business.

If that safeguard is not operational when the premise is closed, all coverage at the premises is suspended until it becomes operational again.

Note: This is a very important warranty that removes all coverage, regardless of the cause of loss, when the protective safeguard goes down. There are no exceptions.

Example: The weight of ice and snow takes the electricity out for the town. Farlow is notified by his burglar alarm provider the alarm is not operational due to the lack of electricity. Farlow is notified, but he is more concerned about his personal residence than his business. While the alarm is not active, the roof collapses and damages the contents. Because the alarm was not active, all coverage under the policy had been suspended, so Farlow has no coverage for the roof collapse damage.

c. Records and Inventory

The named insured is required to maintain accurate records for the insured business and to hold them for at least three years after the policy expires. The records that must be maintained are the following:

Itemized inventories of stock used in the business. A physical inventory must be taken at least once a year.
All purchases and sales
Property of others that are in the named insured’s care, custody, or control
Travelers stock
All other property that is away from the premises for whatever reason

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 Furriers Block Coverage Form. It must then be attached to the Furriers Block Coverage Form to activate coverage.

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

ENDORSEMENTS

ISO has developed one proposal form for use with the Furriers Block Coverage Form.

IH 44 01–Proposal for Furriers Block Coverage Form

This is the application for Furriers Block coverage. The applicant must complete each section entirely and sign it. Along with the Jewelers Block Coverage Form and the Proposal for Jewelers Block Coverage Form, the Furriers Block Coverage Form and the Proposal for Furriers Block Coverage Form are unique in the insurance industry 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 15 sections that address virtually every physical aspect of the business. Only the applicant has the knowledge and information to properly complete it, but the agent must be available to assist in completing 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, 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.

UNDERWRITING CONSIDERATIONS

Underwriting furs, fur-trimmed garments, and the other exposures this coverage form insures focuses heavily on theft, burglary, and hold up issues. Alarm systems, storage arrangements, and the risk's location must all be considered. Does the named insured remove property from the premises? If so, what precautions does it take? How is property inside the location handled? How are show windows locked, and who controls the keys? Showroom windows and smash and grab hazards are always key underwriting areas to consider.

Underwriting must also evaluate the risk’s physical characteristics and the extent to which the named insured effectively controls and manages its properties and exposures. Any furrier usually occupies a fixed location that is subject to the same fixed location exposures to loss as any other business. Stocks of furs and fur-trimmed garments are easily moved and are highly attractive and susceptible to theft or burglary. These factors demand a close evaluation of the make-up of each risk’s inventory. Off premises issues to consider involve goods in various forms of transit and the custody of salespersons for retail operations and sales agents for wholesale operations.

Location factors to consider include exposure to losses by fire. This involves evaluating the building construction, the exact nature of the occupancy, exposing occupancies, and public and private fire protection. Furs not on display should be kept in storage, 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 by other means. Damage from water can be reduced or eliminated by having furs stored on shelves in some cases instead of simply on hangers in the open. Earthquake issues may be present in certain geographical areas.

Burglary is a critical issue. Premises should always be protected by an excellent quality alarm system that covers all exterior openings connected to a certified central station alarm facility. Theft and mysterious disappearance are common issues for this class of business. Background checks should be performed on all persons before they are hired. The premises should be equipped with video surveillance equipment. Arrangements should be made and procedures put in place that address display and storage issues. Furs and fur-trimmed garments displayed in show windows should have suitable protection, and merchandise should be removed from them when the premises are closed. The same procedures should apply to property at other locations, at exhibits, and at trade shows.

Transit exposures should be addressed 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 up to the task.

Salespersons and selling agents should also vary their routes and schedules to avoid developing a pattern that a would-be perpetrator might capitalize on. Security issues such as traveling by personal vehicle, taxis, or other public vehicles and by foot must be evaluated and appropriate arrangements made, and procedures followed. Ownership and management issues may be the most important of all. The named insured's financial condition dictates the degree of attention to protective devices and procedures incorporated into the business. Its experience in the business and hiring practices are other essential elements to consider and evaluate. Developing and implementing plans, procedures, protocols, and actions to take in an emergency in advance of need are other critical factors. Maintenance and care of the premises and protective devices also affect the overall desirability and success of a fur business.