ISO Jewelers Block Coverage Form

ISO JEWELERS BLOCK COVERAGE FORM ANALYSIS

(August 2024)

 

Introduction

Eligibility

Policy Construction

CM DS 09–Advisory Jewelers Block Declarations

CM 00 59–Jewelers Block Coverage Form Analysis

   A. Coverage

   B. Exclusions

   C. Limits of Insurance

   D. Deductible

   E. Additional Conditions

Endorsements

Underwriting Considerations

INTRODUCTION

The Insurance Services Office (ISO) Jewelers Block Coverage Form insures jewelry dealers' stock of diamonds, jewels, jewelry, watches, watch movements, and other precious and semi-precious stones. It also covers semi-precious and precious metals and alloys, such as gold, silver, and platinum. Similar items usual to a jeweler's business and being held for sale are also covered.

This coverage form is limited to businesses with less than $250,000 in stock values. Larger retail, wholesale, and jewelry manufacturing risks must purchase coverage from an insurance carrier specializing in writing coverage for those businesses.

Related Articles:

ISO Jewelers Block Coverage Form Analysis

Jewelers Block Policy

ELIGIBILITY

Every kind of jewelry operation needs this coverage, but this coverage form is used for only smaller retail jewelry stores. Commercial jewelers with an average inventory of $250,000 or less are eligible. Retail departments and discount stores are also eligible for their stock of jewelry, watches, or silverware.

This coverage form is not to be used by any of the following types of operations:

Note: Coverage can be extended to otherwise eligible retail jewelers while at an exhibition. An endorsement describing the exhibition and its duration is required.

POLICY CONSTRUCTION

ISO Jewelers Block Coverage requires at least these five forms:

Related Article: IL 00 17–Common Policy Conditions

Related Article: CM 00 01–Commercial Inland Marine Conditions

Note: Jewelers block coverage may be issued as a stand-alone, monoline inland marine policy or as part of a commercial package policy.

CM DS 09–ADVISORY JEWELERS BLOCK DECLARATIONS

CM DS 09–Advisory Jewelers Block Declarations contains the following information:

Policy Number

The policy number is entered in the space provided.

Effective Date

The effective date of coverage is entered in the space provided.

Premium for This Coverage Form

The premium for Jewelers Block Coverage is entered in the space provided.

Limits of Insurance

Separate limits of insurance must be entered in the spaces provided for each of the following:

Note: There is no catastrophe limitation for this policy.

Coverage Options

Two coverage options are available.

Coverage for property in show windows is provided only when limits are entered for the coverage. Limits are flexible. Limits vary based on the premises being open or closed and based on the windows being protected or unprotected. Limits are entered for the following:

If coverage for money is to be provided a limit must be entered.

Deductible

The deductible is $500 unless a different amount is entered in the space provided.

Additionally Covered Property

Four additional types of property may be covered by entering a limit of insurance for any or all of the following:

Note: CM 99 01–Additionally Covered Property must be attached when entries are made in the section.

Special Provisions

Any special provisions are entered in the space provided.

Jewelry141

Types of property that this coverage form can insure

CM 00 59–JEWELERS BLOCK COVERAGE FORM ANALYSIS

Note: This analysis is of the 01 13 edition. Changes from the 03 10 edition are in bold print.

Introduction

CM 00 59 opens by stating that certain provisions restrict coverage and encourages the named insured to carefully read the policy to understand what is covered, what is not covered, and to determine its rights and duties. It highlights that the insurance company uses the terms you and your to refer to the named insured shown on the declarations and the terms we, us, and our to refer to the insurance company that provides coverage.

A. Coverage

The insurance company pays for direct physical loss or damage to covered property from a covered cause of loss.

1. Covered Property

DiamondRing

The following property is covered:

a. Jewelry, precious stones, semi-precious stones, precious metals and alloys, and other property that make up the named insured's stock-in-trade

b. The same property described above that has been sold, but has not yet been delivered

c. Similar property of others that are not in the jewelry business and that is in the named insured's care, custody, or control

d. Similar property of others that are in the jewelry business and that is in the named insured's care, custody, or control. This type of property is limited to only the named insured's legal liability for that property or the amount of money that the named insured advanced for that property.

Note: Property covered is significantly different than property covered in almost all other commercial property coverage forms. Most of them completely exclude this property. A few provide some limited coverage, small limits, or restricted extensions of coverage. Most businesses eligible for the insurance this coverage form provides still need many of the coverages in those other standard commercial property coverage forms.

2. Property Not Covered

There is no coverage for the following property:

a. Property sold subject to a deferred payment sales arrangement after that property is no longer on the premises

b. Property at exhibitions that trade associations or a public authority promote or financially support

Note: Property the named insured had at an exhibition can be covered. An endorsement must be attached listing the place and the duration of the exhibit. An additional premium will be charged.

c. Property away from the named insured's premises and being exhibited in showcases or show windows

Note: Property in showcases or show windows on the named insured's premises is covered. Although covered, it is subject to a theft exclusion unless limits are entered for show windows in the Declarations.

d. The named insured's property while being worn by the named insured or by any of the following:

Property in the care, custody, or control of the named insured or any of the others described in this item for the purpose of being worn is also not covered.

The only exception is watches being worn to adjust them properly are covered.

e. Property in transit by the following:

There are two exceptions:

o    Coverage does apply to shipments when made under passenger parcel transportation or baggage services receipts.

o    Passenger baggage service by air carriers subject to freight tariffs that deliver the property to the passenger at the final destination is treated as accompanied baggage. This accompanied baggage is subject to the limit of insurance on the declarations for "Property Away From Your Premises and Not Included Above."

The exceptions are for shipments by merchant's parcel delivery service carriers, armored car services, and passenger bus service baggage services or parcel transportation.

f. Contraband. These goods are illegal to possess or are legal but in the course of illegal transportation.

Note: While "Covered Property" appears to be broad and comprehensive, close examination of "Property Not Covered" reveals several restrictions, limitations, and details that both the named insured and its insurance agent must review carefully. In most cases, only the named insured knows the details of the business well enough to address these issues and communicate them in a way that can be captured in a risk assessment and the Proposal for Jewelers Block Coverage Form.

3. Covered Causes of Loss

The covered causes of loss under this policy are direct physical loss or damage to the named insured's covered property. The only exceptions are those causes of loss listed and described in Section B. Exclusions.

4. Additional Coverage–Collapse

Only abrupt collapse is covered under this coverage. What abrupt collapse is and is not is described below.

a. As used in this coverage, abrupt collapse means the building or part of the building must abruptly fall down or cave in. As a result of such falling down or caving in, the building or part of the building cannot be occupied for its intended purpose.

b. Payment for such abrupt collapse as described in paragraph item a. is for only direct physical damage to the covered property inside the building. However, payment is made only if one or more of the following cause the collapse:

·         Hidden decay. This applies only if the insured was unaware of the hidden decay before the collapse.

·         Hidden insect or vermin damage. This applies only if the insured was unaware of the hidden insect or vermin damage before the collapse.

·         Defective construction material or construction methods. This applies only if the collapse occurs after a building has been built, remodeled, or renovated and depends on one of the following contributing to the collapse:

o    Hidden decay or hidden insect or vermin damage as described above

o    One or more of any of the following listed causes of loss:

§  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, and earthquake are the causes of loss.

o    Weight of people or personal property

o    Weight of rain that accumulates on a roof

c. While this is additional coverage, it does not increase the coverage form's limits of insurance.

5. Coverage Extension

Theft Damage to Buildings

a. The named insured's lease may make it legally responsible for theft damage to a building it occupies, or the named insured may be the building owner. In these situations, this coverage form covers the theft damage to the part of the building the named insured occupies and building service equipment inside the building. Such damage resulting from attempted theft is also covered.

b. Coverage does not apply to loss or damage due to fire. It also does not apply to damage to glass or any lettering or artwork on the glass.

This coverage extension is included in the limit of insurance for the property at the covered location where the damage occurs. It is not in addition to it.

Example: Jean's Jewels is a ground floor tenant in the Mercantile Building, a multistory office building. An employee of the tenant above Jean's decides to create an opening through its floor to enter Jean's space and remove merchandise.

Mercantile will be compensated for Jean's ceiling damage by this coverage form because Jean's lease required it to be responsible for building damage due to theft.

6. Coverage Options

The limits of insurance shown in the declarations for these options are sublimits and not additional limits. They are subject to the limit of insurance that applies to covered property at the premises where the loss or damage occurs.

a. Show Windows

Exclusion 2 .g. below excludes theft coverage for property in show windows when the theft results from the windows either being cut or smashed. This optional coverage is an exception to that exclusion. It applies only if there is a limit of insurance on the declarations for property in show windows.

 

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Example: Jean has an outside show window insured. She stocks the window from inside the store. However, access to it from inside is fairly accessible to customers and employees. A "Bonnie and Clyde" duo enters the store. "Bonnie" draws the store staff's attention, inquiring about and trying on several pieces of jewelry.

Scenario 1: "Clyde" gets near the show window, finds it unlocked, and cleans it out without anyone noticing. He signals "Bonnie," and they leave. Jean overlooks the theft until closing time, and by then, the duo are long gone. Coverage applies because the theft loss was not due to the windows being smashed or cut.

Scenario 2: "Clyde" cannot open the window from the inside, so he goes outside. While "Bonnie" distracts others, he cuts a hand-sized hole in the window and removes several valuable objects. Coverage does not apply to this theft because of the exclusion. However, Jean purchased the optional show window coverage and was compensated up to the limit of insurance on the declarations.

b. Money

The insurance company pays for loss of or damage to money in locked safes or vaults on the named insured's premises from theft or attempted theft, but only when broken into and opened. Coverage applies if there is a limit of insurance on the declarations for money.

Example: Jean usually keeps small amounts of money in the cash register drawers to make change for cash purchases. Most of the cash is kept in a burglar-resistant safe locked during business hours and when the store is closed. "Bonnie and Clyde" strike again. "Clyde" wanders around the store until he sees a large amount of cash being taken to the safe. As soon as the safe is opened, he signals "Bonnie" to pull the manual fire alarm. As soon as the alarm sounds, everyone exits the store…except "Clyde." He removes all the cash from the safe and disappears into the crowd outside the store. Jean discovers the loss after she returns to the store. She learns that the loss is not covered because the safe was unlocked and was not broken into.

B. Exclusions

1. Primary Exclusions

The causes of loss in this exclusion do not apply to loss or damage caused directly, indirectly, or in any sequence in a chain of events contributing to the loss. Exceptions to the chain of events condition are stated in the specific exclusion subpart. Coverage form wording emphasizes that coverage for any loss event described in these exclusions does not apply even if the event is widespread.

a. Earthquake

Loss or damage caused by or resulting from earthquake is excluded.

This is a very limited exclusion. It is not an earth movement exclusion, so all other types of earth movement remain covered. Also, if a fire results, damage due to the fire is covered. Finally, this exclusion applies only to property on the named insured's premises. This means property in transit and off premises is covered for earthquake.

b. Governmental Action

Coverage does not apply if the government seizes or destroys property. This exclusion has an exception. Coverage applies to loss or damage due to such ordered acts of destruction at the time of a fire to prevent the fire's spread. The exception applies only if the insurance provided by this coverage form covers the fire.

c. Nuclear Hazard

There is no coverage for loss or damage for anything related to nuclear hazards. Reactions, radiation, and contamination are not covered. This exclusion has an exception. There is coverage if the nuclear reaction, radiation, or radioactive contamination results in fire. The exception applies only if the insurance provided by this coverage form covers the fire.

d. War and Military Action

This exclusion lists three specific warlike activities that are excluded.

Any government action taken to respond to such actions is also considered war.

e. Water

Loss or damage caused by water is excluded, but not all types of water. Water, as used in this exclusion, is only flood, surface water, waves, tides, tidal waves, tsunamis, or overflow of any body of water or their spray, all whether driven by wind or not. Storm surge and material that is waterborne, moved, or carried by water in any way is also water. Coverage is excluded, regardless of whether the damage is due to an act of nature or otherwise.

This exclusion has an exception. If water, as described above, causes a fire, explosion, or theft, and this coverage form would otherwise cover that fire, explosion, or theft, that fire, explosion or theft loss or damage is covered.

This exclusion applies to only property at the named insured's premises.

2. Secondary Exclusions

There is no coverage for loss or damage caused by the following exclusions.

Note that the lead-in language is not as strong or inclusive for these exclusions as the language in 1. Broad Exclusions.

Editorial note: ISO does not give titles to these exclusions. To assist in the analysis, we have provided a title to help identify the exclusion's main intent.

a. Delay, Loss of Use, and Loss of Market

Coverage under this form is direct damage coverage. Therefore, delay, loss of use, loss of market, or any other consequential loss is not covered.

b. Theft from Any Vehicle

Coverage does not apply to loss due to theft from a vehicle. There are two exceptions:

Note: The "other carriers" must be of the type excepted in the Property Not Covered section above.

Example: Over $25,000 of Jean's jewels are stolen from a vehicle:

Scenario 1: Jean is using her own vehicle to deliver a customer's order. A man selling flowers approaches her vehicle while she is stopped at a traffic signal during one of her deliveries. When she rolls down her window to make a purchase, the man opens her car door, grabs her, throws her out of the vehicle, gets in, and speeds off. Coverage applies.

Scenario 2: Pamela, Jean's assistant, is using her vehicle to deliver a customer's order. She makes a quick dash into the gas station, and when she returns, the package has disappeared. All the doors and windows were locked, but one window had been smashed into to gain access. No coverage applies because the vehicle was unattended at the time of the theft.

Scenario 3: A merchant's parcel delivery service is delivering a customer's order. The driver leaves its vehicle to deliver a package, and a thief breaks in and steals several parcels, including Jean's jewels. Coverage applies because the jewels were in the custody of a covered other carrier.

c. Unexplained Disappearance

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

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, is excluded. This is sometimes referred to as "inventory shrinkage."

e. Shortage of Property

Coverage does not apply when a package of property shipped to a consignee is received and appears to be in good condition and sealed but does not contain all the property alleged to have been sent.

f. Dishonest or Criminal Acts (01 13 changes)

There is no coverage for loss or damage due to dishonest or criminal acts (including theft) from any of the following:

(1) Acts that the named insured, its partners, employees, directors, trustees, authorized representatives or managers and members of a limited liability company commit. This also includes such acts that leased workers and temporary employees commit.

(2) Acts of managers or members of a limited liability company, if the named insured is a limited liability company

(3) Acts by anyone with an interest in the property, their employees, or their authorized representatives. This also includes such acts that their leased workers and temporary employees commit.

Note: This edition removes item (4) in the previous edition that addressed others entrusted with property for any reason. It is re-introduced in newly added exclusion n.

This exclusion applies whether the persons act alone or in collusion with others or if the acts occur during regular working hours.

This exclusion does not apply to covered property entrusted to carriers for hire or to acts of destruction by the named insured's employees, leased workers, or temporary workers. However, loss due to theft of covered property by employees, leased workers, or temporary workers is excluded.

g. Theft or Attempted Theft from Show Windows

Loss or damage to items in show windows is excluded but only if both of the following occur:

There is an exception.This exclusion does not apply when the optional show window coverage is selected by entering limits for it on the declarations. The exception is subject to that Optional coverage and the sublimits on the declarations.

h. Processing or Work Upon the Property

Loss or damage caused by or resulting from the actual processing or work being done on covered property is excluded. There is an exception. When the processing or work being done results in a fire or explosion, coverage applies to the loss or damage that fire or explosion causes, but only if the fire or explosion are considered covered causes of loss under this coverage form.

i. Insufficient or Defective Packing

Any loss or damage to property that is the result of insufficient or defective packing is excluded.

Example: Jean usually has a professional mailing service package and mails out of town purchases. However, a customer demands that a unique gift item be sent out immediately, or the sale is lost. Jean wraps and mails the item herself. The package arrives on time, but the customer is very upset because parts of the item had broken off. The insurance company investigates the loss and denies it because it considered the packaging defective.

j. Breakage of Fragile Articles

Coverage does not apply to loss or damage caused by or resulting from fragile articles breaking.

This exclusion has an exception. Coverage does apply when such loss or damage is caused directly by fire, lightning, explosion, windstorm, vandalism, aircraft, rioters, strikers, theft, attempted theft, or by accident that involves the vehicle transporting the property. This exception applies only when this coverage form insures these causes of loss.

k. Voluntary Parting

There is no coverage if the named insured or someone the named insured entrusts property to is tricked or deceived into giving property away.

l. Unauthorized Instructions

Coverage does not apply if a loss occurs because covered property was given to another person or sent to another place based solely on unauthorized instructions.

m. Neglect

There is no coverage if an insured does not use reasonable measures to save and preserve property from further damage during and after the time of loss.

n. Theft (01 13 addition)

There is also no coverage for theft committed by anyone else entrusted with property. This exclusion applies whether a person acts alone or colludes with others who committed the theft. This exclusion applies 24 hours a day. This means that acts that occur during business hours are excluded as well as acts committed after hours.

There are three exceptions:

Note: The "other carriers" must be of the type excepted in the Property Not Covered section above.

Note: This exclusion was previously part of exclusion f. above. This change does not affect coverage. It makes the exclusion more visible.

3. Other Exclusions

The subparts of this exclusion are sometimes referred to as the anti-concurrent causation exclusions. These exclusions are unique because if a loss is covered as a covered cause of loss, except for these exclusions, it is still covered. On the other hand, if the loss would have been excluded anyway, it is still excluded.

Editorial Note: This coverage form does not title these exclusions. The titles given suggest the exclusion's content.

a. Weather Conditions

Coverage does not apply to loss or damage that weather conditions cause. This exclusion applies only if the weather condition contributes in any way to an excluded cause or event in 1. Primary Exclusions above that produces the loss or damage.

b. Acts or Decisions

Governmental entities and related groups make decisions and take actions that not only affect others but may also cause loss or damage. Loss or damage that results from such acts or decisions is excluded.

c. Faulty, Inadequate, or Defective Planning

Loss or damage due to faulty, inadequate, or defective planning, design, materials, and maintenance is excluded. An important provision is that it applies both on and away from the designated premises.

d. Collapse

Note: Collapse is initially totally excluded here, but limited coverage is added back in Section 4. as Additional Coverage–Collapse.

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

(1) Any type of sudden caving in or falling down

(2) When the structural integrity of the building is lost or compromised. The evidence of this could be parts of the property that separate from the rest of the building or the building appearing to be in danger of caving in or falling down.

(3) Cracking, sagging, expanding, settling, shrinking, bulging, or bending, but only as they relate to items (1) and (2) above

There are two exceptions to this exclusion.

e. Gradual Deterioration/Other

Loss or damage that is caused by wear and tear is excluded. Any quality in covered property that causes it to damage or destroy itself is excluded. Loss or damage caused by insects, vermin, rodents, corrosion, rust, dampness, heat, or cold is also excluded.

C. Limits of Insurance

The limits on the declarations are the most paid for loss or damage in a single occurrence.

D. Deductible

The deductible on the declarations must be exceeded before the insurance company pays anything. Once the deductible is satisfied, the insurance company will pay up to the limit of the insurance that applies. The deductible applies on a per occurrence basis.

E. Additional Conditions

1. Valuation

This condition replaces General Condition F. Valuation in CM 00 01–Commercial Inland Marine Conditions.

Related Article: CM 00 01–Commercial Inland Marine Conditions

In all cases, the value of the property is determined when the loss or damage occurs and does not include any antique or historical value.

The value of property that sustains loss or damage is limited to the least of the following:

2. Additional Conditions

These conditions are in addition to those in IL 00 17–Common Policy Conditions and CM 00 01–Commercial Inland Marine Conditions.

Related Articles:

IL 00 17–Common Policy Conditions

CM 00 01–Commercial Inland Marine Conditions

a. Coverage Territory

The insurance company insures covered property anywhere in the United States of America, its territories and possessions, Puerto Rico, and Canada.

b. Protective Safeguards

When the named insured lists protective safeguards at a premises as being in place, those safeguards must be maintained in proper working order throughout the policy term. This applies only whenever the business is closed though. If the named insured fails to maintain the protective safeguards as required, coverage is suspended until the equipment or service is restored to proper working order.

Example: When the tenant's thief cut into her ceiling, he also cut the wire for Jean's burglar alarm system. Jean cleaned up the mess and neglected to consider the alarm had been cut off. She was so shaken up that she even "activated" the alarm without noticing it was not turned on. That evening, another break-in took place, and this time much of the merchandise was removed. Jean discovers the second break-in the next morning and learns the loss is 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 keep accurate records of its business and maintain them for at least three years after the policy expires or is cancelled. As a minimum, the following records are required:

Note: Travelers stock is not defined and is not a common term. Because this is required information, it would be good to discuss with the named insured and the insurance carrier exactly what information is required to be reported.

In addition, the named insured must conduct a physical inventory of its stock-in-trade at least once a year.

d. Changes to Premises

Unless the insurance has agreed, in writing, to the following changes, there is no coverage for either:

Example: The tenant next to Jean is moving out, so Jean negotiated with her building owner to take over that space. She hires the contractors and begins the expansion process.

Scenario 1: She has the contractors create openings between the two spaces. Because the new space has no alarms in place, this significantly increases the risk of loss or damage. Until she notifies the insurance company or extends the alarm system, Jean will have no coverage for any of her property.

Scenario 2: Jean moves property to the expansion of the premises. Even though there is no material increase in risk, that property is not covered because it is located in the expanded area. Jean must notify the insurance company of this change to be covered.

e. Attachment of Proposal

The named insured must prepare and sign the Proposal for Jewelers Block Coverage Form. It must be attached to the Jewelers Block Coverage Form for coverage to apply.

Note: This is the only standard coverage form that requires attaching the application for coverage (Proposal for Jewelers Block Coverage Form) to the Jewelers Block Coverage Form for coverage to apply.

ENDORSEMENTS

ISO has developed one proposal form and four endorsements to use with the Jewelers Block Coverage Form.

CM 59 90–Proposal for Jewelers Block Coverage Form

This is an extremely detailed application for jewelers block coverage. The named insured must complete every section and sign it. CM 59 90 and the Jewelers Block Coverage Form are unique in the insurance industry because they must be attached to and become part of the coverage form, or there is no coverage. A separate proposal is required for each location.

CM 59 03–Registered Mail Deductible

This endorsement applies to property sent by registered mail except for property mailed to Canada. It replaces D. Deductible in the coverage form. The insurance company does not pay for covered loss or damage to any one package sent via registered mail until the loss exceeds $25,000. The company then pays the adjusted loss over $25,000 up to the limit of insurance that applies.

CM 59 07–Limitation on Property Away From Premises

This endorsement limits covered property off premises but in the named insured's and select others' care, custody, or control to only $5,000. This restriction does not apply to any person listed on the endorsement schedule.

CM 99 01–Additionally Covered Property

This endorsement extends coverage to other property that consists of furniture, fixtures, office supplies, machinery, tools, fittings, patterns, dies, molds, models, improvements, and betterments. It has its own coinsurance provisions because of the number and types of additional property that can be covered. When this endorsement is attached, an entry must be made on the Declarations to show the limit of insurance, the type of property and the premises where coverage is to apply.

CM 99 03–New Business–Premium Adjustment

When this endorsement is used, the policy premium is computed based on anticipated business operations. After the named insured has been in business for six months, a new application must be submitted so that the insurance carrier can reevaluate the actual exposure and charge an equitable premium using rates that were in effect on the policy effective date.

UNDERWRITING CONSIDERATIONS

Underwriting jewelry and the other exposures this coverage form insures focuses 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.

Underwriting must also evaluate the risk's physical characteristics and the extent to which the named insured effectively controls and manages the property and exposures involved. Any type of jeweler usually occupies a fixed location, and these locations are subject to the same fixed location exposures to loss as any other business. Jewelry 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. Other property covered include 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 each risk's inventory. Off premises issues to consider involve goods in various forms of transit and in possession of salespersons.

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 them and protected in 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. There may be earthquake issues in certain geographical areas.

Burglary is an extremely critical issue, and the premises should always be protected by an excellent quality alarm system that covers all exterior openings and connects to a certified central station alarm facility. Theft and mysterious disappearance are common issues for this class of business. The named insured should conduct background checks on all persons before hiring them. The premises should be equipped with video surveillance equipment. Arrangements should be made, and procedures should be implemented to address display and storage issues. Jewelry displayed in show windows and showcases should have suitable protection, and merchandise should be removed when the premises are closed. The same procedures should apply to property at other locations.

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 suitable for the task.

Salespersons 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.

Ownership and management issues may be the most important ones of all. The named insured's financial condition dictates the degree of attention to protective devices and procedures the business incorporates into its operations. The named insured's experience in the business and hiring practices are other crucial 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 a jewelry business's overall desirability and success.