(February 2024)
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IM 7509–Schedule of Coverages–Exhibition Floater–Scheduled Exhibitions
IM 7513–Schedule of Coverages–Exhibition Floater–Blanket Exhibition
Coverage IM 7503–Exhibition Floater Coverage Form Analysis |
The American
Association of Insurance Services (AAIS)
Exhibition Floater Coverage Form covers the named insured's property while it
is off premises at display locations and also while it
is in transit to and from the insured’s locations and exhibition locations.
The types of property exhibited can range from simple merchandise such
as furniture, tools, and sporting goods to exotic property such as jewelry,
furs, expensive automobiles, and live animals. Exhibitions can be held
outdoors, indoors in small buildings or halls, or at large convention centers.
Coverage can be for a single show for a limited period or annually for
risks with numerous shows throughout the year.
While there is only a single Exhibition Floater Coverage Form there are two schedules of coverages available.
Any commercial business enterprise that exhibits or displays its merchandise or merchandise of others for which it is legally liable is eligible.
AAIS Exhibition Floater coverage requires the first three forms plus one of the last two:
Related Article: CL 0100–AAIS Commercial Lines Common Policy Conditions
This Schedule of Coverages is used with IM 7503–Exhibition Floater. IM 7509 contains the following information:
The 01 12 edition added a space to enter the policy number.
The description of covered property is entered in the space provided.
The location and description of the exhibition premises, its
inclusive dates, and the limit are entered in the spaces provided. The 01 12 edition added quotation marks
around the word Limit (“Limit”) because Limit is a defined word.
The limit on the Schedule of Coverages for this coverage
applies to all covered locations.
The limit is $5,000 unless a different limit is entered.
This coverage provides additional limits and additional coverage.
The limit is $10,000 unless a different limit is entered.
A deductible amount must be entered in the space provided.
One of the following coinsurance options must be selected:
This section of the
schedule of coverages lists endorsements and forms included when the policy is
issued.
The previous edition referred to this
section as Optional Coverages and Endorsements.
This Schedule of Coverages is used with IM 7503–Exhibition Floater. IM 7513 contains the following information:
The 01 12 edition added a space to enter the policy number.
The description of the covered property is entered in the space provided.
This is the most the insurance company pays for loss to property on exhibit or display at a single premises.
This is the most paid in a single occurrence for loss to property on
exhibit or display.
The 01 12 edition added
quotation marks around the word Limit (“Limit”) because Limit is a defined
word.
The limit on the Schedule of Coverages for this coverage
applies to all covered locations:
The limit is $5,000 unless a different limit is entered.
This coverage provides additional limits and additional coverage.
The limit is $10,000 unless a different limit is entered.
A deductible amount must be entered in the space provided.
One of the following coinsurance options must be selected:
This section of the
schedule of coverages lists endorsements and forms included when the policy is
issued.
The previous edition referred to this
section as Optional Coverages and Endorsements.
This analysis is of
the 04 04 edition.
The insurance company agrees to provide the coverage as described in the coverage form and on the schedule of coverages. The named insured agrees to pay the premium. The agreement between the two parties is subject to all of the coverage form's terms, conditions, endorsements, and definitions, including those on the CL 0100.
Defined terms are used throughout the coverage form. Restricting their meaning to their definition is how all parties have a clearer understanding of the intended coverage. Nine terms are defined:
1. You and your
The party(ies) named on the declarations as the insured.
2. We, us, and our
The insurance company that is providing the coverage.
3. Limit
The amount of coverage that is available to the insured property.
4. Pollutant
This is a broad and expansive term. It is solids, liquids, thermal or
radioactive contaminants, and irritants. It includes, but is not limited to,
acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. Waste includes
materials intended for recycling, reclamation, and reconditioning, as well as
for disposal. Visible and invisible electrical or magnetic emissions and sound
emissions are also considered pollutants.
5. Schedule of
coverages
Any page that is labeled
as such that contains coverage information.
Declarations or supplemental declarations are also included.
6. Sinkhole collapse
The earth’s surface
suddenly settling or collapsing into an underground opening created by water acting
on limestone or some other rock formation. The collapsing land’s value and the
cost to fill sinkholes are not considered sinkhole.
7. Specified perils
The named perils of
aircraft, civil commotion, explosion, falling objects, fire, hail, fire
extinguishing equipment leakage, lightning, riot, sinkhole collapse, smoke,
sonic boom, vandalism, vehicles, volcanic action, water damage, the weight of sleet, snow or ice and windstorm. Two
terms need further explanation.
Falling objects do
not include loss to personal property stored in the open. Damage to the
interior of buildings or personal property stored in buildings by a falling
object is not included unless that falling object first breaches the building's
exterior.
The cracking or breaking of a part of a system or appliance holding
water or steam, causing a sudden or accidental discharge or leakage of water or
steam, is water damage.
8. Terms
All provisions,
limitations, exclusions, conditions, and definitions that apply to this
coverage.
9. Volcanic action
An airborne
volcanic blast or shock waves, ash, dust, and particulate matter. However, it
does not include the cost to remove dust, ash, or particulate matter that does
not directly damage covered property. Lava flow
is volcanic action.
Coverage applies to
the property described below, subject to any exclusions or limitations.
1. Scheduled Exhibitions
a. Coverage
The named insured's property and property of
others that is in its care, custody, and control are covered for direct physical loss by a covered peril only when
meeting both of the following criteria:
b. Coverage Limitation
The property that is
on exhibit or display is covered subject to the following restrictions:
Note: What does “to and from” mean? Does transit
coverage only exist while the exhibits or displays are in transit between
exhibitions, or is transit coverage available when the items are being shipped
to and from the main location and the exhibition?
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Example: Penny’s display is being exhibited at five different events. Each is
scheduled with appropriate dates on the schedule of coverages. Between each exhibit,
the display is shipped back to Penny’s home office until the next event. Penny’s
is very surprised when a claim for transit damage is denied because the
display was being shipped from Penny’s to the scheduled exhibition and not
between events. |
Note: IM 7509–Schedule of Coverage–Exhibition
Floater-Scheduled Exhibitions must be used when coverage is written on this
basis.
2. Blanket
Exhibitions
a. Coverage The named insured's property and property of
others in its care, custody, and control are covered for direct physical loss
by a covered peril but only while on exhibit or display.
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Example: Gordon's Gutters & Downspouts attends
a roofing industry convention and displays its products there. Gordon has
permission to display some gutter guard systems manufactured by Gigantic
George's Gutter Guards, which supplement and complete Gordon's display.
Gordon includes the values of George's goods along with its own on its Exhibition
Floater Coverage Form. He schedules the dates and location of the roofing
convention on the schedule of coverages. The value of both Gordon's and
George's goods is covered up to the limit of insurance if a covered loss
occurs. |
b. Coverage Limitation
The property that is
on exhibit or display is covered subject to the following restrictions:
Note: What does “to and from” mean? Does transit
coverage only exist while the exhibits or displays are in transit between
exhibitions, or is transit coverage available when the items are being shipped
to and from the main location and the exhibition?
Note: IM
7513–Schedule of Coverage–Exhibition Floater-Blanket Exhibition Coverage must
be used when coverage is written on this basis.
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Example: Gordon’s Gutter display and Gigantic
George’s Gutter Guards are returned to Gordon’s main location. Does Gordon’s coverage
end when the display enters the transit vehicle or when the guards are unloaded
from the transit vehicle? |
Four specific types of property are excluded.
1. Contraband
Property illegal to possess is not covered. Property that is legal to possess but is being used as part of an illegal trade or transported illegally is also not covered.
2. Money and Securities
A number of types of property are not covered under this item. Accounts, bills, currency, food stamps, evidence of debt, and lottery tickets not held for sale, in addition to money, notes, or securities are all not covered.
Note: This property should be insured under commercial crime coverage forms.
Related Article: Commercial Crime Coverage Analysis
3. Property at Your
Premises
Property is not
covered when in a premises that the named
insured owns, leases, or operates.
Note: When the property is on premises, it is
part of the named insured’s business personal property.
4. Waterborne Property
Property that is waterborne is not covered. The only exception
is when it is in transit while in a carrier for hire's custody.
Provisions That Apply To Coverage Extensions
There is one coverage extension. Its limit is either the limit on the schedule of coverages or the default limit included in the coverage form. This limit is part of the applicable limit for covered property and not in addition to it unless otherwise indicated. This limit is not added to or combined with limits for any other coverage extension or supplemental coverage and is not subject to any coinsurance provisions that apply elsewhere in the coverage form.
Debris Removal
a. When a covered peril damages or destroys covered property, the cost to
remove any created debris is covered under this extension.
b. Debris removal does not include any costs
for removing, restoring, or replacing polluted land or water or extracting
pollutants.
c. There are two
parts of the Limit section. The first is restricting any debris removal payment
to no more than 25% of the amount paid for the actual direct physical loss or
damage. The second part is that when the debris removal and the physical damage
loss are added together, no more than the limit of insurance is paid.
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Example: The Wild Ideas display limit is $25,000. A
covered fire occurs. Scenario 1: The fire loss exceeds $25,000, so it is considered a total
loss. The debris removal cost is $1,500. The maximum debris limit is $6,250
($25,000 X .25). However, because the $25,000 is already needed to pay for
the physical damage loss, no debris removal coverage is available. Scenario 2: The covered fire loss is $2,000. The debris removal cost
is $5,000, but the maximum debris removal cost of $2,000 x.25 = $500. Only
the $500 is paid. Scenario 3:
The covered fire loss is $20,000. The debris removal cost is $3,000. The
maximum debris removal cost payment is .25 X $20,000 = $5,000. The total of
the $20,000 + $3,000 = $38,000. This entire loss would be covered after the
deductible. |
d. An additional
$5,000 (or a higher amount entered on the schedule of coverages) is available
if the debris removal expense is more than 25% of the loss amount or if the
combined cost of loss and debris removal is more than the limit of insurance
for the covered property.
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Example: This revision of the above illustrates how
this $5,000 impacts each loss. The Wild Ideas display limit is $25,000. A covered fire occurs. Scenario 1: The fire loss exceeds $25,000, so it is considered a total
loss. The debris removal cost is $1,500. The maximum debris limit is $6,250
($25,000 X .25). However, because the $25,000 is already needed to pay for
the physical damage loss only the $5,000 additional debris removal is
available. The $25,000 loss plus the $1,500 debris removal is covered. Scenario 2: The fire loss exceeds $50,000, so it is considered a total
loss. The debris removal cost is $7,500, and the maximum available is
$12,500. However, because the $50,000 is already needed to pay for the
physical damage loss, only the $5,000 additional limit is available to pay for
the debris removal. Scenario 3: The covered fire loss is $2,000. The debris removal cost
is $5,000, but only the maximum debris removal cost of $2,000 x.25 = $500 or
the $5,000 additional debris cost is paid. In this case, the entire debris removal is paid. Scenario 4:
The covered fire loss is $20,000. The debris removal cost is $3,000. The
maximum debris removal cost payment is .25 X $20,000 = $5,000. The total of
the $35,000 + $3,000 = $38,000. This entire loss would be covered after the
deductible. There is no change in this scenario because the loss was handled
within item c. |
e. The named insured must report debris removal
expenses to the insurance company within 180 days of the loss date for this coverage
extension to apply.
Provisions That Apply To Supplemental Coverages
There is one supplemental coverage. Its limit is the limit for the supplemental coverage unless there is a limit for that coverage on the schedule of coverages. This limit is separate from and not part of the applicable limit for covered property.
The limit available for coverage described under a supplemental coverage is the only limit available for it. It is not the total of the limit for a supplemental coverage and the limit for covered property. The limits are not added to or combined with limits for any other supplemental coverage or coverage extension. They also are not subject to any coinsurance provisions that apply elsewhere in the coverage form.
Pollutant Cleanup and
Removal
a. The insurance company pays the named insured's expenses to extract pollutants from land or water if a covered peril that occurred during the policy period caused the pollutants to be released or discharged.
b. This is immediate coverage, so any expenses to extract pollutants are paid only when reported to the insurance company within 180 days of the date of loss.
c. Costs related to testing, evaluating, observing, or recording pollutants are excluded except for those costs that are part of the extraction process.
d. The most paid is $10,000 for all such expenses that a
covered peril that occurs during each separate 12-month policy period causes.
This limit can be increased.
Coverage applies to risks of direct physical loss unless the loss is limited or caused by an excluded peril.
1. Primary Exclusions
The first group of
exclusions is essentially absolute. Subject to specific exceptions, loss or
damage by each is totally excluded, regardless of any other cause or event that
contributes to a loss, either concurrently or in any other sequence. The
insurance company does not pay for any direct or indirect loss or damage caused
by or that results from any of these events.
Related Article: Concurrent Causation and Anti-Concurrent
Causation Clauses–A Discussion
a. Civil Authority
There is no
coverage for a loss that results from an
order any civil or government authority issues. These orders may include
seizure, confiscation, destruction, or quarantine of property, but this
exclusion is not limited to only these. The only exception is when the loss or
damage is caused by a civil authority destroying property to control a fire. This
exception applies only if the fire results from a covered peril.
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Example: A bomb threat occurs at First Friendly’s Convention. The first
responders clear the area and search all exhibits for potential bombs.
Maxie’s display is one of the many exhibits quickly dismantled and left in
shambles. Maxie’s loss of $5,000 is not covered because it was due to the
action of a civil authority. |
b. Nuclear Hazard
The insurance
company does not cover loss or damage caused by or that results from any
nuclear reaction, radiation, or contamination. This is absolute and applies
whether or not the nuclear incident was controlled, and by whatever means
caused. Any loss the nuclear hazard causes is not treated as a loss that fire,
explosion, or smoke causes. The only exception is when a fire results from the
nuclear fire, direct loss or damage from that fire is covered, but the damage
from the nuclear hazard remains excluded.
c. War and
Military Action
The insurance
company does not pay for loss or damage caused by any act of war. Undeclared
and civil war or warlike action by a military force are all considered war. All
actions taken to hinder or defend against an actual or expected attack by any
government or sovereign authority that uses military personnel or other agents
are also considered war and excluded. In addition, acts of insurrection,
rebellion, revolution, or unlawful seizure of power and any action any
government authority takes to prevent or defend against any such acts are excluded.
If any action within the terms of this exclusion involves nuclear reaction,
radiation, or contamination, this exclusion applies in place of the nuclear
hazard exclusion.
Note: This means that the exception for resulting
fire under the nuclear hazard is not covered when it results from war.
2. Secondary Exclusions
The second group of
exclusions applies to loss or damage caused by or resulting from any of the
following loss events. Some of these exclusions have exceptions, conditions, or
limitations that should be noted and reviewed carefully. The insurance company
does not pay for any loss or damage caused by or that results from any of these
events.
a. Contamination
or Deterioration
Loss or damage that
is caused by contamination or deterioration is excluded. This applies to corrosion,
decay, fungus, mildew, mold, rot, and rust. It also applies to any quality,
fault, or weakness in covered property that causes it to damage or destroy
itself. However, this exclusion is not limited to only these described causes.
b. Criminal, Fraudulent,
Dishonest, or Illegal Acts
Coverage does not
apply to loss caused by, or that results from criminal, fraudulent, dishonest,
or illegal acts that any of the following commit alone or in collusion with
another:
Coverage applies if employees destroy property. It does not apply if
employees steal.
This exclusion does
not apply to covered property in the custody of carriers for hire.
c. Electrical Currents
Electrical arcing or currents caused loss or damage is excluded unless lightning is the cause. When the excluded arcing or currents result in the occurrence of a specified peril any resulting loss from that specified peril is covered.
d. Loss of Use
There is no coverage for loss that results from delay, loss of use, or loss of market.
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Example: Jolly Times’ major sales time is between August and October in
preparation for the Christmas season.
It will be displaying at seven different events. During the first event, a
tornado destroys the display area and Jolly’s display. Jolly is unable to
replace the display for one month and, therefore, misses three of its events.
It estimates the loss of profit due to the delay is $25,000. The insurance company
pays the $15,000 for the destroyed display but pays nothing for the loss of
profit. |
e. Mechanical Breakdown
When mechanical, structural, or electrical breakdown or
malfunction causes a loss, it is excluded. The loss is excluded even if a
breakdown results from a structural, mechanical, or reconditioning process. There
are no exceptions.
f. Missing
Property
The
unexplained or mysterious disappearance of covered property is excluded
when there is no physical evidence to suggest what happened to it, and the only
proof that a loss occurred is based on an audit
or physical inventory. The one exception is that this does not apply to
covered property in the custody of carriers for hire.
g. Pollutants
There is no
coverage for loss caused by or resulting from any release, discharge, seepage,
migration, dispersal, or escape of pollutants. There are three exceptions:
h. Processing Work
Loss or damage due
to any processing or other type of work
done on the property is not covered. The only exception is that if a specified
peril results from the processing, coverage applies to the specified peril
loss.
i. Temperature/Humidity
Coverage does not apply to loss that dryness, dampness, humidity, changes in, or extremes of temperature causes. However, if a specified peril occurs due to any of these, coverage applies to the loss or damage that specified peril causes.
j. Theft from an Unattended Vehicle
Coverage does not apply to theft
of covered property from an unattended vehicle. There are two exceptions. If the
vehicle was locked, its windows securely
closed, and there is visible evidence
of forced entry into the vehicle, coverage applies. In addition, when covered property is in the custody of carriers
for hire, coverage applies.
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Example: Gordon unloads most of the merchandise for
the roofing association trade show and takes a break to eat lunch before
finishing. He inadvertently forgets to lock the pull-down door on the box
truck. When he returns and rolls the door up, he finds the cargo area empty
and the merchandise he had not yet unloaded gone. Coverage does not apply
because the vehicle does not have even a single mark on it to suggest that a
forced break-in occurred. |
k. Voluntary
Parting
The
loss to covered property
voluntarily given to others is not covered, even if the surrender was due to a
fraudulent scheme, trick, or false pretense.
l. Wear and Tear
Loss or damage
caused by wear, tear, marring, or scratching is excluded.
1. Notice
The named insured
must promptly notify the insurance company or its agent of a loss. The notice
must include a description of the property lost or damaged. If a criminal act
caused the loss, the appropriate law enforcement agency must also be notified.
The insurance company has the right to require that the notice be in writing.
2. You Must Protect
Property
During and after a
loss, the named insured must take all reasonable steps to protect covered
property from further loss. The insurance company pays reasonable costs the
named insured incurs if the named
insured maintains accurate records to substantiate the costs. Paying these
costs is not in addition to the policy limits. There is no coverage for any
repairs or emergency measures performed on property not already damaged by a
covered peril.
Note: Such costs
incurred to reduce the amount available
to pay the actual loss.
3. Proof of Loss
The named insured must complete and return the insurance company's
prescribed proof of loss forms within 60 days after the company requests it.
The information provided must include the time, place, and circumstances
involved with the loss and information on any other insurance coverage that may
apply. It must also include the named insured’s interest and the interest of
others with respect to the property involved, including lienholders, loss
payees, and mortgagees. Any changes in the title
to the property during the policy period must be disclosed, in addition to
providing any other reasonable information the company may require to adjust
and settle the loss.
4. Examination
Examination under
oath may be required in matters that relate to the loss. The insurance company
may request these examinations more than once, but such requests must be
reasonable. If multiple persons are examined, the company has the right to
examine each individual separately.
5. Records
The named insured
must produce any records related to the loss. The insurance company must be
allowed to make copies and take extracts of them as often as it reasonably
requests. Records include tax returns and bank microfilms of all related cancelled checks, but records are not limited
to just these.
6. Damaged Property
Damaged and
undamaged property must be made available for the insurance company's
inspection as often as reasonably necessary. It must also be allowed to take
samples of the property to the extent necessary to adjust and settle the loss.
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Example: William’s display is damaged, but he needs to move on. He notifies
the insurance company of the loss and they inform him that it will take three
days to arrive at the location. He informs them he is moving on and cannot
wait for them. Because he removes the damaged property before they can
inspect the damage, the claim is denied. |
7. Volunteer Payments
The named insured may not voluntarily make payments, assume obligations,
pay or offer rewards, or incur other expenses without the insurance company's
express approval. If it does, it does so at its own expense. The only
exceptions are those costs incurred to protect property, as item 2. above
describes.
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Example: William is in a hurry, so he arranges for his display to be repaired
and transported to the next exhibit. The insurance company is not obligated
to pay for any of William's arrangements. |
8. Abandonment
The named insured may not abandon damaged property to the insurance
company without its written consent.
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Example: William
left part of the damaged display at the convention center as he moved on to
the next exhibition. He notified the insurance company that it belonged to
them now. The insurance company refused to accept it, so all bills for its
removal and storage were sent to William. |
9. Cooperation
The named insured
must cooperate with the insurance company and perform all acts this coverage
form requires.
1. Actual Cash Value
The value of covered property is its actual cash value at
the time of loss. Actual cash is replacement cost new minus depreciation.
2. Pair or Set
The value of a loss
that involves damage to or loss of one part of a pair or set is based on a
reasonable proportion of the value of the entire pair or set. However, the loss
of one part of a pair or set is not considered a total loss.
Note: This
recognizes that the value of the whole is greater than the value of individual
parts but that the remaining parts still have value as separates.
3. Loss to Parts
The value of a lost
or damaged part of property that consists
of several parts is the cost to repair or replace only the lost or damaged
part.
1. Insurable Interest
The insurance
company does not pay more than the named insured's insurable interest in the
covered property at the time of loss.
Note: This coverage form includes property of others. The
named insured has no insurable interest in that property, so this condition
will be difficult to enforce.
2. Deductible
The insurance
company pays only the amount of loss that exceeds the deductible amount on the
schedule of coverages.
3. Loss Settlement Terms
Subject to other
items in this section, the insurance company pays the least of the following:
4. Coinsurance
a. When coinsurance applies to a coverage provided, the insurance company pays only part of the loss if the limit is less than the percentage of the value of the covered property on the schedule of coverages.
b. The following are the three steps to determine the amount of loss to be paid:
Step
1. Multiply the percentage on the schedule of coverages by the covered property’s
value at the time of loss.
Step
2. Divide the covered property’s limit by the result determined in Step 1.
Note: There is no coinsurance
penalty if the result is 1.00 or higher.
Step 3. There is a coinsurance penalty when Step 2. is less than 1.00. Subtract the deductible from the amount of loss and then multiply the total amount of loss by the percentage determined in Step 2.
The insurance company does not pay more than the amount determined in Step 3. or the limit, whichever is less. It does not pay any remaining part of the loss.
c. If there is more than one limit on the schedule of coverages, this procedure applies separately to each limit.
d. If there is only one limit on the schedule of coverages, this procedure applies to the total of all covered property insured under that limit.
e. This coinsurance provision does not apply unless there is a coinsurance percentage entered on the schedule of coverages.
5. Insurance under More
Than One Coverage
Two or more coverages in the coverage form may apply to the same loss. In
that case, the insurance company does not pay more than the value of the actual
claim, loss, or damage sustained.
6. Insurance under More Than One Policy
a. Proportional Share
The named insured
may have other coverage subject to the same terms as this coverage form. In
that case, this coverage form pays only its share of the covered loss. That
share is the proportion that its limit of insurance bears to the limits of
insurance of all insurance that covers on the same basis.
b. Excess Amount
There may be other coverage available to pay for the loss other than as described in 7. a. above. In that case, this coverage form pays on an excess basis. It pays only the amount of covered loss that exceeds the amount due from the other coverage, whether collectible or not. Any payment is subject to the limit of insurance that applies.
1. Loss Payment Options
a. Our Options
The insurance
company has the following four loss payment options if a covered loss occurs.
b. Notice of Our
Intent to Rebuild, Repair, or Replace
The insurance
company must notify the named insured of its intent to rebuild, repair, or
replace within 30 days after receiving a properly completed proof of loss.
2. Your Losses
a. Adjustment and
Payment of Loss
The insurance
company adjusts all losses with and pays the named insured unless another loss payee named in the policy is involved.
b. Conditions for
Payment of Loss
The insurance
company pays a covered loss within 30 days after it receives a properly
prepared proof of loss and the amount of loss is established. Either the amount
of loss is determined by a written
agreement between the company and the named insured or after an appraisal award
is filed with the company.
3. Property of Others
a. Adjustment and
Payment of Loss to Property of Others
The insurance company
has the option to adjust and pay losses that involve property of others either
to the named insured acting on the property owner’s behalf or to the property
owner.
b. We Do Not Have
to Pay You if We Pay the Owner
The insurance
company is not obligated to pay the named insured when it pays the property
owner. In addition, if the property owner sues the named insured, the company
has the option to defend the named insured in that suit.
1. Appraisal
The insurance
company and the insured may not always agree on the value of a covered claim.
This condition provides one method to resolve disputed claims.
Either party can request an appraisal to determine the value of a
disputed claim. Once requested, the parties have 20 days to obtain their own independent
and competent appraisers and give their appraiser's name to the other party.
The two appraisers then have 15 days to select a competent impartial umpire. If
they cannot agree on an umpire within that time period, either can request that
a judge in the court of record in the state where the property is located
appoint one.
The appraisers then determine the claim’s value. They submit any
differences to the umpire. Once any two of the three parties agree, the amount
of loss is set.
Each party pays its own appraiser. Both parties share the umpire’s cost
and other expenses equally.
2. Benefit to Others
The insurance
provided does not directly or indirectly benefit any party with custody of the
named insured's property.
3. Conformity with
Statute
Any condition in
this coverage form that conflicts with any applicable law is amended to conform
to that law.
4. Estates
Note: This condition applies only if the named
insured is an individual.
a. Your Death
If the named
insured dies, the person who has custody of the named insured's property is an
insured until a qualified legal representative is appointed. The named
insured’s legal representative becomes an insured once he or she is appointed.
Both are insureds, but only with respect to the property this coverage form
insures.
b. Policy Period
is not Extended
This coverage does
not extend past the policy’s expiration date.
5. Misrepresentation,
Concealment, or Fraud
This coverage is
void if any insured at any time willfully concealed or misrepresented a
material fact that relates to the insurance provided, the property covered, or
its interest in the property. It is also void if fraud or false swearing by any
insured took place concerning the insurance provided or the property covered.
Note: The named
insured must deal with the insurance company honestly. Its rights of recovery
may be voided if it intentionally misrepresents or conceals a material fact or
information. This means that the insurance is treated as simply having never
existed versus denying a particular claim.
6. Policy Period
Only covered losses
that occur during the policy period are paid.
7. Recoveries
Paying the loss
does not end the obligations of the named insured and the insurance company
toward one another. Additional provisions apply if the insurance company pays a
loss and the lost or damaged property is subsequently recovered, or the parties
responsible for the loss pay for it.
Either party that recovers property or payment must inform the other.
Recovery expenses that either party incurred are reimbursed first. If the named
insured keeps the recovered property, it must refund the amount of the claim
the insurance company paid unless the company agrees to a different amount. If
the claim paid is less than the agreed loss due to applying a deductible or
another limitation, any recovery is prorated between the named insured and the
insurance company based on the company's respective interest in the loss.
8. Restoration of
Limits
Payment of a claim
does not reduce the limit available for future claims.
9. Subrogation
The insurance
company acquires the named insured's rights of recovery from third parties
after it pays a loss. The named insured must help the insurance company secure
those rights. The company is not obligated to pay a loss if the named insured
hinders or impairs the company's rights of subrogation. However, the named
insured can agree in writing to waive recovery rights from others before a loss
occurs.
10. Suit against Us
The insurance
company cannot be sued by anyone for any coverage until all the terms of the
coverage form are met. Suits must be brought within two years after the named
insured first knew about a loss. If a state law invalidates this condition, any
suit brought must comply with the provisions of that law and begin within the
shortest period of time allowed by law.
Note: It is normal
for a basic coverage form to be modified by mandatory state-specific
endorsements that address issues that relate to that specific state.
11. Territorial Limits
Covered
property must be located in the
United States, its territories and
possessions, Canada, or Puerto Rico for coverage to apply.
AAIS has developed one endorsement for use with this coverage form:
This endorsement restricts the perils covered to named perils of fire, lightning, windstorm, hail, collision, overturn, or derailment of a transporting conveyance, collapse of a bridge or culvert, theft, and vandalism.
Note: Additional company specific endorsements may be available and used. Each should be examined to determine its effect on coverage, especially when some may impose restrictions or controls that may be minimum requirements or prerequisites for the company to provide coverage or to accept a particular exposure.
Location specific underwriting is not appropriate for this floater because coverage applies only when the items are not at the named insured’s premises. Instead, underwriting must focus on the property itself, the type of exhibitions, the manner of transport, and the loss history.
The property to be
covered must be described in the schedule of coverages. It should be as
descriptive as possible to prevent any confusion if a loss should occur because
only the described property is covered. This description should be regularly
updated because items might be added to the exhibit that, if not described,
might not be covered.
The susceptibility of the property and its damageability is very
important to evaluate. Breakage is a significant concern, especially if the
property is fragile or easily damaged. Handling and packing issues will come
into play, and underwriters may require that only professional packers be
permitted to handle the items.
Procedures and
accountability are very important. The named insured should have set procedures
for the handling of displays. One of the most important parts of the procedure
should be establishing one individual as primarily responsible for the display
at a specific exhibit.
The exhibition
contract is important because it provides duties and obligations of both
parties. If the exhibition provides security, it is important to understand the
hours of protection so that the named insured can remove valuable items as
appropriate. The nature of the exhibitions must be evaluated. Outdoor
exhibitions present additional concerns, such as security and protection
arrangements after hours or contingency plans if weather conditions change or
become inclement. Exhibitions conducted indoors involve the traditional
evaluation of construction, occupancy, public and private protection, and
surrounding exposures and any special attention and handling needed, depending
on the nature of the property being exhibited.
Transit coverage is
a major element of the exhibition floater. The method of transportation must be
considered, along with the bill of lading or shipping document, if the insured
uses a carrier for hire. Valuation terms should be adequate and may require
special attention if the merchandise is valuable, unique, or special in any
way. In addition, some property may also be fragile and easily damaged, and
packing and handling issues must be addressed. If transportation involves the named
insured's own vehicles, the same issues exist, along with determining the
adequacy of the motor vehicle for the job and the experience of the drivers and
helpers while driving, loading, and unloading the merchandise.
If exhibition coverage is written on a scheduled basis, accurately
establishing the dates when coverage applies is extremely important because
coverage applies on only the dates indicated. Coverage includes transportation
to and from the event, so those dates must be considered when establishing the
dates. Adding time in the beginning and the end is suggested because unexpected circumstances or delays can develop
that could affect coverage.
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Example: An office equipment show is scheduled from
06/01 through 06/07. Jan plans to leave on 05/30 to travel to the exhibition
location and will return home by 06/09. She notifies her insurance agent, who
arranges coverage from 05/30 through 06/09. On 05/25, Jan receives an
invitation to attend a special pre-exhibit showing of her equipment. She leaves
on 05/28 instead of the previously arranged date and forgets to inform her
agent of the change. An accident in transit occurs on 05/28, and all the
merchandise for the exhibit is destroyed. There is no coverage because the
loss occurred on a date before the scheduled start of coverage, and the claim
is denied. |
Losses in the past
are good indicators of future loss unless intervening loss prevention steps are
taken following a loss. It is important to have at least five years’ worth of loss
runs to ascertain whether effective management control is in place.