AAIS FILED INLAND MARINE COVERAGE FORMS OVERVIEW

(August 2024)

INTRODUCTION

The American Association of Insurance Services (AAIS) filed inland marine coverage forms are subject to rate, rule, and form filing requirements. As a result, they are less flexible and are more similar to commercial business personal property coverage forms than the non-filed inland marine coverage forms. However, the coverage continues to be inland marine and, therefore, broader and includes coverage for property in transit and at other or unnamed locations.

Many of these coverages are frequently added to property coverage forms as supplemental coverages or extensions of coverage. The title of the coverage may even be the same. It is very important to compare the inland marine coverage and the similarly named property coverage because there are often significant differences. Inland marine forms tend to have fewer exclusions and are more targeted. Transit is always a part of the coverage form.

POLICY CONSTRUCTION

The American Association of Insurance Services (AAIS) has a specific format and arrangement for the coverage forms and endorsements used with filed inland marine coverage. The following forms are mandatory:

IM 7900–Inland Marine–Declarations or

IM 7901–Inland Marine–Declarations–Renewal Certificate

CL 0100–Common Policy Conditions

Schedule of Coverages for the specific Coverage Form

The Coverage Form

BRIEF DESCRIPTION OF THE AAIS FILED INLAND MARINE COVERAGE FORMS

Accounts Receivable Coverage

Coverage:

This coverage insures the named insured’s losses for amounts due that it cannot collect because of an insured loss or damage to records of accounts receivable. Covered losses include the following:

Value of the receivables that cannot be collected
Reasonable costs required to reconstruct lost or damaged records of accounts receivable
Additional collection expenses required when a loss occurs
Interest on loans the named insured must take out to offset the loss of funds during the time the accounts receivable claim is being adjusted and until it is paid

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

The goal of every insured should be rapid restoration of lost records so that amounts owed can be collected. Duplication of records and the storage of those records in an easily accessible off site location are keys to achieving that goal.

Camera and Musical Instrument Dealers Coverage

Coverage:

This coverage insures camera dealers’ stock and similar or related equipment, such as lenses, projection machines, or sound equipment. It also covers musical instrument dealers’ stock of musical instruments and similar or related accessories and supplies, such as sheet music, instrument cases, and music stands. In both cases, it covers similar property of others in the named insured’s care, custody, or control.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

Camera and musical instruments are very susceptible to loss. A minor fire can result in a total loss because of heat and smoke damage. They are also theft targets. Effective protective devices are vital if losses are to be kept to a minimum.

Floor Plan Merchandise Coverage

Coverage:

This coverage insures a variety of dealers’ stock and other merchandise financed through banks or other lending institutions. Coverage is written on a reporting basis because of the nature of the property covered and values that fluctuate widely. Merchants involved with high-value merchandise, such as mobile equipment and expensive household objects like refrigerators and other high-value appliances, often borrow money from banks or finance companies on the collateral of their stock or specifically identified property "on the floor" for sale. This coverage is unique because that stock or merchandise must be identified as specifically encumbered to the bank or other lending institution. The dealer can sell the merchandise only after the financial institution releases its encumbrance. This coverage form is flexible in this regard. It can be written to cover only the single interest of either the dealer or the lending institution or for the dual interests of both parties.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

Documentation as to which items are part of the floor plan and which are part of the standard stock is very important to prevent over or underinsurance on the commercial property and inland marine forms. Poor documentation can result in coinsurance penalties and paying higher premiums because of duplicated coverage.

Jewelry Dealers Coverage

Coverage:

This coverage insures jewelry dealers' stock of diamonds, jewels, jewelry, watches, watch movements, and other precious and semi-precious stones. It also covers such property held for sale. In addition, it covers semi-precious and precious metals and alloys, such as gold, silver, and platinum.

Perils:

Risks of direct physical loss except as excluded or limited

A separate named perils coverage form is also available.

Considerations:

This form can be used only by retailers with $250,000 or less in stock.

Related Article: AAIS Jewelry Dealers Coverage Analysis

Mobile Equipment Dealers Coverage

Coverage:

This coverage insures retail or wholesale mobile agricultural and construction machinery along with equipment, material-handling machinery, and equipment. Vehicles designed for highway use cannot be covered nor can aircraft or watercraft.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

The equipment is mobile and often left outside, so perimeter protection is key to preventing theft losses.

Musical Instruments Coverage

Coverage:

This coverage insures musical instruments, sheet music, instrument cases, music stands, related accessories and supplies, and stationary organs that are owned or used by professional musicians, businesses, and commercial enterprises and educational institutions. It also covers similar property of others in the named insured's care, custody, or control. Coverage is available on a blanket or scheduled basis.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

The instruments are covered anywhere in the world. Inventory controls and assigned individual responsibility for off premises instruments are vital in controlling losses.

Negative Film Coverage

Coverage:

This coverage insures negative film and other media that commercial or non-profit organizations produce. Media includes exposed motion picture film, properly recorded magnetic or videotapes, and similar or related sound recordings. Coverage also applies to property of others in the named insured’s care, custody, or control.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

Film can be easily damaged and re-filming is costly, so control with clear and established responsibility for the film is vital for controlling losses.

Related Article: AAIS Negative Film Coverage Analysis

Photographic Equipment Coverage

Coverage:

This coverage insures cameras and all types of photographic equipment, projection machines, and movable sound equipment that business or commercial enterprises and non-profit organizations own or use. It also covers similar property of others in their care, custody, or control. Coverage is available on a blanket or scheduled basis.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

Equipment is covered worldwide and is extremely valuable and attractive to thieves. Effective loss control must involve effective inventory and individual responsibility for off premises equipment.

Physicians and Dentists Equipment Coverage

Coverage:

This coverage insures medical equipment and surgical instruments used by doctors and dentists. The primary coverage is for tools, materials, supplies, equipment, and scientific books they normally carry with them from place to place. It includes similar property of others in their care, custody, or control. Coverage can be expanded to apply to furniture, fixtures, equipment, and tenant’s improvements.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

There are no location or premises restrictions to covered medical equipment property. When coverage is expanded to other items such as furniture, fixtures and other equipment, coverage for those items is limited to listed and described premises.

Sign Coverage

Coverage:

This coverage insures automatic, electric, fluorescent, mechanical, or neon signs. It also covers lamps, and street clocks and supporting data processing equipment. The property can be covered on a scheduled or unscheduled basis.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

The coverage is subject to a 5% of the limit deductible.

Related Article: AAIS Sign Coverage Analysis

Theatrical Property Coverage

Coverage:

This coverage insures scenery, costumes, and other theatrical property used in stage plays and theatrical productions. Coverage is based on the play or production itself and applies wherever the traveling company and the production are within the territorial limits. Coverage is written per production on a non-reporting basis.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

An updated, to-date inventory and established individual responsibility for the property is an important part of underwriting this coverage.

Valuable Papers and Records Coverage

Coverage:

This coverage insures commercial enterprises' documents, records, manuscripts, maps, films, prints, books, deeds, mortgages, copyright and/or patent rights to key products and similar materials.

Perils:

Risks of direct physical loss except as excluded or limited

Considerations:

Any covered items that cannot be replaced must be scheduled and a limit established for it because an irreplaceable item that is not so scheduled has no coverage at all.