5/E - Inland Marine Insurance Flashcards
1
Q
Inland Marine Insurance - An Overview
A
- Covers property in transport (other than ocean transport)
- Covers property involved in transportation
- Policies typically known as “floaters”
2
Q
Eligible Property
A
- Movable
- In transit
- Instrumentalities of transportation or communication, including:
a. roads
b. bridges
c. tunnels
d. radio towers
e. power lines
Not Eligible
- Actual means of transport, such as:
a. trucks
b. airplanes
c. ships
d. forklifts
e. cranes
3
Q
Controlled Line Floaters
A
“Controlled” lines:
- Written on a standard provision form promulgated by a bureau and filed with the Department of Insurance for uniform use (for example, the ISO standard policy form)
- Disclose the rates being charged
- General property floaters: personal effects and personal property
- Specific property floaters: cameras, fine arts, golf equipment, jewelry and furs, musical instruments, stamp and coin collections and silverware
4
Q
Uncontrolled Line Floaters
A
“Uncontrolled” lines:
- Insurers use their own forms, which can vary by company and by the individual risk
- Used to meet the needs of individual clients
- Not filed with the state department of insurance
- Common floaters: outboard motor boat floaters, gun floaters, sporting equipment floaters and wedding present floaters
Note: Floaters are often added as scheduled property endorsements to Homeowners policies, but can be written as stand-alone Inland Marine policies
5
Q
Inland Marine Categories
A
Four Categories of Inland Marine Insurance
- Domestic Shipments
- Instrumentalities of Transportation or Communication
- Personal Property Floater Risks
- Commercial Property Floater Risks
6
Q
Domestic Shipments
A
- Protect against losses occurring during shipment or transport of goods
- Includes travel by truck, train, ship, mail or plane
7
Q
Annual Transit
A
- Uncontrolled form that covers loss of goods in transit
- Applies to all of the insured’s shipments during the year
- Choice of open-peril coverage or named- peril coverage against fire, windstorm, collision or theft
8
Q
Trip Transit
A
- Uncontrolled form similar to annual transit, but which only insures a single shipment
- Coverage applies from the trip origination point to destination
9
Q
Motor Truck Cargo
A
- Uncontrolled form
- Protects carrier of shipped goods while the shipment is in transit
Common Carrier Legal Liability
- Free on Board (FOB) Shipping Point: ownership of / responsibility for cargo transfers to buyer as soon as cargo leaves shipper
- Free or Board (FOB) Destination Point: ownership of / responsibility for cargo transfers to buyer after buyer accepts cargo when it arrives at the buyer’s destination
Tariff Liability
- Can apply to cargo in transit, such as on a truck, ship or train
- Refers to rates, rules, conditions, and charges for transport of goods
10
Q
Mail Coverage
A
- Controlled form
- Provides open peril coverage for property sent by registered mail
- Shipper must report property value accurately
11
Q
Instrumentalities of Transportation & Communication
A
- Uncontrolled form
- Pays for direct damage or loss of revenue due to covered loss
- Covers property directly related to transportation and communication, including:
a. bridges
b. tunnels
c. roads
d. dams
e. piers and docks
f. pipelines
g. power transmission lines
h. antennas and towers for radio and TV
12
Q
Personal Articles Floater
A
- Insurers may write separate forms for specific property coverage
- Usually, coverage for several types of property is combined in a single Personal Articles Floater (PAF)
- PAF specifies coverage and premium for each property type
13
Q
PAF Characteristics
A
- Open-peril coverage (they are not named-peril policies!)
- Coverage is worldwide
- There is no deductible
- Valuation is determined using the least of the following (unless the insured has chosen agreed value coverage):
a. actual cash value
b. cost to repair or replace
c. coverage limits - Subject to “pair and set” provision
14
Q
Common Exclusions
A
- War
- Nuclear hazards
- Wear and tear
- Insects and vermin
- Spoilage
- Gradual deterioration
15
Q
Jewelry, Furs, Cameras
A
Jewelry
- Eligible items include:
a. items of personal adornment containing precious metals or jewels
b. pens
c. flasks
d. smoking equipment
e. trophies - Each item must be individually scheduled
- Newly acquired property automatically covered for 30 days at 25% of coverage limit, up to $10.000
Furs
- Includes both genuine and imitation fur
- Each item must be individually scheduled
- Newly acquired property automatically covered for 30 days
Cameras
- Eligible items include:
a. photography equipment
b. binoculars
c. telescopes - Each item must be individually scheduled, but blanket coverage available for accessories
- Newly acquired property automatically covered for 30 days
16
Q
Medical Instruments, Silverware, Golf Equipment
A
Musical Instruments
- Each item must be individually scheduled, but blanket coverage available for accessories
- Newly acquired property automatically covered for 30 days
Silverware
- Eligible items inclulde
a. silver
b. silver-plate items
c. gold
d. gold-plate items - Items may get blanket or scheduled coverage
Golfer’s Equipment
- Eligible items include:
a. clubs
b. equipment
c. clothing - Blanket coverage
17
Q
Fine Arts Coverage
A
- Eligible items include private collections of:
a. paintings
b. etchings
c. pictures
d. tapestries
e. stained glass
f. rugs
g. statues
h. marbles
i. bronzes
j. antiques
k. rare books manuscripts
l. porcelains or rare glass - Individual items must be scheduled, but blanket coverage available for small items or collections
- Agreed value coverage
- Newly acquired property automatically covered for 90 days at 25% of total limit of scheduled items
- No coverage for property on exhibit away from insured premises
Pair and Set provision under Fine Arts coverage:
- Insurer pays full scheduled amount for pair or set
- Insured must surrender any remaining pieces of set to insurer
18
Q
Stamps & Coin Collection
A
- Eligible items include:
a. postage stamps
b. rare and current coins
c. paper money
d. banknotes - Can provide blanket or scheduled coverage
- Special limits:
a. $1,000 for any unscheduled coin collection
b. $250 for any individual item - Additional exclusions apply to stamps or coins that are:
a. faded
b. defective
c. damp
d. depreciated
e. over-handled
f. lacking part of a set
g. in the custody of a transport company (except registered mail)
h. not part of a collection
19
Q
Commercial Inland Marine Policies
A
Include:
- Domestic Shipments
- Instrumentalities of Transportation and Communication
- Commercial Property Floater Risks
Written in similar commercial property format
Two types of conditions
- General
- Loss
20
Q
Conditions
A
General Conditions
- Concealment, Misrepresentation, and Fraud
- Legal Action Against the Insurer
- No Benefit to Bailee
- Policy Period
Loss Conditions
- Abandonment
- Appraisal
- Duties of the Insured
- Insurance Under 2 or More Coverages
- Property of Others
- Recovery or Salvage
- Rights of Recovery
- Reinstatement of Limit
21
Q
Commercial Property Floater Risks
A
- Can be written on controlled or uncontrolled forms
- Includes
a. Bailee forms
b. Equipment Floaters
c. Business Floaters
d. Dealer Policies
22
Q
Bailees
A
Individual who holds someone else’s property for a specific purpose and then returns it to the owner
Bailee coverage:
- Reimburses a bailee’s customer for damage to the customer’s property while in the bailee’s control
- Property coverage for Confusion of Goods (a loss makes it impossible to identify damaged property)
23
Q
Equipment Floaters
A
Equipment Floater
- Uncontrolled form
- May be open peril or named peril
- Covers heavy machinery and equipment
Controlled Equipment Forms
- Physicians and Surgeons Equipment: covers instruments and furniture of doctors, surgeons, and dentists
- Theatrical Property: covers scenery, props, and costumes
- Commercial Articles: covers commercial photographic equipment and musical instruments
- Contractors Equipment: covers construction machinery, like tractors, backhoes, and pavers
24
Q
Business Floaters
A
Accounts Receivable
- Controlled
- Open peril
- Reimburses insured for money that cannot be collected because company records have been destroyed
Valuable Papers and Records
- Controlled
- Covers losses to important documents, manuscripts, or records
- Does NOT cover money and securities
25
Q
More Business Floaters
A
Installation
- Controlled
- Often open peril
- Covers items that have been sold while they are being moved or installed, before being accepted by the buyer
Electronic Data Processing (EDP)
- Covers:
a. hardware
b. data
c. media
d. recorded information
e. software - Liability coverage also available
Signs
- Controlled
- Covers all types of signs owned by insured and those belonging to others that are in the insured’s care
26
Q
Dealer’s Policies
A
- Open peril
- Covers dealers of:
a. jewelry
b. stamps
c. art
d. coins
e. furs
f. cameras
g. musical instruments
h. equipment
Versatile coverage
a. reporting or non-reporting
b. property covered while on or off premises
c. property covered while controlled by employees or in transit
d. covers property of others in insured’s custody
27
Q
Jewelers Block Coverage Form
A
Jewelers Block
- Bailee form
- For jewelers with up to $250,000 in stock
- Covers
a. insured’s merchandise
b. property of others in insured’s care
c. property in transit and in showcases
28
Q
Jewelers Block Covers
A
- Insured’s stock in trade
- Jewelry sold, but not yet delivered
- Similar property of others in the insured’s care
a. if such property is in jewelry trade, it is only covered up to insured’s financial interest in the property - Damage to building housing merchandise when damage is caused by theft, attempted theft, and collapse
29
Q
Jewelers Block: Optional Coverages
A
Show Windows
Covers theft from a show window by cutting or smashing glass
Money
Covers theft of money form a vault or safe on insured premises
30
Q
Jewelers Block: Exclusions
A
Property Not Covered under Jewelers Block
- On exhibition in showcases not on the premises
- At an exhibition that is promoted by a trade association or public authority
- Sold on a payment plan after it leaves the premises
- Being worn by the insured or an employee (or a family member of either)
- In the mail, in express carriers, or motor carriers
Extended Causes of Loss
- Water damage at the insured’s premises
- Unexplained disappearance
- Shortage of shipped property when the package is received in good condition and the seal is unbroken
- Failed tracking
- Earthquake
- Theft from a vehicle unless the property is accompanied by an attendant
- Shortage discovered while doing inventory
- Breakage of fragile articles
- Criminal or dishonest acts by the insured, his employees, or someone else the property is entrusted to
31
Q
Jewelers Block: Loss Settlement
A
Determining Value
- Value is determined at the time of loss
- Historical or antique value have no bearing on valuation
Policy pays the least of:
- Actual cash value
- Cost to restore damaged property to pre-loss condition
- Cost to replace damaged property
- Lowest dollar value listed on the company’s books
32
Q
Jeweler’s Block: Insured’s Duties
A
Insured must:
- Maintain safeguards in place at policy inception
- Take yearly inventory
- Keep records for 3 years of:
a. purchases
b. inventory
c. sales
d. property off premises
e. property of others on premises
