inland marine part 1
What other types of policies can be used to address bailment coverage
1. Commercial property policies 2. garagekeepers coverage
What area the interests that are covered for the bailee in a bailee coverage form.
1. Covers the interests of the bailee - the named insured under the Policy a. Their responsibility for the value of the goods of the bailor in their care, custody or control b. The bailee's investment of time and materials incurred in the repair or processing conducted on those goods c. Policy usually contains a provision that allows the settlement of a claim directly with the bailor - for the value of the goods • Any claim settled directly will also settle the claims of the bailee - in other words, we won't pay more than the actual amount of the loss based on the insurable interests of each party
What is the definition of bailment?
1. Describes the relationship where one person accepts personal property from another for a particular purpose AND 2. Promises to return the personal property in the same or better condition
What are the reporting conditions on a bialee coverage form?
1. Details the policy conditions applicable when coverage is written on a reporting basis - it is rare but it can be written on a blanket limit. 2. Named insured must submit reports for the period no later than 30 days after the end of the reporting period 3. Premium will be calculated based on the amounts reported 4. Generally includes penalties for failing to accurately or timely reporting
What are the coverage territories on the bailee coverage form?
1. Generally the United States of America, including its territories or possessions, Canada and Puerto Rico • Example of when you have left is if you take your computer to get serviced and it is sent to india for repair. You have left the coverage territory. 2. May need to consider broader coverage territory if processing is done outside the stated coverage territory
How is payment of losses handled on a bailee coverage form?
1. Insurer has several options available a. Pay the value of the lost or damaged property b. Pay the cost to repair the damaged property c. Rebuild, repair or replace the property with property of like kind or quality d. Take any part of the property at an appraised or the agreed value (Salvage)
What are the two ways that bailee coverage is provided?
1. Legal liability basis 2. Direct damage basis
What are the covered locations of a bailee coverage form?
1. On described premises 2. On the premises of others • For example: where the named insured has sent the customer's property for servicing or processing 3. Anywhere in the coverage territory when being transported
What are some of the exclusions under a bailment coverage form?
1. Theft 2. Misdelivery 3. Voluntary parting 4. Damage caused by processing
What is the theft exclusion on the bailee coverage form and what are its provisions?
1. Theft of property left overnight in or on a vehicle, unless inside a locked building and there are signs of forced entry. a. It has to be inside the building and the building has to have signs of forced entry This is examples like moneys and securities coverage on brinks trucks, you don't want those businesses to leave them outside where they are a increased chance of being broken into. Or if the vehicle is inside the building, its to prevent employees from stealing the money. That way there has to be forced entry into the building and in to the car.
What are some property not covered under the bailee form
1. air craft/watercraft 2. contraband 3. Furs 4. Juwelry, stones, and metals 5. money and securties 6. no charge for services 7. vehicles 8. waterborn property 9. accounts, bills, currency
What are the interests that are covered by the bailor
2. Covers the interest of the bailor a. They may have their own coverage on the goods b. The bailor's policy will contain a provision that prevents protection for any bailee (Condition - No Benefit To Bailee) c. If loss occurs, the bailor's own policy will pay the loss (if covered) d. Bailor's insurance provider will then attempt subrogation against the bailee
how is the payment of loss of property of others handled on the bailee coverage form?
2. For property of others, the insurer has the right to adjust the loss directly with the customer or with the named insured on the owner's behalf, solely at the insurer's discretion a. Carrier is able to settle with the bailee or the bailor. Then the two can just deal with each other. Carrier makes the choice.
What is the misdelivery exclusion on the bailee coverage form and what are its provisions?
2. Loss resulting from misdelivery a. one common thing that underwriters ask for when you are trying to get coverage for this, is that you have controls to check the licenses of the people you are delivering to. Like FEDEX may require it for high dollar items.
If a customer sues the named insured on a bailee coverage form, what happens?
3. If the customer sues the named insured, the insurer has the right, but not the duty, to defend the suit. If the insurer agrees to defend the suit, the insurer will pay for all the costs incurred in that defense
What is the voluntary parting of property exclusion on the bailee coverage form?
3. Voluntary parting with property due to trick, scheme or fraud
What is the damage caused by processing exclusion on the bailee coverage form?
4. Damage caused by processing performed by the bailee • This is business risk and insurance is not designed to guarantee your work • An example of this is you are a dry cleaner and you place the clothes in the wrong type of cleaning chemicals which causes damage to the item. There is no coverage here because this is not designed to cover "your work".
What is a bailor?
Bailor is the owner of the personal property given to the other party
Why is commercial property policies not a goo d way to insure bailment?
Because it only provides limited coverage. It does not include off premises or in transit
what is the definition of covered property in a bailee form?
Cover direct physical loss caused by a covered peril to property of others that is in "your" care, custody, and control for processing. Processing, includes but is not limited to finishing, repairing, restoring, adjusting, or other similar work upon the property.
What is a bailor coverage?
Covers the named insured's property while in the possession of others • May also cover similar property of others in the named insured's possession or similar property of others in the possession of another party for which the named insured is responsible
What is the benefit of direct damage vs legal liability bailee coverage?
Direct damage does not require for you to be legally liable before coverage activates. This is ideal if your goal is to save the customer you can pay for a customers loss without them sueing you
What type of property is excluded by the bailor coverage?
Excludes property on premises owned, leased, rented or otherwise occupied by the named insured • This is for when you are taking care of others property. So it will not cover items that are owned by your or leased to you. • Building And Personal Property Coverage Form will provide the coverage for this exposure
What is a filed form in a inland marine coverage?
Filed or controlled forms - generally filed with who has control of insurance. State commissioner is a example.
What is a non filed form in a inland marine policy?
Non filed or unfiled forms- they are not restricted by the states insurance commissioner.
What are the coverage areas under a bailee coverage while being transported?
a. Between named insured premises, including branches b. Between named insured's premises and premises of others for the purposes of servicing or processing c. Between the named insured's premises and the customer's premises
What are the penalties for failing to accurately or timely report on a bailee coverage form?
a. If reports are not submitted, the most the insurer will pay is a reduced percentage of the amount of the loss b. If reports are less than the full value, the insurer will only pay a portion of the loss calculated by dividing the amount reported by the amount that should have been reported times the amount of the loss c. If the reported amount in larger than the Limit Of Insurance, the most the insurer will pay is still the Limit Of Insurance but insured will pay premium for the amount reported
how does the legal liability bailee coverage form trigger?
b. In order to trigger coverage, the bailee must be legally liable for the damage to the bailors property (Example: Warehouse Operators Legal Liability) • If it was an act of god then there may be no coverage at all. • If you are not legally liable then this policy is not going to activate • A receipt can be classified as a trigger that says who is legally liable.
Generally what does the legal laibility basis include coverage for?
c. Generally coverage includes the value of the bailees investment in labor and materials • Would you pay the bailee for a repair bill when the goods don't get returned to you in at least the condition they were in when the bailment was created?
What is the trigger of direct damage bailee coverage?
c. Since coverage is on a direct basis, the bailee does not have to be legally responsible for the damage to the bailor's property (Example: Bailee Customers Goods Floater) • Care, custody or control establishes the responsibility • Payment is made without regard to liability in order to maintain the goodwill of the customer
What is a bailee?
d. Bailee is the party that accepts the personal property of others
What is the requirement for bailee exposure to exist?
for there to be bailee exposure, the bailor has to take some of their property. If a tailor just takes measurements of someone and then makes a suit, there is no bailee exposure since you did not take any physical item from them. Now, if you take a suit from the and adjust it based on their measurements, then yes there is bailee exposure then.
how is bailor coverage typically written?
it is written on a schedule basis so we list exactly what property we are going to cover and not.
What drives the need for coverage for bailment exposure?
often driven by an exclusion that many polices have of: a. Commercial General Liability Policy because of(Exclusion j.) - Care, Custody OR Control. Which excludes coverage for items that are under your CCC. b. No Benefit To Bailee Language Condition in many types of property policies will create a need for bailment coverage
in laymen terms, what is a non filed form really mean?
that the commissioner is not going to control the coverage or the rates. The carrier will still send the form to the commissioner to review as they want to know what exactly is being sold to the consumers.
How is bailee coverage typically written?
typically it is written on a open peril basis.
Does direct damage bailee coverage includes value of the investment and materials
yes
What is an example of the need to address the coverage area for the bailee coverage.
• A good example of this is lets say you are a business that handles laundry clean up an pick up/drop off at the customers location. You go to you customers location to pick up the goods. They can be damaged there. You coverage territory could be at the customers premise. It could get damaged while being transported from the customers location to the cleaning facility for processing. That travel locations could be coverage territories that need to be considered. It could also be damaged on your location while being cleaned. These floaters are designed to cover all of these locations if they are needed by the customer.
What are examples of inland marine coverages that are able to cover a bailment exposure?
• Bailee Customers Goods Floater • Bailee Processor Floater • Cargo Coverage Forms such as Motor Truck Cargo • Furriers Customers Floater • Warehouse Operators Legal Liability
What are examples of classes benefit from being on a inland marine form due to the underwriters need to be flexible?
• Contractors Equipment • Transportation Policies • Builders Risk Policies • Installation Floater
What is an example of bailement for the benefit of the bailor and who has the duty of care?
• Ex: The coatroom of a restaurant. This is for the benefit of the bailor (owner of the coat) and the Bailee has strict responsibility of the property. • The bailee owes the bailor a low duty of care
What are the characteristics of a non filed form?
• Exposures not uniform even within the same industries • Exposures too unique or diverse to reasonably require insurers to insure them on other than a case by case basis • More flexibility on how coverage will be provided - terms and conditions are negotiable • Underwriters are more willing to negotiate the coverages. But it has to be cost effective for the carrier.
What are the three types of bailments?
• Gratuitous bailment for the benefit of the bailor (I store someone's property for no charge). For the benefit of the owner of the property. • Gratuitous bailment for the benefit of the bailee (I borrow another's tool for my own use) • Bailment for mutual benefit that benefits both the bailor and the bailee (I agree to take your clothes into my possession to clean them)
What types of inland marine floaters can cover the CCC exposure for the named insured even though its not their primary purpose.
• Installation Floater • Jewelers Block • Furriers Block • Riggers Floater • Valuable Papers and Records
What are some examples of policies that are not designed to cover property that is on the premises of the named insured (rented or occupied?
• Patterns and Dies Floater • Garment Contractors Floater
What are the outcomes of a filed/controlled forms?
• Rates filed with the insurance commissioner or financial department of that jurisdiction. • Coverage forms filed. They will say this is what it is and what we will charge. - some examples • Accounts Receivable • Valuable Papers and Records • Signs • Commercial Articles • Organizations that make the filings on behalf of their members include American Association of Insurance Services (AAIS) and Insurance Services Office (ISO)
What is the outcome of non filed inland marine forms.
• Rates not filed • Coverage forms not filed
What are the characteristics of a filed form?
• Relative uniformity of exposures. Regardless of industry, the exposures are similar • General agreement by the insurance industry concerning appropriate coverage provisions, underwriting rules, and rates • Static and set between all carriers. Jewelry floater will be the same with every carrier • Tend to be specialty coverages. Accounts receivable insures only accounts receivable, for example • Inflexible terms and conditions. Policy terms and conditions are dictated by the filings made with each jurisdiction - Non negotiable Also included the rating format
What is an example of bailement for the benefit of the bailee and who has the duty of care?
• Someone (bailor) loans you a tool (bailee) to use for a project. If you damage it, you are responsible for it. • Bailee owes the bailor a high duty of care.
What does bailment create?
• This creates an obligation, whether implied or express • Creates an obligation to act in good faith to ensure that any contract terms are met
What is an example of bailement the mutual benefit of the bailor and the bailee? Who has the duty of care?
• Typical business transaction. Example: You give the clothes to a dry cleaner and they return them cleaned to you. You benefit by having clean clothes while they benefit by getting the money for the service. • In these relationships, it is a mutual benefit and requires a reasonable duty of care from both parties.
