Chapter 12- Commercial Marine and Aviation Insurance

Installation Floater

-Covers property in transit (electrical, plumbing, or heating equipment) -Awaiting installation -Coverage ends when installed or the interest of the insured ends

Electronic Data Processing Coverage Form (Computer Systems Coverage Form): Coverage not provided for

-Property leased to others and located off-premises -Accounts, bills, records, and documents -Portable computers, including laptops, notebooks, and tablets -Stock in trade, which is the merchandise kept on hand for sale

Motor Truck Cargo Carriers Coverage Form: Property is only covered if

-While in the carrier's custody, until the property is delivered to its destination -When loaded or unloaded at a facility, such as a warehouse, storage area, or terminal (up to 72 hours, excluding sundays&holidays) -While being returned to the named insured if the property is not delivered

Commercial Articles Coverage Form: If additional equipment is acquired during the policy period, coverage is automatically provided for up to ____________________ days. During that time, the insurer will pay for loss to the newly acquired property, up to the lesser of 25% of the total limit of insurance shown in the Declarations for that type of property, or $10,000. The insured must report the property to the insurer within those 30 days and pay any additional premium in order for coverage to continue.

30 days

Contractors Equipment Floater: If additional property is acquired during the policy period, coverage is automatically provided for up to __________.

60 days

An entity that owns a fleet of trucks on which the entity ships its own goods should purchase:

A Motor Truck Cargo Owners Coverage Form

The form that excludes losses that result from dishonest acts of an insured or the insured's employees, bookkeeping or accounting errors, and alteration or falsification of records to conceal wrongful acts.

Accounts Receivable Coverage Form

The policy pays for the uncollected sums, plus the expenses involved with reconstructing records, along with extra collection fees. Coverage also pays for interest on loans and other reasonable expenses.

Accounts Receivable Coverage Form

Excluded property for Bailees Customers Coverage Form

Accounts, bills, records, documents, deeds, money, or securities Animals, birds, or fish Autos, trucks, trailers, aircraft, or watercraft Furs, jewelry, watches, precious or semiprecious stones, gold, or silver Property shipped by mail

Covered property does not include

Accounts, currency, money, securities, bullion, jewelry, furs, stamps, live animals, vehicles carrying the property, works of art, or contraband. Import and export shipments are only covered when the applicable Ocean Marine coverage ceases.

Inland Marine Transportation Coverages: Common Carriers are not liable for

Acts of God, such as storms or other natural events Acts of a public enemy, such as war Exercise of a public authority, such as confiscation or quarantine of property Fault or neglect of a shipper, such as poor packaging Inherent vice, meaning a condition in the property itself that causes its own damage

Signs Coverage Form

Add insurance for signs, street clocks, and similar property in the insured's care This form can be used to cover neon signs, automatic or mechanical signs, billboards, and ordinary fixed or plastic-faced signs.

Transit Coverage Forms

Annual Transit - used to protect all property/shipments being shipped or received from other shippers throughout the year via any common carrier. Named perils: fire, windstorm, collision, and theft Trip Transit - used for irregular shipments, wish to insure a single shipment. Open and named perils coverage is available.

A business receives and sends out a number of interstate cargo shipments throughout the year, and wants to protect the wide variety of property on these shipments for loss or damage caused by specific perils. Which transit coverage form should the business purchase?

Annual Transit Coverage Form

The _________________ is for insureds who ship or receive cargo, not the carrier.

Annual Transit Coverage Form

Loss Conditions for Commercial Inland Marine: Transfer of Rights of Recovery Against Others To Us

Any person or organization that receives a claim payment must transfer subrogation rights to the insurer. However, the named insured may waive those rights prior to a covered loss.

Uncontrolled lines of coverage/nonfiled lines

Are those that use policy forms, endorsements, and rates that are not filed with or through any rating bureau or state department of insurance Developed by individual insurers for individual risks and, consequently, the forms and coverage differ from insurer to insurer

Equipment Dealers Floater: DOES NOT COVER

Autos, motorcycles, aircraft, or watercraft accounts, bills, money, etc. property in the course of manufacture prop leased/rented out of insured's custody furniture, fixtures, and office supplies

Excluded for coverage for Contractors Equipment Floater

Autos, trucks, aircraft, or boats Plans, blueprints, or designs Property while waterborne, except coverage is given back for property on ferries Property underground or under water Property loaned, leased, or rented to others Personal property of employees

Typical exclusions include wear and tear, electrical breakdown, war, acts of terrorism, excessive heat, hijacking, and confiscation by a government authority

Aviation Insurance: HULL Insurance

Typical exclusions include expected or intended injury, bodily injury to employees covered by Workers' Compensation, contractual liability, injury or damage caused by the application of fertilizers or similar substances, and injury or damage caused by pollution or noise.

Aviation Liability Insurance

Eligible property for Marine Insurance must contain an element of transportation and property MUST

Be in transit, be moveable, bear a relationship to transportation or communication

A ______________________ is both a contract between the carrier and shipper and a receipt for goods the carrier accepts into its care. If the carrier is a trucker or motor carrier, Form MCS-90 serves as proof of financial responsibility, which is regarding auto (not cargo) insurance.

Bill of Lading

Indicates whether the shipment has been prepaid or if the carrier should collect a specified amount from the receiver.

Bill of lading

The uniform document that common carriers are required to issue to the shipper of the goods being transported is called a:

Bill of lading

Aircraft liability policies include three types of liability coverage, and the insured may select any combination of them

Bodily injury or death sustained by third parties other than passengers, such as people on the ground Bodily injury or death sustained by passengers Damage to property owned by third parties

P&I covers

Bodily injury to or death of passengers or people onshore caused by the insured or the crew Cargo lost or damaged through the insured's negligence Damage to other property, including fixed objects, such as wharves and docks Damage to other vessels, other than the collision coverage provided by hull coverage Clean-up and removal of wreckage Damage to property on board the insured vessel when caused by collision Expenses resulting from quarantine Work-related injuries to crew members(that work comp doesn't cover)

The Collision or Running Down Clause in Ocean Marine insurance covers:

Collision damage to another vessel

The _____________________ Coverage Form is an Inland Marine form that provides worldwide coverage for cameras, musical instruments, and their related equipment when used for business or commercial purposes.

Commercial Articles

Inland Marine forms can be used as stand-alone policies, or they can be added as a coverage part to a ____________________________.

Commercial Package Policy

Released Bill of Lading / Released value bill of lading

Contains a stated value that limits the carrier's liability on the shipment and is agreed upon by the carrier and the shipper

Contractors Equipment Floater

Contractors equipment coverage provides open perils coverage on the insured's equipment, such as mobile tools, equipment, and machinery. This includes small hand tools, mobile equipment, forklifts, compressors, and generators that are used in the course of contracted work. Coverage is also provided for similar property of others in the insured's care.

Aviation Insurance

Coverage offered by select insurers to cover the airplane itself, as risks related to aircraft are excluded from other commercial insurance policies.

Hull Insurance: Inchmaree Clause

Covers direct damage caused by the bursting of boilers, the breaking of propeller shafts, or loss due to faults or errors in navigation by the crew

Classes of property under Marine Contracts: Instrumentalities of Transportation or Communication

Covers items that are often at a fixed location because they play an important role in the transportation and communication industries..... example: bridges, tunnels, towers, piers, etc.

Jewelers Block Coverage

Covers jewelry held as stock by jewelry retailers, wholesalers, and manufacturers, including similar property of others in the insured's care and stock that has been sold but not delivered

In Ocean Marine Insurance, Protection and Indemnity (P&I) Insurance

Covers legal liability imposed on the insured shipowner for damages arising out of the operation of the insured vessel

Cargo insurance

Covers physical damage losses to merchandise in transit. Cargo insurance can be written on an open or named perils basis and is provided during the time the insured (either the cargo buyer or seller) has an interest in the property.

Hull Insurance

Covers physical damage to the ship itself, including fittings and machinery of the vessel

Electronic Data Processing Coverage Form (Computer Systems Coverage Form): Protects electronic equipment from

Electrical arcing and power surges, temperature and humidity changes, and mechanical breakdown

Warranties in Ocean Marine Insurance

Express: written into the policy contract, such as the exclusion of coverage for war, strike, riot, and civil commotion Implied: Legality- goods shipped must be legs Seaworthiness- ship must be seaworthy and crew must be competent No Deviation in Voyage- ship must sail its filed course unless to avoid a storm, save a life, or get medical relief for someone on board

The period during which the insured has interest in the property may differ depending on how the cargo is shipped. If the cargo is shipped___________________________ , the buyer takes interest in the property as soon as the trip begins

FOB (Free on Board) Point of Shipment

The period during which the insured has interest in the property may differ depending on how the cargo is shipped. If the cargo is shipped _______________, the seller retains interest in the property until after the trip is completed

FOB Point of Destination

With respect to Marine policies, the term uncontrolled means:

Forms that are not standardized by any rating bureau

__________________ provides indirect loss, such as when cargo suffers a partial loss and the insured cannot be refunded prepaid freight charges or import duties.

Freight insurance

Coverage may be written on an open or named perils basis, though named perils is more common, insuring against fire, lightning, explosion, heavy weather, piracy, jettison (throwing cargo overboard), and other sea perils

HULL Insurance

Ocean Marine insurance provides three main property coverages for the______________, ______, and ___________.

Hull, Cargo, and Freight

Loss Conditions for Commercial Inland Marine: Other Insurance

If other insurance with the same plan, terms, conditions, and provisions applies to the loss, the insurer will pay its pro rata share. Otherwise, coverage is excess insurance.

Loss Conditions for Commercial Inland Marine: Recovered Property

If property after the loss has been settled, other party must be notified. Insured can take property back and insurer will pay to fix the recovered property

Freight Insurance/ Freight Revenue Insurance

Indirect loss coverage that protects the shipper, who is required to prepay freight charges and/or import duties, in the event that the voyage is not completed. Coverage also applies in the event that the goods have sustained partial damage and the shipper is not able to secure a refund of the duty on the damaged goods.

Goods being transported would be covered by which of the following types of insurance?

Inland Marine

___________________ provide open perils coverage that is adapted to the class of property insured.

Inland Marine Policies

The Furniture Company would need an Installation Floater to protect the appliances that are being installed in customers' homes. Without this coverage, physical damage to the appliances in transit to the destination and during the installation would not be covered. EXAMPLE OF:

Installation Floater

The _______________ is designed to cover contractors for the property they are installing on contracted jobs while that equipment is being transported or being installed on the job site.

Installation Floater

Bridges, tunnels, transmission towers and their radio and television transmitting equipment, piers, wharves, slips, docks and dry-docks, marine railways, pipe lines, outdoor cranes, loading bridges, and similar types of equipment are categorized as

Instrumentalities of Transportation or Communication

Loss Conditions for Commercial Inland Marine: Apr, Sets, or Parts

Insurer may repair or replace any part to restore it to its original value, or pay the difference between the value of the pair or set before and after the loss. If the property has several parts, insurers pays only value of damaged part

Loss Conditions for Commercial Inland Marine: Loss Payment

Insurer will give notice of its intentions to pay or not pay a loss within 30 days of receiving the proof of loss.

Electronic Data Processing Coverage Form (Computer Systems Coverage Form)

Insures computer hardware and associated equipment used for a business, as well as data and media, including software, discs, tapes, and cells. Computer equipment includes air conditioning, fire suppression equipment, and electrical equipment used exclusively in the insured's computer operations.

Ocean Marine Insurance

Insures the transportation of goods and merchandise (imports and exports) by vessels crossing domestic and foreign waters, as well as any inland or aviation transit connected with the shipment.

Loss Conditions for Commercial Inland Marine: Legal Action Against Us

Legal action may be brought against the insurer as long as the policy terms have been complied with and the action is brought within 2 years after first having knowledge of the direct loss.

Hull Insurance: Collision or Running Down Clause

Legal liability coverage for physical damage to another vessel or its cargo resulting from collision

Loss Conditions for Commercial Inland Marine: Reinstatement of Limit After Loss

Limit of insurance will not be reduced by the payment of any claim, except for total loss of a scheduled item. In that instance, the insurer will refund the unearned premium on that item.

______________________ is designed for property that is portable, or that is being shipped from place to place. Generally, fixed property, such as buildings, is not eligible, except when it is part of the transportation or communication industries (such as bridges and tunnels).

Marine Insurance

Classes of property under Marine Contracts: Exports

May be insured at any location, and they acquire their character when being prepared for export. Exports must retain that character, unless diverted for domestic trade.

The __________________ forms are Inland Marine insurance, and coverage does not apply while property is waterborne, which would require Ocean Marine insurance.

Motor Truck Cargo Carriers Coverage

A company owns a fleet of commercial trucks and acts as a hired carrier for transporting goods belonging to other entities. To protect the property being transported, the carrier should purchase which insurance form?

Motor Truck Cargo Carriers Coverage Form

The ______________________ is an Inland Marine coverage form to protect cargo in the insured's care when the insured acts as a carrier, but does not own the cargo itself

Motor Truck Cargo Carriers Coverage Form

Property coverage for cargo, when the insured carrier owns the truck itself, but the cargo belongs to another entity

Motor Truck Cargo Carriers Form

Property coverage for cargo, when the insured carrier owns both the truck and the cargo inside of it

Motor Truck Cargo Owners Form

Inland Marine policies are generally written on a(n):

Open perils basis

Commercial Inland Marine Insurance

Primarily cover property on land while it is away from the owner's premises

Inland marine insurance provides coverage for

Property in transit over land, like the merchandise being transported by a trucker.

Aviation Hull Insurance: Ground and Flight coverage/All Risk coverage

Protects the hull on an open perils basis when the aircraft is motionless on the ground, while the aircraft is taxiing, and while the aircraft is in flight

Aviation Hull Insurance: Ground Coverage/Not in Motion Coverage

Protects the hull when the aircraft is on the ground and not in motion. Covered perils include fire, theft, and vandalism.

Aviation Hull Insurance: Ground Including Taxi coverage/Not In Flight coverage

Protects the hull when the hull is motionless on the ground and adds coverage for hull losses that occur during taxi (takeoff)

Aircraft liability insurance

Provides coverage for the insured's legal liability for bodily injury or property damage that arises out of the ownership, maintenance, or use of an aircraft.

Accounts Receivable Coverage Form

Provides insurance when the insured's business records are destroyed in a loss caused by a covered peril, and the business is unable to collect money it is owed.

Marine Insurance Foundations (Ocean Marine)

Provides protection to property being transported by vessels crossing domestic and foreign waters, such as oceans, rivers, and lakes, and it includes the inland or aviation transit connected to that shipment by water. Provides protection for the vessels carrying the property.

Commercial Articles Coverage Form

Provides worldwide insurance for cameras, projection machines, films, musical instruments, related equipment, and similar property of others in the insured's care when these types of property are used for business or commercial purposes. Example: Pro photographer insuring their cameras

A contract and receipt for cargo accepted into the carrier's care, making the carrier liable for a stated value of cargo

RELEASED bill of lading

Cargo Insurance: Average Losses

Refer to partial losses, and these losses are subject to different coverage provisions GENERAL AVG. LOSS: sustained from voluntary sacrifice of cargo or from expenses incurred by one party for everyone's benefit, such as throwing cargo overboard in order to save the ship PARTICULAR AVG. LOSS: accidental partial losses sustained by a specified vessel or specified cargo, which affect one party's particular interest, meaning loss is not shared

This bill of lading is used when the shipper has decided in advance to immediately release their hold on the cargo, whether payment has been made to them or not

Released bill of lading

A contract and receipt for cargo accepted into the carrier's care, making the carrier liable for the full value of cargo

STRAIGHT bill of Lading

Classes of property under Marine Contracts: Domestic Shipments and Property in Transit

Shipments on consignment, for sale or distribution, for approval or auction, while in transit, while in the custody of others, and while being returned NO coverage for shipments on property owned by owner of products

Coverage Options for Jewelers Block Coverage:

Show Windows Coverage and Money Coverage Option

This bill of lading is used when payment has been made to the carrier in advance of the shipment, and it requires the carrier to deliver the merchandise to the appropriate party.

Straight Bill of Lading

Controlled lines of coverage/filed lines

Those that use policy forms, endorsements, and rates that are filed by insurers with the departments of insurance in each of the states where they write insurance Insurers are able to develop forms and rates for large numbers of insureds Governed by rules in Commercial Lines Manual/approved manuals

Hull coverage written on a ________ _____covers the vessel for a specific period of time, usually 12 months.

Time Policy

Valuable Papers and Records Floater

Valuable papers and records coverage provides insurance for the destruction of valuable papers and records by a covered cause of loss. Examples of covered property include maps, blueprints, manuscripts, films, illustrations, abstracts, deeds, books, mortgages, etc. Money, securities and property held as samples or for delivery after a sale, and property in storage off the premises are NOT covered.

Loss Conditions for Commercial Inland Marine: Valuation

Value of property is the lesser of the actual cash value determined at the time of loss, the cost of reasonably restoring the property to its original condition, and the cost to replace the property with substantially identical property.

Hull and cargo insurance are typically written on a __________ basis. The valuation of the cargo includes the stated value of the invoice, import duties, and freight charges.

Valued

Hull coverage written on a _______________ covers the vessel for a specific voyage.

Voyage Policy

Inland Marine Transportation Coverages: Motor Truck Cargo Carriers Coverage Form is used when

a carrier, who owns the motor truck itself, has accepted the property of others for transport under a bill of lading or other shipping receipt

Bill of Lading

a legal contract and receipt that defines responsibility for goods while they are in transit (whether by land, sea, or air)

covers the insured's uncollectibles from customers due to a direct physical loss of the insured's business records

accounts receivable coverage form

The value of computer equipment will be either the cost of replacing the equipment with new property that is functionally identical to the lost property or, if the lost property is not repaired or replaced, the ______________ of the lost property. The value of data is the actual cost to reproduce it. The value of media is the cost to repair or replace media with substantially identical property.

actual cash value

Two basic coverages provided by Aviation insurance are __________ ______and aircraft liability, which may be purchased separately or together.

aircraft hull

To be eligible for Marine insurance,

all property must contain an element of transportation. Specifically, the property must be in transit, be moveable, or bear a relationship to transportation or communication.

For common carriers, a __________________ is a contract between the carrier and shipper, and a receipt for goods accepted in the carrier's care

bill of lading

Commercial lines property floaters insure moveable property pertaining to a ______________________, _____________________, or __________________

business, profession, or occupation

Inland Marine Coverage Forms are divided into two lines of coverage:

controlled (filed) and uncontrolled (nonfiled)

Show Windows Coverage Option

coverage for theft losses to covered property in show windows at the insured's premises, including coverage for damage resulting from the smashing or cutting of show windows during an attempted theft

Coverage forms insuring moveable property

floaters

Moveable property is sometimes referred to as

floating property

Loss Conditions for Commercial Inland Marine: Appraisal

insured and insurer disagree on the value of the property or the amount of loss, either may make a written demand for an appraisal of the loss.

Loss Conditions for Commercial Inland Marine: ABANDONMENT

insured may not abandon property to the insurer.

Loss Conditions for Commercial Inland Marine: Duties in the Event of Loss

insured must give prompt notice to the insurer of any loss or damage, including a description of the property involved, and the police must be notified if a law may have been broken. The insured should also take reasonable steps to protect the property from further damage and keep a record of expenses necessary to do so. A sworn proof of loss is due to the insurer within 60 days of the insurer's request. As often as reasonably required, the insurer may inspect the property or the insured's books and records. The insurer may also examine any insured under oath. The insured must immediately send copies of any legal papers and cooperate with the insurer's claim investigation or settlement.

The Electronic Data Processing Coverage Form covers computer hardware and associated equipment, like printers and systems used exclusively in the __________________, such as air conditioning or electrical equipment. Portable computers, like laptops and notebooks, are excluded from coverage, as are accounts, bills, records, and documents.

insured's computer operation

Straight bill of lading

legally responsible for the full value of transported goods in their care

Contractors Equipment Floater: Insurer will pay for loss to the newly acquired property, up to the _____________ of the total limit of insurance shown in the Declarations for all scheduled equipment or ____________. The insured must report the property to the insurer within those 60 days and pay any additional premium in order for coverage to continue.

lesser of 25%, 50,000

Classes of property under Marine Contracts: Imports

may be insured at any location and must remain segregated from other property so it can be easily identified.

Commercial Inland Marine Forms and Floaters: Bailees Customers Coverage Form provides _______________ coverage for covered personal property of others while it is in the care, custody, or control of the insured

open perils

Commercial Inland Marine Insurance is written on an ________ basis

open perils

When all three of these coverages are selected, a combined single limit of insurance will apply on a __________________ basis

per occurrence

Policyholders may purchase (or insurers may require) a sublimit of coverage that limits loss payments on a ______________ basis, which only applies to passengers, or a __________ basis, which would apply to passengers and other third parties.

per passenger; per person

Aircraft hull insurance provides coverage for

physical damage to the airplane, including its frame, engines, controls, and navigation and communication equipment.

Jewelers Block Coverage: DOES NOT COVER

property @ a exhibit promoted by public authority/trade association property in show cases away from premises worn by officer, director, employee, family, messenger

Equipment Dealers Floater

provides insurance for property consisting primarily of mobile agricultural and construction equipment, including property of others in the dealer's care, custody, or control, such as binders, reapers, harvesters, tractors, bulldozers, and road scrapers

Preservation of Property Additional Coverage

provides that the insurer will pay for any direct physical loss to covered property while it is being moved or temporarily stored at another location to protect it from a covered loss; 3o days after the property is first moved

Coverage only applies in Motor Truck Cargo Owners Coverage Form while_____________________________.

the property is actively in transit BUT doesn't include accounts, currency, money, securities, gold, jewelry, furs, live animals, vehicles carrying the property, tarpaulin covers, works of art, or contraband

Money Coverage Option

theft coverage for money stored in locked safes or vaults that are located on premises and are broken open.

Property at fixed locations is only insured by Inland Marine forms when it is part of the_____________________ or _______________ industries

transportation or communication

Signs Coverage Form: This form will not apply if loss or damage occurs during _________________________,_____________________,____________,______________

transportation, installation, repairing, or dismantling

Motor Truck Cargo Owners Coverage Form

used when the named insured owns both the motor truck itself and the cargo being carried by the motor truck

The three implied ______________ in Ocean Marine Insurance are Legality, Seaworthiness, and No Deviation in Voyage

warranties