ISO Theatrical Property Coverage Form

ISO THEATRICAL PROPERTY COVERAGE FORM ANALYSIS

(August 2018)

 

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INTRODUCTION

The Insurance Services Office (ISO) Theatrical Property Coverage Form insures scenery, costumes, and theatrical property. This property must have been, is being used, or will be used in the production listed on the declarations. Similar property of others in the named insured's care, custody, or control, or on which it owes payments can also be covered. Coverage can be written for one specific production or on a blanket basis that covers all listed productions.

ELIGIBILITY

Any theatrical production or play is eligible. Even though they may appear to be theatrical productions, carnivals, circuses, and rodeos cannot use the form. In addition, costume rental companies, or theatrical supply houses are not eligible for coverage under this form.

POLICY CONSTRUCTION

ISO Theatrical Property Coverage requires at least these five forms:

Related Article: IL 00 17–Common Policy Conditions

Related Article: CM 00 01–Commercial Inland Marine Conditions

Note: Theatrical property coverage may be issued as a stand-alone, monoline inland marine policy or as part of a commercial package policy.

CM DS 16–ADVISORY THEATRICAL PROPERTY DECLARATIONS

CM DS 16–Advisory Theatrical Property Declarations contains the following information:

Policy Number

The policy number is entered in the space provided.

Effective Date

The effective date of coverage is entered in the space provided.

Premiumfor This Coverage Form

The premium for Theatrical Property Coverage is entered in the space provided.

Rate

The rate that applies is entered in the space provided.

Limits of Insurance

The following information must be provided:

Note: Whenever the separate or blanket limits are adjusted, the All Coverage Property at All Locations should be evaluated in order not to have an unintentional capping of coverage.

Deductible

The deductible is $500 unless a different amount is entered in the space provided.

Coinsurance

A coinsurance percentage or the words “No Coinsurance” must be entered in the space provided. The coinsurance percentage is 80% unless a different percentage is entered in the space provided.

Special Provisions

Any special provisions are entered in the space provided.

 

TheatricalProp141

Example of a production that this coverage form can insure

CM 00 29–THEATRICAL PROPERTY COVERAGE FORM ANALYSIS

Note: This analysis is of the 01 13 edition. Changes from the 03 10 edition are in bold print.

Introduction

CM 00 29 opens by stating that certain provisions restrict coverage and encourages the named insured to carefully read the policy to understand what is covered, what is not covered, and to determine its rights and duties. It highlights that the insurance company uses the terms you and your to refer to the named insured that is shown on the declarations and the terms we, us, and our refer to the insurance company that provides coverage.

A. Coverage

The insurance company pays for direct physical loss or damage to covered property from a covered cause of loss.

1. Covered Property

 

Only theatrical property that is part of a production is covered. It may have been part of, is being currently used in, or is planned to be used in a production. The property may be owned by the named insured or be owned by others but under the named insured’s care, custody, or control. It may also be property for which the named insured has made a partial payment.

Scenery and costumes are considered theatrical property but covered property it is not limited to only those items.

2. Property Not Covered

There is no coverage for the following property:

a. Buildings or any improvements and betterments to those buildings

b. Vehicles. The only exception is a vehicle that is used on stage as part of the production

c. Jewelry but this is limited to precious or semi-precious stones, gold, silver, platinum, and other precious metals or alloys.

Note: This means that costume jewelry without precious stones or metals is covered property.

d. Money, securities, bills, deeds, transportation or admission tickets, notes, accounts, and evidence of debt

e. Animals

f. Contraband. These are goods that are illegal to possess or that are legal but are in the course of illegal transportation.

Note: Property excluded is noteworthy and unique relative to the class of business and other property covered. For example, most property coverage forms and policies exclude motor vehicles, but this coverage form has an exception that covers vehicles that are part of the production. Similarly, costume jewelry that does not include precious stones or metals is specifically covered to differentiate it from jewelry that does. Even though circuses and rodeos are not eligible, animals are still excluded without exception. Similarly, transportation and admission tickets, while unique to this class of business, are also specifically excluded along with other similar property.

3. Covered Causes of Loss

The covered causes of loss under this policy is direct physical loss or damage to the named insured's covered property. The only exceptions are those causes of loss that are listed and described in Section B. Exclusions.

4. Additional Coverage–Collapse

Only abrupt collapse is covered under this coverage. What abrupt collapse is and is not is described below. 

a. As used in this coverage, abrupt collapse means that the building or part of the building must abruptly fall down or cave in. As a result of such falling down or caving in, the building or part of the building cannot be occupied for its intended purpose.

b. Payment for such abrupt collapse as described in paragraph item a. is for only direct physical damage to the covered property that is inside the building. However, payment is made only if one or more of the following cause the collapse:

·         Hidden decay. This applies only if the insured was not aware of the hidden decay prior to the collapse.

·         Hidden insect or vermin damage. This applies only if the insured was not aware of the hidden insect or vermin damage prior to the collapse.

·         Defective construction material or construction methods. This applies only if the collapse occurs after a building has been built, remodeled, or renovated and depends on one of the following contributing to the collapse:

o    Hidden decay or hidden insect or vermin damage as described above

o    One or more of any of the following listed causes of loss. However, loss by them applies only if they are insured against in this coverage form and only to the manner in which they are. Fire, lightning, windstorm, hail, explosion, smoke, aircraft, vehicles, riot, civil commotion, vandalism, leakage from fire extinguishing devices, sinkhole collapse, volcanic action, breakage of building glass, falling objects, weight of ice, sleet, or snow, water damage, and earthquake are the causes of loss.

o    Weight of people or personal property

o    Weight of rain that accumulates on a roof

c. While this is additional coverage, it does not increase the coverage form's limits of insurance.

B. Exclusions

1. Primary Exclusions

The causes of loss in this exclusion do not apply to loss or damage caused directly, indirectly, or in any sequence in a chain of events that contribute to the loss. Exceptions to the chain of events condition are stated in the specific exclusion subpart. Coverage form wording emphasizes that coverage for any loss event described in these exclusions does not apply even if the event is widespread.

a. Governmental Action

Coverage does not apply if the government seizes or destroys property. This exclusion has an exception. Coverage applies to loss or damage due to such ordered acts of destruction at the time of a fire to prevent the fire's spread. The exception applies only if the insurance provided by this coverage form covers the fire.

b. Nuclear Hazard

There is no coverage for loss or damage for anything related to nuclear hazards. Reactions, radiation, and contamination are not covered. This exclusion has an exception. There is coverage if the nuclear reaction, radiation, or radioactive contamination results in fire. The exception applies only if the insurance provided by this coverage form covers the fire.

c. War and Military Action

This exclusion lists three specific warlike activities that are excluded.

Any government action taken to respond to such actions is also considered war.

2. Secondary Exclusions

There is no coverage for loss or damage caused by the following exclusions. Note that the lead-in language is not as strong or inclusive for these exclusions as the language in 1. Broad Exclusions.

Editorial note: ISO does not give titles to these exclusions. To assist in the analysis, we have provided a title to help identify the exclusion’s main intent.

a. Theft from Any Unattended Vehicle

Loss due to theft from an unattended vehicle is excluded. There are two exceptions.

 

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Example: The Traveling Troupe owns two large furniture moving vans to haul its props, scenery, and costumes to cities where it puts on plays. Normal procedures require all items to be moved and secured inside the theater building immediately. However, procedures are not followed, and some items are left on the van. The next day, the Troupe discovers that burglars got into one of the vans and removed the remaining items. This loss would have been covered except that the van was left unlocked and the burglars needed to only open the doors. Coverage does not apply because of this oversight and this exclusion.

 

b. Marring, Scratching, Exposure to Light

There are two different types of exclusion in this item.

An exception that applies to both exclusions is that if fire, lightning, explosion, windstorm, vandalism, aircraft, rioters, strikers, theft, attempted theft, or accident to vehicles that carry such property directly causes the loss, the loss is covered. This exception applies only if this coverage form would otherwise cover those causes of loss.

 

Example: The Traveling Troupe has several extensive tableware settings of china and stemware it uses with its various productions, including the current one. The moving van takes a curve too fast and overturns. When the damage is sorted out, it is discovered that several pieces of china and stemware are badly scratched. Because coverage applies when a vehicle has an accident, the loss to the damaged items is covered.

 

c. Delay, Loss of Use, and Loss of Market

Coverage under this form is direct damage coverage. Therefore, delay, loss of use, loss of market, or any other consequential loss is not covered.

d. Unexplained Disappearance

When covered property is gone and there is no obvious cause or explanation of what happened to it there is no coverage.

 

Example: The Traveling Troupe unloads its vans one night, retires for the evening, returns to the theater the next morning, and begins to unpack and arrange the property brought in the night before. They suddenly realize that the costumes are all gone. Everybody remembers bringing them in and where they placed them but now they are simply gone. There is no evidence that the building was broken into or that others were in the building overnight. In this case, the property that simply "disappeared" is not covered.

 

e. Shortage Found Upon Taking Inventory

Any loss that is discovered as a result of an inventory shortage and there is no explanation as to what happened to the property, like unexplained disappearance, is excluded. This is sometimes referred to as "inventory shrinkage."

f. Dishonest or Criminal Acts (01 13 changes)

There is no coverage for loss or damage that is due to dishonest or criminal acts (including theft) from any of the following:

(1) Acts that the named insured, its partners, employees, directors, trustees, authorized representatives or managers and members of a limited liability company commit. This also includes such acts that leased workers and temporary employees commit.

(2) Acts of managers or members of a limited liability company, if the named insured is a limited liability company

(3) Acts by anyone with an interest in the property, their employees, or their authorized representatives. This also includes such acts that their leased workers and temporary employees commit.

Note: This edition removes item (4) in the previous edition that addressed others entrusted with property for any reason. It is re-introduced in newly added exclusion l.

This exclusion applies whether the persons act alone or in collusion with others or if the acts occur during regular working hours.

This exclusion does not apply to covered property entrusted to carriers for hire or to acts of destruction by the named insured’s employees, leased workers, or temporary workers. However, loss due to theft of covered property by employees, leased workers, or temporary workers is excluded.

g. Processing or Work Upon the Property

Any loss that is discovered as a result of an inventory shortage and there is no explanation as to what happened to the property, similar to the unexplained disappearance, is excluded. This is sometimes referred to as "inventory shrinkage."

h. Artificially Generated Current

Loss or damage is excluded when it is caused by results from artificially generated electrical, magnetic, or electromagnetic energy damaging, disturbing, disrupting, or interfering with any of the following:

Examples of this excluded energy are an electrical current, charges a magnetic or electromagnetic field produces, and microwaves but are not limited to just these. There are two exceptions:

i. Voluntary Parting

There is no coverage if the named insured or someone the named insured entrusts property to is tricked or deceived into giving property away.

 

Example: The Traveling Troupe scrambles to get replacement costumes. Since it is performing in a large city, it easily gets what it needs but some costumes need cleaning. A "patron" of the theater who states that he owns a dry-cleaning establishment offers to clean the costumes without charge. The Troupe eagerly and willingly accepts this gracious gesture after everything else it has been through. Whether the costumes ever got cleaned is not known because both the patron and the costumes disappear without a trace. Of course, this exclusion applies and there is no coverage for the costumes that were willingly given away under false pretenses.

 

j. Unauthorized Instructions

Coverage does not apply if a loss occurs because the covered property was given to another person or sent to another place based solely on unauthorized instructions.

k. Neglect

There is no coverage if an insured does not use reasonable measures to save and preserve the property from further damage during and after the time of loss.

l. Theft (01 13 addition)

There is also no coverage for theft committed by anyone else entrusted with property. This exclusion applies whether a person is acting alone or is in collusion with others who committed the theft.

This exclusion applies 24 hours a day. This means that acts that occur during business hours are excluded as well as acts committed after hours.

This exclusion does not apply to covered property entrusted to carriers for hire.

Note: This exclusion was previously part of exclusion f. above. This change does not affect coverage. It makes the exclusion more visible.

3. Other Exclusions

The subparts of this exclusion are sometimes referred to as the anti-concurrent causation exclusions. These exclusions are unique in that, if a loss is covered as a covered cause of loss, apart from these exclusions, it is still covered. On the other hand, if the loss would have been excluded anyway, it is still excluded.

Editorial Note: This coverage form does not title these exclusions. The titles given suggest the exclusion’s content.

a. Weather Conditions

Coverage does not apply to loss or damage that weather conditions cause. This exclusion applies only if the weather condition contributes in any way with an excluded cause or event in 1. Primary Exclusions above that produces the loss or damage.

b. Acts or Decisions

Governmental entities and related groups make decisions and take actions that not only affect others but may also cause loss or damage. Loss or damage that results from such acts or decisions is excluded.

c. Faulty, Inadequate, or Defective Planning

Loss or damage that is due to faulty, inadequate, or defective planning, design, materials, and maintenance is excluded. An important provision is that it applies both on and away from the designated premises.

d. Collapse

Note:Collapse is initially totally excluded here but limited coverage is added back in Section 4. as Additional Coverage–Collapse.

Collapse is excluded. This means the following property conditions are also excluded:

(1) Any type of sudden caving in or falling down

(2) When the structural integrity of the building is lost or compromised. The evidence of this could be parts of the property that separate from the rest of the building or the building appearing to be in danger of caving in or falling down.

(3) Cracking, sagging, expanding, settling, shrinking, bulging, or bending, but only as they relate to items (1) and (2) above

There are two exceptions to this exclusion.

e. Wear, Tear, and Other

Loss or damage caused by wear and tear is excluded. Damage caused by qualities in covered property that causes it to damage or destroy itself is excluded. Damage due to latent defect, gradual deterioration, depreciation, mechanical breakdown, insects, vermin, rodents, corrosion, rust, dampness, heat, or cold is also excluded.

C. Limits of Insurance

The limits on the declarations are the most paid for loss or damage in a single occurrence.

D. Deductible

The deductible on the declarations must be exceeded before the insurance company pays anything. Once the deductible is satisfied the insurance company will pay up to the limit of the insurance that applies. The deductible applies on a per occurrence basis.

E. Additional Conditions

These conditions are in addition to those in IL 00 17–Common Policy Conditions and CM 00 01–Commercial Inland Marine Conditions.

Related Articles:

IL 00 17–Common Policy Conditions

CM 00 01–Commercial Inland Marine Conditions

1. Coverage Territory

The insurance company insures covered property anywhere in the United States of America, its territories and possessions, Puerto Rico, and Canada.

2. Coinsurance

This condition applies if there is a coinsurance percentage on the declarations.

The insurance company does not pay the full amount of any loss if the value of all covered property (subject to coinsurance) at the time of loss multiplied by the coinsurance percentage on the declarations exceeds the limit of insurance at all locations. The following are the steps the insurance company takes to determine the amount it pays:

Step 1: Determine the value of items, at the time of the loss, of all accounts receivable. Exclude values that are in transit.

Step 2: Multiply Step 1 by the coinsurance percentage on the declarations.

Step 3. Divide the limit for the accounts receivable subject to coinsurance by the result determined in Step 2.

Note: Stop here if the result is 1.00 or higher because no coinsurance penalty applies.Go to Step 4. only if the result is less than 1.00.

Step 4.Multiply the total amount of loss, before the deductible is applied, by the percentage determined in Step 3.

Step 5. Subtract the deductible from Step 4.

The insurance company does not pay more than the amount determined in Step 5. or the limit of insurance, whichever is less. It does not pay any remaining part of the loss.

ENDORSEMENTS

ISO has not developed any endorsements to use with the Theatrical Property Coverage Form.

UNDERWRITING CONSIDERATIONS

Coverage applies to property that is not usually kept at a single, fixed location. As a result, there are several other issues to consider and address.

Note: Evaluating and analyzing the risk is much simpler if there is a defined storage location.