AAIS Exhibition Floater

AAIS EXHIBITION FLOATER ANALYSIS

(February 2018)

 

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INTRODUCTION

The American Association of Insurance Services (AAIS) Exhibition Floater Coverage Form covers the named insured's property while it is off premises at display locations and also while it is in transit to and from the insured’s locations and exhibition locations.

The types of property exhibited can range from simple merchandise such as furniture, tools, and sporting goods to exotic property such as jewelry, furs, expensive automobiles, and live animals. Exhibitions can be held outdoors, indoors in small buildings or halls, or at large convention centers.

Coverage can be for a single show for a limited period or on an annual basis for risks that have numerous shows throughout the year.

While there is only a single Exhibition Floater Coverage Form there are two schedules of coverages available.

ELIGIBILITY

Any commercial business enterprise that exhibits or displays its merchandise or merchandise of others for which it is legally liable is eligible.

POLICY CONSTRUCTION

AAIS Exhibition Floater coverage requires the first three forms plus one of the last two:

Related Article: CL 0100–AAIS Commercial Lines Common Policy Conditions

IM 7509–SCHEDULE OF COVERAGES–EXHIBITION FLOATER–SCHEDULED EXHIBITIONS (01 12 changes)

This Schedule of Coverages is used with IM 7503–Exhibition Floater. IM 7509 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Covered Property

The description of covered property is entered in the space provided.

Scheduled Exhibitions

The location and description of the exhibition premises, its inclusive dates, and the limit are entered in the spaces provided. The 01 12 edition added quotation marks around the word Limit (“Limit”) because Limit is a defined word.

Coverage Extensions

The limit on the Schedule of Coverages for this coverage applies to all covered locations.

The limit is $5,000 unless a different limit is entered.

Supplemental Coverages

This coverage provides additional limits and additional coverage.

The limit is $10,000 unless a different limit is entered.

Deductible

A deductible amount must be entered in the space provided.

Coinsurance

One of the following coinsurance options must be selected:

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7513–SCHEDULE OF COVERAGES–EXHIBITION FLOATER–BLANKET EXHIBITION COVERAGE (01 12 changes)

This Schedule of Coverages is used with IM 7503–Exhibition Floater. IM 7513 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Covered Property

The description of the covered property is entered in the space provided.

Blanket Exhibitions Limits

This is the most the insurance company pays for loss to property on exhibit or display at a single premises.

This is the most paid in a single occurrence for loss to property on exhibit or display.

The 01 12 edition added quotation marks around the word Limit (“Limit”) because Limit is a defined word.

Coverage Extensions

The limit on the Schedule of Coverages for this coverage applies to all covered locations:

The limit is $5,000 unless a different limit is entered.

Supplemental Coverages

This coverage provides additional limits and additional coverage.

The limit is $10,000 unless a different limit is entered.

Deductible

A deductible amount must be entered in the space provided.

Coinsurance

One of the following coinsurance options must be selected:

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7503–EXHIBITION FLOATER COVERAGE FORM ANALYSIS

This analysis is of the 04 04 edition.

Agreement

The insurance company agrees to provide the coverage as described in the coverage form and on the schedule of coverages. The named insured agrees to pay the premium. The agreement between the two parties is subject to all of the coverage form's terms, conditions, endorsements, and definitions including those on the CL 0100.

Definitions

Defined terms are used throughout the coverage form. Restricting their meaning to the definition in it is how all parties have a clearer understanding of the coverage intended. Nine terms are defined:

1. You and your

The party(ies) named on the declarations as the insured.

2. We, us, and our

The insurance company that is providing the coverage.

3. Limit

The amount of coverage that is available to the insured property.

4. Pollutant

This is a broad and expansive term. It is solids, liquids, thermal or radioactive contaminants, and irritants. It includes, but is not limited to, acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. Waste includes materials intended for recycling, reclamation, and reconditioning, as well as for disposal. Visible and invisible electrical or magnetic emissions and sound emissions are also considered pollutants.

5. Schedule of coverages

Any page that is labeled as such that contains coverage information. Declarations or supplemental declarations are also included.

6. Sinkhole collapse

The earth’s surface suddenly settling or collapsing into an underground opening that was created by water acting on limestone or some other rock formation. The collapsing land’s value and the cost to fill sinkholes are not considered sinkhole.

7. Specified perils

The named perils of aircraft, civil commotion, explosion, falling objects, fire, hail, fire extinguishing equipment leakage, lightning, riot, sinkhole collapse, smoke, sonic boom, vandalism, vehicles, volcanic action, water damage, the weight of sleet, snow or ice and windstorm. Two terms need further explanation.

Falling objects does not include loss to personal property that is stored in the open. Damage to the interior of buildings or personal property that is stored in buildings by a falling object is not included unless that falling object first breaches the building's exterior.

The cracking or breaking of a part of a system or appliance that is holding water or steam causing a sudden or accidental discharge or leakage of water or steam is water damage.

8. Terms

All provisions, limitations, exclusions, conditions, and definitions that apply to this coverage.

9. Volcanic action

An airborne volcanic blast or shock waves, ash, dust, and particulate matter. However, it does not include the cost to remove dust, ash, or particulate matter that does not directly damage covered property. Lava flow is volcanic action.

Property Covered

Coverage applies to the property that is described below, subject to any exclusions or limitations.

1. Scheduled Exhibitions

a. Coverage

The named insured's property and property of others that is in its care, custody, and control are covered for direct physical loss by a covered peril only when meeting both of the following criteria:

b. Coverage Limitation

The property that is on exhibit or display is covered subject to the following restrictions:

Note: What does “to and from” mean? Does transit coverage exist only while the exhibits or displays are in transit between exhibitions or is transit coverage available when the items are being shipped to and from the main location and the exhibition?

 

Example: Penny’s display is being exhibited at five different events. Each is scheduled with appropriate dates on the schedule of coverages. Between each exhibit, the display is shipped back to Penny’s home office until the next event. Penny’s is very surprised when a claim for transit damage is denied because the display was being shipped from Penny’s to the scheduled exhibition and not between events.

 

Note: IM 7509–Schedule of Coverage–Exhibition Floater-Scheduled Exhibitions must be used when coverage is written on this basis.

 

2. Blanket Exhibitions

a. Coverage The named insured's property and property of others that is in its care, custody, and control is covered for direct physical loss by a covered peril but only while on exhibit or on display.

 

Example: Gordon's Gutters & Downspouts attends a roofing industry convention and displays its products there. Gordon has permission to display a number of gutter guard systems manufactured by Gigantic George's Gutter Guards and they supplement and complete Gordon's display. Gordon includes the values of George's goods along with its own on its Exhibition Floater Coverage Form and schedules the dates and location of the roofing convention on the schedule of coverages. The value of both Gordon's and George's goods is covered up to the limit of insurance if a covered loss occurs.

 

b. Coverage Limitation

The property that is on exhibit or display is covered subject to the following restrictions:

Note: What does “to and from” mean? Does transit coverage exist only while the exhibits or displays are in transit between exhibitions or is transit coverage available when the items are being shipped to and from the main location and the exhibition?

Note: IM 7513–Schedule of Coverage–Exhibition Floater-Blanket Exhibition Coverage must be used when coverage is written on this basis.

 

Example: Gordon’s Gutter display and Gigantic George’s Gutter Guards are returned to Gordon’s main location. Does Gordon’s coverage end when the display enters the transit vehicle or when the guards are unloaded from the transit vehicle?

Property Not Covered

Four specific types of property are excluded.

1. Contraband

Property that is illegal to possess is not covered. Property that is legal to possess but that is being used as part of an illegal trade or that is being transported illegally is also not covered.

2. Money and Securities

A number of types of property are not covered under this item. Accounts, bills, currency, food stamps, evidence of debt, and lottery tickets not held for sale, in addition to money, notes, or securities are all not covered.

Note: This property should be insured under commercial crime coverage forms.

Related Article: Commercial Crime Coverage Analysis

3. Property at Your Premises

Property is not covered when in a premises that the named insured owns, leases, or operates.

Note: When the property is on premises is part of the named insured’s business personal property.

4. Waterborne Property

Property that is waterborne is not covered. The only exception is when it is in transit while in a carrier for hire's custody.

Coverage Extensions

Provisions That Apply To Coverage Extensions

There is one coverage extension. Its limit is either the limit on the schedule of coverages or the default limit included in the coverage form. This limit is part of the applicable limit for covered property and not in addition to it, unless otherwise indicated. This limit is not added to or combined with limits for any other coverage extension or supplemental coverage and is not subject to any coinsurance provisions that apply elsewhere in the coverage form.

Debris Removal

a. When a covered peril damages or destroys covered property, the cost to remove any created debris is covered under this extension.

b. Debris removal does not include any costs for removing, restoring, replacing polluted land or water or to extract pollutants.

c. There are two parts of the Limit section. The first is restricting any debris removal payment to no more than 25% of the amount paid for the actual direct physical loss or damage. The second part is that when the debris removal and the physical damage loss are added together, no more than the limit of insurance is paid.

 

Example: The Wild Ideas display limit is $25,000. A covered fire occurs.

Scenario 1: The fire loss exceeds $25,000 so it is considered a total loss. The debris removal cost is $1,500. The maximum debris limit is $6,250 ($25,000 X .25). However, because the $25,000 is already needed to pay for the physical damage loss, no debris removal coverage is available.

Scenario 2: The covered fire loss is $2,000. The debris removal cost is $5,000 but the maximum debris removal cost of $2,000 x.25 = $500. Only the $500 is paid.

Scenario 3: The covered fire loss is $20,000. The debris removal cost is $3,000. The maximum debris removal cost payment is .25 X $20,000 = $5,000. The total of the $20,000 + $3,000 = $38,000. This entire loss would be covered, after the deductible.

 

d. An additional $5,000 (or a higher amount entered on the schedule of coverages) is available if the debris removal expense is more than 25% of the loss amount or if the combined cost of loss and debris removal is more than the limit of insurance for the covered property.

 

Example: This revision of the above illustrates how this $5,000 impacts each loss.

The Wild Ideas display limit is $25,000. A covered fire occurs.

Scenario 1: The fire loss exceeds $25,000 so it is considered a total loss. The debris removal cost is $1,500. The maximum debris limit is $6,250 ($25,000 X .25). However, because the $25,000 is already needed to pay for the physical damage loss only the $5,000 additional debris removal is available. The $25,000 loss plus the $1,500 debris removal is covered.

Scenario 1: The fire loss exceeds $50,000 so it considered a total loss. The debris removal cost is $7,500 and the maximum available is $12,500. However, because the $50,000 is already needed to pay for the physical damage loss, only the $5,000 additional limit is available to pay for the debris removal.

Scenario 2: The covered fire loss is $2,000. The debris removal cost is $5,000 but only the maximum debris removal cost of $2,000 x.25 = $500 or the $5,000 additional debris cost is paid. In this case, the entire debris removal is paid.

Scenario 3: The covered fire loss is $20,000. The debris removal cost is $3,000. The maximum debris removal cost payment is .25 X $20,000 = $5.000. The total of the $35,000 + $3,000 = $38,000. This entire loss would be covered, after the deductible. There is no change in this scenario because the loss was handled within item c.

 

e. The named insured must report debris removal expenses to the insurance company within 180 days of the loss date in order for this coverage extension to apply.

Supplemental Coverages

Provisions That Apply To Supplemental Coverages

There is one supplemental coverage. Its limit is the limit for the supplemental coverage unless there is a limit for that coverage on the schedule of coverages. This limit is separate from and not part of the applicable limit for covered property.

The limit available for coverage described under a supplemental coverage is the only limit available for it. It is not the total of the limit for a supplemental coverage and the limit for covered property. The limits are not added to or combined with limits for any other supplemental coverage or coverage extension. They also are not subject to any coinsurance provisions that apply elsewhere in the coverage form.

 

Pollutant Cleanup and Removal

a. The insurance company pays the named insured's expenses to extract pollutants from land or water if a covered peril that occurred during the policy period caused the pollutants to be released or discharged.

b. This is immediate coverage so any expenses to extract pollutants are paid only when reported to the insurance company within 180 days of the date of loss.

c. Costs related to testing, evaluating, observing, or recording pollutants are excluded except for those costs that are part of the extraction process.

d. The most paid is $10,000 for all such expenses that a covered peril that occurs during each separate 12-month policy period causes. This limit can be increased.

Perils Covered

Coverage applies to risks of direct physical loss unless the loss is limited or caused by an excluded peril.

 

Perils Excluded

1. Primary Exclusions

The first group of exclusions is essentially absolute. Subject to specific exceptions, loss or damage by each is totally excluded, regardless of any other cause or event that contributes to a loss, either concurrently or in any other sequence. The insurance company does not pay for any direct or indirect loss or damage caused by or that results from any of these events.

Related Article: Concurrent Causation and Anti-Concurrent Causation Clauses–A Discussion

a. Civil Authority

There is no coverage for a loss that results from an order any civil or government authority issues. These orders may include seizure, confiscation, destruction, or quarantine of property but this exclusion is not limited to only these. The only exception is when the loss or damage is caused by a civil authority destroying property as a means of controlling a fire. This exception applies only if the fire is the result of a covered peril.

 

Example: A bomb threat occurs at First Friendly’s Convention. The first responders clear the area and search all exhibits for potential bombs. Maxie’s display is one of the many exhibits that were quickly dismantled and left in shambles. Maxie’s loss of $5,000 is not covered because it was due to the action of a civil authority.

 

b. Nuclear Hazard

The insurance company does not cover loss or damage caused by or that results from any nuclear reaction, radiation, or contamination. This is absolute and applies whether the nuclear incident was controlled or not, and by whatever means caused. Any loss the nuclear hazard causes is not treated as a loss that fire, explosion, or smoke causes. The only exception is when a fire results from the nuclear fire, direct loss or damage from that fire is covered but the damage from the nuclear hazard remains excluded.

c. War and Military Action

The insurance company does not pay for loss or damage caused by any act of war. Undeclared and civil war or warlike action by a military force are all considered war. All actions taken to hinder or defend against an actual or expected attack by any government or sovereign authority that uses military personnel or other agents are also considered war and excluded. In addition, acts of insurrection, rebellion, revolution, or unlawful seizure of power and any action any government authority takes to prevent or defend against any such acts are excluded. If any action within the terms of this exclusion involves nuclear reaction, radiation, or contamination, this exclusion applies in place of the nuclear hazard exclusion.

Note: This means that the exception for resulting fire under the nuclear hazard is not covered when it is the result of war.

2. Secondary Exclusions

The second group of exclusions applies to loss or damage caused by or that result from any of the following loss events. Some of these exclusions have exceptions, conditions, or limitations that should be noted and reviewed carefully. The insurance company does not pay for any loss or damage caused by or that results from any of these events.

a. Contamination or Deterioration

Loss or damage that is caused by contamination or deterioration is excluded. This applies to corrosion, decay, fungus, mildew, mold, rot, and rust. It also applies to any quality, fault, or weakness in covered property that causes it to damage or destroy itself. However, this exclusion is not limited to only these described causes.

 b. Criminal, Fraudulent, Dishonest, or Illegal Acts

Coverage does not apply to loss caused by or that results from criminal, fraudulent, dishonest, or illegal acts that any of the following commit alone or in collusion with another:

Coverage applies if employees destroy property. It does not apply if employees steal.

This exclusion does not apply to covered property in the custody of carriers for hire.

c. Electrical Currents

Electrical arcing or currents caused loss or damage is excluded unless lightning is the cause. When the excluded arcing or currents results in the occurrence of a specified peril any resulting loss from that specified peril is covered.

d. Loss of Use

There is no coverage for loss that results from delay, loss of use, or loss of market.

 

Example: Jolly Times major sales time is between August and October in preparation for the Christmas season. It will be displaying at seven different events. During the first event, a tornado destroys the display area and Jolly’s display. Jolly is unable to replace the display for one month and therefore misses three of its events. It estimates the loss of profit due to the delay is $ 25,000. The insurance company pays the $15,000 for the destroyed display but pays nothing for the loss of profit.

 

e. Mechanical Breakdown

When mechanical, structural, or electrical breakdown or malfunction causes a loss, it is excluded. The loss is excluded even if a breakdown is the result of a structural, mechanical, or reconditioning process. There are no exceptions.

f. Missing Property

The unexplained or mysterious disappearance of covered property is excluded when there is no physical evidence to suggest what happened to it and the only proof that a loss occurred is based on an audit or physical inventory. The one exception is that this does not apply to covered property in the custody of carriers for hire.

 g. Pollutants

There is no coverage for loss caused by or that results from any release, discharge, seepage, migration, dispersal, or escape of pollutants. There are three exceptions:

h. Processing Work

Loss or damage that is due to any processing or other type of work done on the property is not covered. The only exception is that if a specified peril results from the processing, coverage applies to the specified peril loss.

i. Temperature/Humidity

Coverage does not apply to loss that dryness, dampness, humidity, changes in, or extremes of temperature causes. However, if a specified peril occurs as a result of any of these, coverage applies to the loss or damage that specified peril causes.

j. Theft from an Unattended Vehicle

Coverage does not apply to theft of covered property from an unattended vehicle. There are two exceptions. If vehicle was locked, its windows securely closed, and there was visible evidence of forced entry into the vehicle coverage applies. In addition, when covered property is in the custody of carriers for hire, coverage applies.

 

Example: Gordon unloads most of the merchandise for the roofing association trade show and takes a break to eat lunch before finishing. He inadvertently forgets to lock the pull-down door on the box truck. When he returns and rolls the door up, he finds the cargo area empty and the merchandise he had not yet unloaded gone. Coverage does not apply because the vehicle does not have even a single mark on it to suggest that a forced break-in occurred.

 

k. Voluntary Parting

The loss to covered property that is voluntarily given to others is not covered, even if the surrender was due to a fraudulent scheme, trick, or false pretense.

l. Wear and Tear

Loss or damage caused by wear, tear, marring, or scratching is excluded.

What Must Be Done In Case Of Loss

1. Notice

The named insured must give prompt notice of a loss to the insurance company or its agent. The notice must include a description of the property lost or damaged. If a criminal act caused the loss, the appropriate law enforcement agency must also be notified. The insurance company has the right to require that the notice is in writing.

2. You Must Protect Property

During and after a loss, the named insured must take all reasonable steps to protect covered property from further loss. The insurance company pays reasonable costs the named insured incurs to do so if the named insured maintains accurate records to substantiate the costs. Paying these costs is not in addition to the policy limits. There is no coverage for any repairs or emergency measures performed on property not already damaged by a covered peril.

Note: Such costs incurred reduce the amount available to pay the actual loss.

3. Proof of Loss

The named insured must complete and return the insurance company's prescribed proof of loss forms within 60 days after the company requests it. The information provided must include the time, place, and circumstances involved with the loss and information on any other insurance coverage that may apply. It must also include the named insured’s interest and the interest of others with respect to the property involved, including lienholders, loss payees, and mortgagees. Any changes in the title to the property during the policy period must be disclosed, in addition to providing any other reasonable information the company may require to adjust and settle the loss.

4. Examination

Examination under oath may be required in matters that relate to the loss. The insurance company may request these examinations more than once but such requests must be reasonable. If multiple persons are examined, the company has the right to examine each individual separately.

5. Records

The named insured must produce any records related to the loss. The insurance company must be allowed to make copies and take extracts of them as often as it reasonably requests. Records include tax returns and bank microfilms of all related cancelled checks but records are not limited to just these.

6. Damaged Property

Both damaged and undamaged property must be made available for the insurance company's inspection as often as reasonably necessary. It must also be allowed to take samples of the property to the extent necessary to adjust and settle the loss.

 

Example: Williams display is damaged but he needs to move on. He notifies the insurance company of the loss they inform him that it will take three days to arrive at the location. He informs them that he is moving on and cannot wait for them. Because he removes the damaged property before they can inspect the damage, the claim is denied.

 

7. Volunteer Payments

The named insured may not voluntarily make payments, assume obligations, pay or offer rewards, or incur other expenses without the insurance company's express approval. If it does, it does so at its own expense. The only exceptions are those costs incurred to protect property as item 2. above describes.

 

Example; William is in a hurry so he arranges for his display to be repaired and transported to the next exhibit. The insurance company is not obligated to pay for any of the arrangements William has made.

 

8. Abandonment

The named insured may not abandon damaged property to the insurance company without its written consent.

 

Example: William left part of the damaged display at the convention center as he moved onto the next exhibition. He notified the insurance company that it belonged to them now. The insurance company refused to accept it so all bills for its removal and storage were sent to William.

 

9. Cooperation

The named insured must cooperate with the insurance company and perform all acts this coverage form requires.

Valuation

1. Actual Cash Value

The value of covered property is its actual cash value at the time of loss. Actual cash is replacement cost new minus depreciation.

2. Pair or Set

The value of a loss that involves damage to or loss of one part of a pair or set is based on a reasonable proportion of the value of the entire pair or set. However, the loss of one part of a pair or set is not considered a total loss.

Note: This recognizes that the value of the whole is greater than the value of individual parts but that the remaining parts still have value as separates.

3. Loss to Parts

The value of a lost or damaged part of property that consists of several parts is the cost to repair or replace only the lost or damaged part.

How Much We Pay

1. Insurable Interest

The insurance company does not pay more than the named insured's insurable interest in the covered property at the time of loss.

Note: This coverage form includes property of others. The named insured has no insurable interest in that property so this condition will be difficult to enforce.

2. Deductible

The insurance company pays only the amount of loss that exceeds the deductible amount on the schedule of coverages.

3. Loss Settlement Terms

Subject to other items in this section, the insurance company pays the least of the following:

4. Coinsurance

a. When coinsurance applies to a coverage provided, the insurance company pays only part of the loss if the limit is less than the percentage of the value of the covered property on the schedule of coverages.

b. The following are the three steps to determine the amount of loss to be paid:

Step 1. Multiply the percentage on the schedule of coverages by the covered property’s value at the time of loss.

Step 2. Divide the covered property’s limit by the result determined in step 1.

Note: There is no coinsurance penalty if the result is1.00 or higher.

Step 3. There is a coinsurance penalty when step 2. is less than 1.00. Subtract the deductible from the amount of loss and then multiply the total amount of loss by the percentage determined in step 2.

The insurance company does not pay more than the amount determined in step 3. or the limit, whichever is less. It does not pay any remaining part of the loss.

c. If there is more than one limit on the schedule of coverages, this procedure applies separately to each limit.

d. If there is only one limit on the schedule of coverages, this procedure applies to the total of all covered property insured under that limit.

e. This coinsurance provision does not apply unless there is a coinsurance percentage entered on the schedule of coverages.

5. Insurance under More Than One Coverage

Two or more coverages in the coverage form may apply to the same loss. In that case, the insurance company does not pay more than the value of the actual claim, loss, or damage sustained.

6. Insurance under More Than One Policy

a. Proportional Share

The named insured may have other coverage subject to the same terms as this coverage form. In that case, this coverage form pays only its share of the covered loss. That share is the proportion that its limit of insurance bears to the limits of insurance of all insurance that covers on the same basis.

b. Excess Amount

There may be other coverage available to pay for the loss other than as described in 7. a. above. In that case, this coverage form pays on an excess basis. It pays only the amount of covered loss that exceeds the amount due from the other coverage, whether collectible or not. Any payment is subject to the limit of insurance that applies.

Loss Payment

1. Loss Payment Options

a. Our Options

The insurance company has the following four loss payment options if a covered loss occurs.

b. Notice of Our Intent to Rebuild, Repair, or Replace

The insurance company must notify the named insured of its intent to rebuild, repair, or replace within 30 days after receiving a properly completed proof of loss.

2. Your Losses

a. Adjustment and Payment of Loss

The insurance company adjusts all losses with and pays the named insured, unless another loss payee named in the policy is involved.

b. Conditions for Payment of Loss

The insurance company pays a covered loss within 30 days after it receives a properly prepared proof of loss and the amount of loss is established. Either the amount of loss is determined by a written agreement between the company and the named insured or after an appraisal award is filed with the company.

3. Property of Others

a. Adjustment and Payment of Loss to Property of Others

The insurance company has the option to adjust and pay losses that involve property of others either to the named insured acting on the property owner’s behalf or to the property owner.

b. We Do Not Have to Pay You if We Pay the Owner

The insurance company is not obligated to pay the named insured when it pays the property owner. In addition, if the property owner sues the named insured, the company has the option to defend the named insured in that suit.

Other Conditions

1. Appraisal

The insurance company and the insured may not always agree on a covered claim’s value. This condition provides one method to resolve disputed claims.

Either party can request an appraisal to determine a disputed claim’s value. Once requested, the parties have 20 days to obtain their own independent and competent appraisers and give their appraiser's name to the other party. The two appraisers then have 15 days to select a competent impartial umpire. If they cannot agree on an umpire within that time period, either can request that a judge in the court of record in the state where the property is located appoint one.

The appraisers then determine the claim’s value. They submit any differences to the umpire. Once any two of the three parties agree, the amount of loss is set.

Each party pays its own appraiser. Both parties share the umpire’s cost and other expenses equally.

2. Benefit to Others

The insurance provided does not directly or indirectly benefit any party that has custody of the named insured's property.

3. Conformity with Statute

Any condition in this coverage form that conflicts with any applicable law is amended to conform to that law.

4. Estates

Note: This condition applies only if the named insured is an individual.

a. Your Death

If the named insured dies, the person who has custody of the named insured's property is an insured until a qualified legal representative is appointed. The named insured’s legal representative becomes an insured once he or she is appointed. Both are insureds but only with respect to the property this coverage form insures.

b. Policy Period is not Extended

This coverage does not extend past the policy’s expiration date.

5. Misrepresentation, Concealment, or Fraud

This coverage is void if any insured at any time willfully concealed or misrepresented a material fact that relates to the insurance provided, the property covered, or its interest in the property. It is also void if fraud or false swearing by any insured took place concerning the insurance provided or the property covered.

Note: The named insured must deal with the insurance company honestly. Its rights of recovery may be voided if it intentionally misrepresents or conceals a material fact or information. This means that the insurance is treated as simply having never existed versus denying a particular claim.

6. Policy Period

Only covered losses that occur during the policy period are paid.

7. Recoveries

Paying the loss does not end the obligations of the named insured and the insurance company toward one another. Additional provisions apply if the insurance company pays a loss and the lost or damaged property is subsequently recovered or the parties responsible for the loss pay for it.

Either party that recovers property or payment must inform the other. Recovery expenses that either party incurred are reimbursed first. If the named insured keeps the recovered property, it must refund the amount of the claim the insurance company paid, unless the company agrees to a different amount. If the claim paid is less than the agreed loss due to applying a deductible or another limitation, any recovery is prorated between the named insured and the insurance company based on the company's respective interest in the loss.

8. Restoration of Limits

Payment of a claim does not reduce the limit available for future claims.

9. Subrogation

The insurance company acquires the named insured's rights of recovery from third parties after it pays a loss. The named insured must help the insurance company secure those rights. The company is not obligated to pay a loss if the named insured hinders or impairs the company's rights of subrogation. However, the named insured can agree in writing to waive recovery rights from others before a loss occurs.

10. Suit against Us

The insurance company cannot be sued by anyone for any coverage until all the terms of the coverage form are met. Suits must be brought within two years after the named insured first knew about a loss. If a state law invalidates this condition, any suit brought must comply with the provisions of that law and begin within the shortest period of time allowed by law.

Note: It is normal for a basic coverage form to be modified by mandatory state-specific endorsements that address issues that relate to that specific state.

11. Territorial Limits

Covered property must be located in the United States, its territories, and possessions, Canada, or Puerto Rico in order for coverage to apply.

ENDORSEMENTS AND SCHEDULES

AAIS has developed one endorsement for use with this coverage form:

IM 7512–Named Perils Endorsement

This endorsement restricts the perils covered to named perils of fire, lightning, windstorm, hail, collision, overturn, or derailment of a transporting conveyance, collapse of a bridge or culvert, theft, and vandalism.

Note: Additional company specific endorsements may be available and used. Each should be examined to determine its effect on coverage, especially when some may impose restrictions or controls that may be minimum requirements or prerequisites for the company to provide coverage or to accept a particular exposure.

UNDERWRITING CONSIDERATIONS

Location specific underwriting is not appropriate for this floater because coverage applies only when the items are not at the named insured’s premises. Instead, underwriting must focus on the property itself, the type of exhibitions, the manner of transport, and the loss history.

Covered Property

The property to be covered must be described in the schedule of coverages. It should be as descriptive as possible to prevent any confusion if a loss should occur because only the described property is covered. This description should be regularly updated because items might be added to the exhibit that if not described might not be covered.

The susceptibility of the property and its damageability is very important to evaluate. Breakage is a significant concern especially if the property is fragile or easily damaged. Handling and packing issues will come into play and underwriters may require that only professional packers be permitted to handle the items.

Procedures and accountability are very important. The named insured should have set procedures for the handling of displays. One of the most important parts of the procedure should be establishing one individual as primarily responsible for the display at a specific exhibit.

Exhibition Location

The exhibition contract is important because it provides duties and obligations of both parties. If the exhibition provides security, it is important to understand the hours of protection so that the named insured can remove valuable items as appropriate. The nature of the exhibitions must be evaluated. Outdoor exhibitions present additional concerns, such as security and protection arrangements after hours or contingency plans if weather conditions change or become inclement. Exhibitions conducted indoors involve the traditional evaluation of construction, occupancy, public and private protection, and surrounding exposures, as well as any special attention and handling needed, depending on the nature of the property being exhibited.

Transit

Transit coverage is a major element of the exhibition floater. The method of transportation must be considered, along with the bill of lading or shipping document if the insured uses a carrier for hire. Valuation terms should be adequate and may require special attention if the merchandise is valuable, unique, or special in any way. In addition, some property may also be fragile and easily damaged and packing and handling issues must be addressed. If transportation involves the named insured's own vehicles, the same issues exist, along with determining the adequacy of the motor vehicle for the job and the experience of the drivers and helpers while driving, loading, and unloading the merchandise.

If exhibition coverage is written on a scheduled basis, accurately establishing the dates when coverage applies is extremely important because coverage applies on only the dates indicated. Coverage includes transportation to and from the event, so those dates must be considered when establishing the dates. Adding time at the beginning and the end is suggested because unexpected circumstances or delays can develop that could affect coverage.

 

Example: An office equipment show is scheduled from 06/01 through 06/07. Jan plans to leave on 05/30 to travel to the exhibition location and will return home by 06/09. She notifies her insurance agent, who arranges coverage from 05/30 through 06/09. On 05/25, Jan receives an invitation to attend a special pre-exhibit showing of her equipment. She leaves on 05/28, instead of the previously arranged date, and forgets to inform her agent of the change. An accident in transit occurs on 05/28 and all the merchandise for the exhibit is destroyed. There is no coverage because the loss occurred on a date before the scheduled start of coverage and the claim is denied.

 

Loss History

Losses in the past are good indicators of future loss unless intervening loss prevention steps are taking following a loss. It is important to have at least five years’ worth of loss runs in order to ascertain whether effective management control is in place.