AAIS Sales Representative Floater

AAIS SALES REPRESENTATIVE FLOATER ANALYSIS

(February 2018)

 

Menu (click here to expand or to collapse)

INTRODUCTION

The American Association of Insurance Services (AAIS) IM 7504–Sales Representative Floater insures samples of the named insured's merchandise or stock in trade, including containers used to carry the items. Coverage applies only when the property is in the custody of the named insured's sales representatives or agents, the named insured's custody as a sales representative or is in transit between the named insured's premises and its sales representatives.

ELIGIBILITY

Any commercial business enterprise that provides sales representatives with samples to show or demonstrate for clients is eligible. Any commercial operation that acts a sales representative for other commercial operations and carries samples of those companies’ merchandise is also eligible.

POLICY CONSTRUCTION

AAIS Sales Representative Floater coverage requires at least these four forms:

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

IM 7510–SCHEDULE OF COVERAGES–SALES REPRESENTATIVE FLOATER
(01 12 changes)

This Schedule of Coverages is used with IM 7504–Sales Representative Floater. IM 7510 contains the following information:

Policy Number (01 12 addition)

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

Covered Property

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

Limits

Limits for any one sales representative and any one occurrence are entered in the spaces provided.

This is the most paid for loss to samples of the named insured's stock in trade in the custody of any single sales representative.

This is the most paid for loss to samples of the named insured's stock in trade in a single occurrence.

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

 

Example: Head First Swimming required all sales representatives to attend a meeting at the Good Convention Hotel. A flash flood occurred during the meeting resulting in 20 of the sales representatives losing both their cars and the sales samples inside of them. The limit of $15,000 per sales representative was adequate but the occurrence limit of $30,000 resulted in a significant loss that was not covered.

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 coverage.

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

Deductible

The 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 7504–SALES REPRESENTATIVE FLOATER ANALYSIS

This analysis is of the 06 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 described below, subject to any exclusions or limitations.

1. Coverage

Samples of the named insured's stock in trade and similar property of others in the named insured's care, custody, and control are covered when a covered peril causes direct physical loss by a covered peril. The containers holding the property are also covered.

2. Coverage Limitation

Coverage applies to only the property that is described on the schedule of coverages. The named insured can own it or it can be property that others own. This described property is covered only under one or more of the following circumstances:

Property Not Covered

Six specific types of property are not covered

1. Property at Your Premises

When the property is at a location that the named insured owns, leases, or operates the property is not covered.  

 

Example: Head First Swimming keeps all sales samples in its warehouse prior to shipping them to its sales representatives. These samples are covered as business personal property until they are loaded on a vehicle and sent to the sales representative.

 

2. 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.

3. Jewelry, Stones, and Metals

Jewelry of every type and description, precious and semi-precious stones, gold, silver, platinum, and other precious metals, and alloys are not covered.

Note: This type of property is more correctly written on a Jewelers Block Coverage Form.

Related Articles:

AAIS Jewelry Dealers Coverage

4. Loaned, Leased, or Rented Property

Any property that the named insured loans, leases, or rents to others is not covered.

 

Example: Jeremy felt that he almost had the sale lined up so when Ashley asked if she could use the product for two days just to test it out, he felt comfortable giving her one of his samples. Unfortunately, a fire occurred on Ashley’s premises that destroyed Jeremy’s product. The sale fell through. To makes matters worse, Jeremy’s claim was also turned down because the property had been loaned to others at the time of the loss.

 

5. 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

6. 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.

Note: Property on board vessels on bodies of water (other than inland waterways) where the water transportation is significant and no longer incidental to the land transportation should be covered under ocean marine coverage forms or policies.

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

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

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

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.

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.

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 the 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 the 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

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.

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.

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

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.

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 results 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.

 

Example: Head First Swimming’s sales representatives demonstrate most of their products under water. Jill forgot to thoroughly dry the products before she placed them in the trunk of her car. She left for a weeklong vacation. She returned and opened the trunk to prepare for her upcoming calls and discovered the product covered in mildew. This loss is not covered.

 

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 a loss that results from delay, loss of use, or loss of market.

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:

 

Example: Oliver left his product poolside at a convention hotel. A container of chlorine leaked and migrated to the product causing it to be discolored and unusable.

Scenario 1: The leak was due to a puncture in the container. There is no coverage.

Scenario 2: The leak occurred with protestors took over the pool area as a flash mob and one of the members kicked the chlorine container. The loss is covered because a specified peril caused the loss.

 

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 the vehicle was locked, its windows securely closed, and there was visible evidence of forced entry into the vehicle, coverage applies. In addition, when the covered property is in the custody of carriers for hire, coverage applies.

k. Voluntary Parting

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.

Example: Mark is met at his client’s door by a security officer who informs him that no briefcases or other containers can be taken into the building. Mark is asked to relinquish his property so that it can be inspected and is assured that it will be returned to him inside the building. Mark surrenders his property and walks into the building. He meets his contact whom he congratulates on such an efficient security system. The contact is quite surprised. Yes, Mark’s property was never returned to him and Mark was even more upset when the property was not covered when he turned in the theft claim.

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 any notice to it be 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 but to do so the named insured must maintain 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.

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.

8. Abandonment

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

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: Insurance is meant to restore a person’s pre-loss financial position, not to improve or enhance it.

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 6. 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 it receives 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. The amount of loss is determined either through 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.

Note: As with all floaters, it is important to remember that the policy period is based on the time at the mailing address. This means that an 11:00 PM loss on the west coast may not be covered because it is 3:00 AM on the east coast.

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 the following endorsement for use with this coverage form:

IM 7512–Named Perils Endorsement

This endorsement restricts the perils covered to only the 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

Underwriting sales representative samples coverage involves evaluating the samples and the persons who carry them.

Covered Property

 Coverage does not apply to regular merchandise and/or property that is similar to the sample and held for sale. The evaluation must focus on the sample’s susceptibility to loss or damage from many different causes of loss. The sample's dollar value will help determines its desirability because the greater its value, the more likely that it will be a target for theft. The sample's size also plays into its value and attractiveness to thieves. Small, high-valued items are much more attractive than large items with the same or even greater value.

Salesperson

The salesperson or authorized sales representatives must also be evaluated relative to the samples carried. The salesperson's experience must be considered along with his or her individual loss experience for this coverage. Criminal and other background checks should be done before hiring any employee and that person should not be hired unless his or her record is acceptable. Salespersons who are employees are more easily and better controlled than authorized representatives, who are similar to independent contractors.

Transit

Samples while in transit present some of the biggest underwriting challenges. The theft exposure is always present and affects certain types of property more than others. Samples transported in rural or country settings are usually less subject to theft than samples transported in larger urban areas. Samples should always be concealed, to the extent possible, when the vehicle is unattended. Depending on the type of property, concealment may not be enough and the vehicles may need burglary and break-in systems and alarms. The packing materials and packaging used are important factors if the property is delicate or fragile. Persons skilled and experienced in packaging should always package fragile or delicate property. The number of days the salesperson and the samples are on the road is another important element to analyze and may determine if additional theft deterrents in the motor vehicle are required.

Location based

Location based exposures are at exhibitions, fairs, expositions, and trade shows. Each must be evaluated separately and the exposures and characteristics determined relative to the types of sample and its damageability and susceptibility to loss or damage from those exposures and characteristics. When multiple salespersons attend a single event there is also the potential for all samples to be lost in a single occurrence.