AAIS Mobile Equipment Floater

AAIS MOBILE EQUIPMENT FLOATER ANALYSIS

(February 2018)

 

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INTRODUCTION

The American Association of Insurance Services (AAIS) Mobile Equipment Floater insures mobile equipment and tools that the named insured uses to conduct its business operations. Coverage also applies to the named insured mobile equipment and similar mobile equipment of others that are in in its care, custody, and control. This is a very open form in that any property considered mobile can be covered provided it is listed on the equipment schedule.

ELIGIBILITY

The insurance company that provides this coverage establishes the eligibility standards.

POLICY CONSTRUCTION

AAIS Mobile Equipment Floater coverage requires at least these four forms:

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

 

IM 7514–SCHEDULE OF COVERAGES–MOBILE EQUIPMENT FLOATER (01 12 changes)

This Schedule of Coverages is used with IM 7505–Mobile Equipment Floater. IM 7514 contains the following information:

Policy Number (01 12 addition)

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

Property Covered

Only equipment listed, described, and that has a limit on IM 7515–Equipment Schedule–Mobile Equipment Floater is covered.

This is the most paid for loss to mobile equipment in a single occurrence.

Optional Coverages

Two optional coverages are available. If either (or both) is selected, a limit must be entered in the space provided.

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

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

The limit is $50,000 unless a different limit is entered.

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

Coinsurance

One of the following coinsurance options must be selected:

Valuation

Two valuations are available. One or the other must be selected:

Deductible

The deductible amount must be entered in the spaces provided for the following:

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 7505–MOBILE EQUIPMENT FLOATER ANALYSIS

This analysis is of the 10 09 edition.

Introduction

The terms "you" and "your" are the party(ies) identified on the declarations as the insured. "We", "us," and "our" is the insurance company that provides coverage. These are the only two definitions in this introduction. However, there are many other defined terms used in this coverage form. The other terms can be found in the Definitions Section at the end at the coverage form. It is very important to review these definitions because of how they can broaden or restrict coverage.

Agreement

The insurance company agrees to provide the coverage described in the coverage form and in the schedule of coverages. The named insured agrees to pay the premium. This entire agreement is subject to all the coverage form's terms, conditions, endorsements, and definitions.

Property Covered

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

Mobile Equipment

The named insured's mobile equipment and similar equipment of others in its care, custody, and control are the covered property. Direct physical damage to this property is covered when caused by a covered peril.

This is a scheduled coverage form so only the mobile equipment that is listed and described on the equipment schedule is covered. The equipment can belong to the named insured or be equipment that is in the named insured’s care, custody, or control.

 

Example: Bubba's Building Supply does as much as it can to maintain its own property in order to reduce the amount it pays outside contractors to do the work. Bubba mostly uses his own equipment but must occasionally rent other equipment to do unusual or infrequent work. He relies on the Mobile Equipment Floater to cover both owned equipment and equipment he occasionally rents from others.

 

Note: Mobile equipment coverage is usually based on the value or limit of each scheduled item. This may not be practical in every case, especially when the named insured has a large number of insurable items. Some insurance companies may consider writing this coverage on a blanket limit basis, describe in general the type of equipment being insured, and declare a maximum limit for each item in addition to the catastrophe limit that applies in a single occurrence.

Optional Coverages

1. Your Tools

This coverage applies only when it is selected on the schedule of coverages and a limit is entered in the space provided.

The direct physical damage to the named insured’s tools is covered but only if caused by a covered peril. The most paid for loss to such tools is the limit on the schedule of coverages, subject to the applicable deductible.

Note: Coverage does not extend to similar property of others in the named insured’s care, custody, or control.

2. Employee Tools

This coverage applies only when it is selected on the schedule of coverages and a limit is entered in the space provided.

The direct physical damage to the tools belonging to the named insured’s employees is covered but only if caused by a covered peril.

The employee tool coverage  applies while at premises the named insured owns, leases, rents, or occupies or at any other premises if the tools are being used as part of the named insured’s business operations. The most paid for loss to such tools is the limit on the schedule of coverages, subject to the applicable deductible.

Note: Employees Tools coverage is more limited than the named insured tools because they are covered only when being used as part of the named insured’s business operations or at the named insured’s premises.

 

Example: Principle Parts purchases employee tool coverage for its employees. Rob brings his own tools from home and uses them while at Principle Parts and at various job sites. Rob takes his tools home every night.

Scenario 1: A forklift at Principle Parts runs over Rob’s sander. This is a covered loss.

Scenario 2: A flash flood sweeps away Rob’s toolbox while he is working on behalf of Principle Parts at a customer’s location. This loss is covered.

Scenario 3: Rob stops at a local diner after work. When he comes out, he discovers that his truck was broken into and the tools stolen. These tools are not covered because the tools are not at either the named insured’s premises or being used in the named insured business operations.

Property Not Covered

Six specific types of property are excluded:

1. Aircraft or Watercraft

Aircraft and watercraft is not covered. Unmanned Aerial Vehicles (UAV or drones) are considered aircraft and not covered.

Note: Scheduled mobile equipment that is inside the aircraft is covered though.

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. Leased or Rented Property

Property that the named insured leases or rents to others is not covered.

Note: This property is excluded because it is not in the named insured's possession and control and there is no way to guarantee that it is being used correctly or safely.  If coverage for property that is rented to others, the IM 7700–Equipment Sales and Rental Coverage Form should be considered.

Related Article: AAIS Equipment Sales And Rental Coverage

4. Loaned property

Any property that the named insured loans to others is not covered.

5. Vehicles

Vehicles that are designed to be used on the highway, such as automobiles, other self-propelled vehicles, trailers, and similar conveyances are not covered.  

Note: This property is more correctly insured under commercial automobile coverage forms.

Related Article: CA 00 01–Business Auto Coverage Form Analysis

6. Waterborne Property

Any property that is being transported over water is not covered. The only exception is when that property is in transit while in a carrier for hire's care, custody, or control.

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. It is not added to or combined with the limit 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.

Debris removal expenses must be reported to the insurance company within 180 days of the date of loss in order for this extension to apply.

The insurance company pays costs incurred to remove debris caused by a covered peril that occurs.

This coverage extension does not apply to any pollutant cleanup, extraction, removal, restoration, or replacement that involves either land or water.

The most paid is 25% of the amount paid for the actual direct physical loss or damage. The combined value of the direct loss or damage and the debris removal cannot exceed the limit of insurance for the covered property.

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.

Debris removal expenses must be reported to the insurance company within 180 days of the date of loss in order for this extension to apply.

Supplemental Coverages

Provisions That Apply To Supplemental Coverages

There are two supplemental coverages. The limit for each is its own default limit that can be increased by entering a higher limit on the schedule of coverages. Limits for any supplemental coverage are separate from the applicable limit for covered property, not part of it.

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.

The insurance company pays costs incurred to remove debris caused by a covered peril occurring.

1. Newly Acquired Equipment

Direct physical loss or damage to equipment the named insured purchases during the policy period is covered when caused by a covered peril. 

There are restrictions. The most paid is the lesser of the covered property’s valuation or $50,000.

The coverage applies for only 60 days following the date of acquisition. This is further modified that regardless of the 60 days, the coverage ends when the equipment is reported by the named insured or when the policy expires, whichever comes first.

Additional premium is due as of the acquisition date.

 

Example: Tom purchases some used equipment at an auction for $25,000. His truck overturns on the way back from the auction and the equipment just purchased is destroyed. He is fully reimbursed for his loss because the equipment’s value was less than $50,000 and its Valuation was $30,000.

 

2. Pollutant Cleanup and Removal

The named insured's expenses to extract pollutants from land or water are covered if a covered peril that occurred during the policy period in any way caused their release or discharge. However, there are significant restrictions.

The expenses must be reported to the insurance company within 180 days of the date of loss.

Testing for, evaluating, observing, or recording pollutants costs are excluded except for those required as part of a covered pollutant extraction process.

A per location 12-month policy period aggregate limit of $10,000 applies. This limit can be increased.

Perils Covered

Coverage applies to risks of direct physical loss or damage 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.

a. Civil Authority

There is no coverage for 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 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.

Coverage for this exposure should be purchased using a commercial crime coverage form.

Related Article: ISO Commercial Crime Coverage Forms and Policies Analysis

 

c. Loss of Use

There is no coverage for loss caused by or that result from delay, loss of use, or loss of market.

d. Mechanical Breakdown

Loss or damage that is caused by either a breakdown or a malfunction that is mechanical, structural, or electrical is excluded. Even such loss or damage occurring during reconditioning, structural, or mechanical processes is excluded.

There is a resulting peril exception that if such a breakdown or malfunction causes a covered peril, the loss or damage from that peril is covered.

e. Missing Property

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 while it is in the custody of carriers for hire.

f. 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:

g. 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 because of any of these, coverage applies to the loss or damage that specified peril causes.

h. Voluntary Parting

There is no coverage for loss to covered property voluntarily given to others, even if the surrender was due to a fraudulent scheme, trick, or false pretense.

i. Wear and Tear

Loss or damage caused by wear, tear, marring, or scratching is excluded. The one exception is that if any of these results in a covered peril occurring, the covered property loss from that covered peril is covered.

j. Weight of Load

Loss or damage that is the result of any equipment attempting to lift a load that exceeds the stated capacity of the equipment is not covered.

 

Example: Oscar used his bobcat to pick up a load. However, instead of moving up, the bobcat’s forks broke because of the weight. The load was three times heavier than the bobcat’s lifting capacity. As a result, there was no coverage for the damage to the bobcat

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 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 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: It is important to realize that any such costs incurred will 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 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 has the right to make payments, assume obligations, pay or offer rewards, or incur other expenses. However, unless the insurance company's has given written approval for such actions, the named insured cannot expect any reimbursement. The only exception is that the insurance company will pay for the 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. Any actions required of the named insured within this policy must be performed.

Valuation

1. Actual Cash Value

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

Note: This valuation clause applies unless Replacement Cost valuation is checked on the schedule of coverages.

2. Replacement Cost

If Replacements Cost valuation is checked on the schedule of coverage, property is valued at replacement cost subject to the following:

Note: If it is the intention to do so that must be provided within the 180 days of the loss, not the settlement itself.

3. 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.

4. 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 could be an issue when the covered property is property of others because the named insured does not necessarily have an insurable interest in that property.

2. Deductible

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

3. Loss Settlement Terms

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 makes the decision on how a loss will be paid – not the named insured or the third party. The options following a loss are:

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. Either the amount of loss is determined 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.

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 unless the damaged item is considered a total loss. When an item is considered a total item, the insurance company refunds any unearned premium on that item to the named insured.

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.

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. Ten terms are defined:

1. Equipment schedule

A listing of each item of covered equipment that provides a description of the covered item. It is attached to and becomes a part of the coverage form.

2. Limit

The amount of coverage that applies to the insured property.

3. Mobile equipment

Equipment that is mobile and used by the named insured in its business operations. Self-propelled vehicles that are both designed to and actually used to carry mounted equipment are not mobile equipment. Vehicles that are designed for use on public roads even though unlicensed and not operated on public roads are not mobile equipment. Tools are also not mobile equipment.

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 labeled as such that contains coverage information. Declarations or supplemental declarations.

6. Sinkhole collapse

A sinkhole is created when an underground opening is created by water acting on limestone or some other rock formation. The earth’s surface suddenly settling or collapsing into that sinkhole is sinkhole collapse. Sinkhole collapse does not include either the land’s value or the cost to fill sinkholes.

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, weight of sleet, snow or ice and windstorm. Two terms need further explanation.

Falling objects does not include loss to personal property stored in the open. It also does not include damage to the interior of buildings or personal property stored in buildings unless a falling object first breaches the building's exterior.

Water damage is the sudden or accidental discharge or leakage of water or steam. However, it must be a direct result of a part of the system or appliance that holds the water or steam cracking or breaking.

8. Terms

These are all policy provisions, limitations, exclusions, conditions, and definitions that apply to this coverage.

9. Tools

Hand-held devices that are designed to be used in the named insured’s business operations. Tools can be motor driven or manual but they cannot be valued at more than $1,000.

 

Example: Mickey buys a handheld motor driven power saw valued at $1,250. Although it looks like a tool and has many of a tool’s characteristics, it is considered mobile equipment because it is valued at more than $1,000.

 

10. Volcanic action

An airborne volcanic blast or shock wave. It is also ash, dust, and particulate matter along with any lava flow. The term does not include the cost of removing dust, ash, or particulate matter from covered property unless there is direct physical damage to the property. 

ENDORSEMENTS AND SCHEDULES

AAIS has developed the following endorsements and schedules for use with this coverage form:

IM 7512–Named Perils Endorsement

This restrictive endorsement deletes the risks of physical damage loss or damage (except as excluded or limited) to only eight specific perils. These are fire, lightning, windstorm, hail, collision, a transporting conveyance overturning or derailing, collapse of a bridge or culvert, theft, and vandalism.

IM 7515–Equipment Schedule–Mobile Equipment Floater

This schedule is used to list individual items of covered equipment and their values.

IM 7516–Coverage Restricted To Described Premises

This endorsement restricts coverage to only the premises that are listed on the endorsement schedule and transit between those listed premises.

IM 7517–Additional Coverages Schedule–Mobile Equipment Floater

This schedule is used with IM 7518–Additional Coverages Endorsement–Mobile Equipment Floater to add coverage for Equipment Leased or Rented to Others. It has spaces to enter the limit and deductible amount. It can also be used to add coverage for Rental Reimbursement and has spaces to enter the limit and the appropriate waiting period. The 01 12 edition added a space to enter the policy number.

IM 7518–Additional Coverages Endorsement–Mobile Equipment Floater

This endorsement provides coverage for Equipment Leased or Rented to Others and Rental Reimbursement.

 

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

Introduction

The mobile equipment coverage form is available to many insureds and for many types of property. The property may be very large or relatively small. The values can be significant or fairly low. The location of the property may be at an owned location where it is used, at a jobsite, in storage or in transit.

Location

When the mobile equipment is primarily used at owned locations, commercial property underwriting should take place.

Related Article: Commercial Property Underwriting Considerations

If the mobile equipment is stored at a single location when not in use, the same commercial property underwriting techniques should be used. In addition, consideration must be given to the potential catastrophic impact if all of the named insured’s mobile equipment stored at a single location with the potential to be damaged in the same event.

If the equipment is used at various jobsites, it is important to know the types of jobs where the equipment will be used, the type of location, the level of security and overall exposure to covered perils.

Transit

Equipment covered by this policy must be mobile. That means that transit must be seriously considered. If the mobile equipment is transported on the named insured’s own vehicles, the commercial automobile underwriting should be conducted because if an accident happens to the transporting vehicle, then the equipment will also be damaged.

Related Article: ISO Business Auto Coverage Form Underwriting Considerations

Mobile Equipment

The equipment can vary widely in its damageability, size, and value and a single item of mobile equipment may present all of these variable elements.

The equipment schedule must be reviewed carefully. The age, value, and condition of the equipment must be reviewed. Insurance to value can be a concern so spot checks on pricing are important. Obsolete equipment may be over insured, which could result in a morale hazard.

Vandalism damage should always be considered when equipment is left in the open regardless if the location is owned or a jobsite.

If the property is fragile, subject to theft, or susceptible to fire, heat, smoke, or water, appropriate precautions should be in place to protect it.