(December 2106)
This document is a repository of analyses, comparisons, and articles that relate to various earlier editions and historical inland marine coverage forms and policies. Refer to the various Inland Marine PF&M Sections for analyses of and information about the latest inland marine coverage forms and policies.
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Archive Index |
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Overview |
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Analysis |
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Analysis |
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Analysis |
Furriers' Customers Excess Legal Liability Endorsement (08/92) |
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Analysis |
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Analysis |
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Comparisons |
Reserved For Future Use |
Occasionally, an Inland Marine Form that was once widely available may lose its relevance, become a proprietary (filed) form or may evolve into a market niche, served by specialty companies. Such is the case with the forms that are part of the Inland Marine Historical section. The forms included here were, in the past, offered by many carriers but are now offered by very few (if written at all). However, the information may still be useful for the sake of comparison and/or perspective. While, naturally, some of the information is obsolete (regarding current market needs, language, etc.), much of it remains relevant for the class and the coverage provided. These analyses have been republished here, along with notations of their last review date. The republished material also includes updated references to other, related, article sections.
Editor’s note: The material in this analysis was last published in August 1992. Currently, there is no AAIS or ISO version of this form. Each company that offers this coverage uses their own form. The various form provisions may be reflected in the items appearing in this discussion. While points in this discussion remain relevant to this exposure, please use this as an historical reference rather than as a current analysis.
Purpose
This policy covers, on an all risk basis, stock consisting of fur garments and garments trimmed with fur, belonging to the insured dealer in such property (fur departments of department stores are eligible) and fur garments of other dealers for which the insured is liable. This insurance does not cover furs of customers in the custody of the insured for storage or repair. A Furriers' Customers policy, a bailee form, covers that exposure.
The two policies are an excellent combination, there being no overlapping of coverage. The policy is written subject to the submission of a proposal form which supplies necessary rating and underwriting information.
ANALYSIS OF POLICY
COVERAGE
A Furriers' Block policy covers, against risks of direct physical loss or damage, stock in trade of the insured, consisting principally of furs, fur garments, garments trimmed with fur and accessories, the property of the insured or sold but not delivered. The policy also applies to property of others who are dealers in such property or otherwise engaged in the trade for which the insured may be liable. Coverage includes the insured's interest in such property for labor performed and materials used.
The policy provides specific limits for the maximum liability of the company resulting in any one loss, disaster or casualty for the following situations:
The policy also pays for damage (except by fire) to that part of the building occupied by the insured and to equipment in it, directly resulting from theft or attempted theft. This provision does not apply to department store premises. It applies in other cases only when the insured is the owner of the premises or is legally liable for the damage. There is no indemnity for damage to glass, except to structural glass.
The combined liability of the company under premises damage and under damage or loss to property on the premises may not exceed the maximum limit of the company for property at that location.
PROPERTY NOT COVERED
A Furriers' Block policy does not cover the following property:
A full declaration of value is made to the carrier on shipments of less than $200
A declaration of 25% of the value of the shipment or $200, whichever is greater, is made to the carrier, if shipment is $200 or more. If shipment is by REA Express, merchandise must be designated as "furs" on the carrier receipt
The shipment is by carrier operating exclusively as a Merchant's Parcel Delivery Service; or
Property is in custody of air carriers' passenger baggage service for transportation under air freight tariff with delivery to passenger at destination. Such property is considered as accompanied baggage and subject to the limitation stated in the policy for property in locations other than those otherwise scheduled.
ADDITIONAL COVERAGE
The policy also pays for direct loss caused by or resulting from risks of direct physical loss involving the collapse of all or part of a building caused by one or more of the following:
This additional coverage was added to commercial all risk policies under the simplified commercial property and inland marine insurance programs inaugurated in the late 1980s.
EXCLUSIONS
The policy is an all risk form, but does not pay for loss caused directly or indirectly by the following:
REQUIRED OF THE INSURED
It is a condition of the insurance that the insured maintain a detailed and itemized inventory of his property and separate listing of all travelers' stocks, in such a manner that the exact amount of loss can be accurately determined from the records by the company; and that the insured also maintain detailed records of the property of others covered under the policy.
It is also a condition of the policy that the insured maintain so far as is within his control such protective devices as were stipulated on the proposal form or in endorsements attached to the policy for which rate credit has been granted. Failure to maintain such safeguards may suspend the insurance as respects the premises or situation affected during the time of discontinuance of the safeguard.
VALUATION
On unsold property, the company is not liable for more than the actual cash value of the property at the time of the loss. The loss or damage is to be estimated according to actual cash value less depreciation, but not exceeding the lowest amount put on the property in the insured's inventories, stock books, stock papers or lists existing at the time of the loss, nor the cost to repair or replace the property with material of like kind and quality.
On sold property, the company is not liable for more than the net selling price after all allowances and discounts.
On property of others, the company is not liable for more than the amount for which the insured is liable, not exceeding the actual cash value at the time and place of the loss, including labor performed and materials used by the insured.
IN EVENT OF LOSS
In event of loss or damage to property of others held by the insured, the company reserves the right to adjust such loss or damage with the owners of the property. If legal proceedings are taken by others to enforce a claim against the insured as respects such loss or damage, the company reserves the right at its option without expense to the insured to defend on behalf and in name of the insured.
The Furriers' Block policy does not cover loss or damage when there is any other insurance, except as to the legal liability of the insured. However, if under the other insurance the liability would be for a lesser amount than would have been recoverable under the Furriers' Block policy, then the Furriers' Block policy would pay the difference.
UNDERWRITING (Acceptability)
Furriers' Block policies may be written only for dealers in property consisting principally of furs, fur garments and garments trimmed with fur, excluding those who deal exclusively in raw or dressed skins and those who manufacture exclusively for the fur trade. The fur department of a department store may be insured. A two-part proposal must be completed and signed by the applicant. The first part is concerned mainly with insurance limits and business operations; the second, with protective facilities. Understandably, this insurance is available only to risks maintaining first-rate crime prevention equipment.
Although the policy was previously written with an 80% Coinsurance clause, the latest form does not contain any Coinsurance provision, limits of liability depending on maximum limits selected by the insured in the declarations of the policy and stated in the proposal for insurance. The reporting form of coverage is no longer written as a standard form.
PROPOSAL
A proposal is required to be submitted before the risk is accepted and the policy issued by the company. Similar to the Jewelers Block policy, the proposal is attached to the policy and becomes part of the policy's provisions. The insured warrants that the information on the proposal is correct. This warranty that information is factual is of vital importance to the underwriter.
The proposal contains detailed information concerning prior loss history, the amounts of insurance required, the insured's inventory, bookkeeping procedures, and the burglary protection afforded the stock enclosure and premises.
Also requested is the proportion by value of property kept in locked enclosures protected by the burglar alarm system, as well as the proportion kept in other locked enclosures and outside of enclosures.
Details concerning the travel and messenger exposure during the prior twelve months are required. Space is also provided on the proposal for information about the show window and show case exposure, if that coverage is requested.
TERRITORY
The property is covered wherever located within the United States, Puerto Rico and Canada.
DEDUCTIBLES
The rules provide for the use of optional deductibles of $500, $1,000, $2,500 or $5,000. The deductible applies to each adjusted claim or the applicable limit of liability, whichever is less. The deductible does not apply to loss or damage caused by fire or lightning at the insured's premises. The deductible must be assumed by the insured, and may not be covered under any other policy of insurance.
Rate credits for the various deductibles are figured on a formula based on the size of the premium and the amount of the deductible.
RATE AND PREMIUM
Each risk is required to be submitted to the company for rating and annually for rerating. The risk is not rated unless a proposal form is submitted and dated within 60 days prior to the time it is received.
ADDITIONAL COVERAGE BY ENDORSEMENT
Show Window And Show Cases Endorsement may be attached for additional charge, determined from proposal facts, covering theft from show windows and show cases at the premises and at described locations elsewhere.
The endorsement provides coverage for theft from show windows when the premises are open or closed to business, and coverage in any one window or all windows. The insured must indicate in the proposal the desired coverage in each situation, and the maximum limits of the company are declared on the endorsement.
Other Property coverage may be endorsed on to the policy to cover one or more of the following categories: Furniture and fixtures, tenants’ improvements and betterments, machinery and fittings.
The endorsement extends the All Risk coverage and exclusions of the policy to such property. There is an 80% Coinsurance clause applicable to property insured under this endorsement.
Editor’s note: The material in this analysis was last published in August 1992. Currently, there is no AAIS or ISO version of this form. Each company that offers this coverage uses their own form. The various form provisions may be reflected in the items appearing in this discussion. While points in this discussion remain relevant to this exposure, please use this as an historical reference rather than as a current analysis.
This policy is designed to provide coverage on furs and garments trimmed with fur for furriers, banks, stores, warehouses, laundries and cleaners who accept such garments for storage. The policy covers property of customers left with the insured for a declared value for which receipts are given to the customers. The policy is written on application.
The Furriers' Customers Custody policy insures against all risks of loss or damage to insured property, except for certain named exclusions. Within the policy limits, it covers for the insured's legal liability for property of others in his custody for alterations, repairing, cleaning, remodeling or storage.
Property Covered - Insured property consists of furs and garments trimmed with fur owned by customers of the insured or under contract of sale to customers.
Coverage applies only to garments for which the insured has provided customers with receipts. The receipts contain an agreement that the insured will effect insurance in accordance with policy conditions.
Where Covered - The policy covers within the United States, Puerto Rico and Canada, while the property is in the custody of the insured. Losses are covered which occur during transportation or at the premises named in the policy. Limits of liability in any one casualty are specified for each location and while in transit.
While this is a broad coverage policy, it contains an important exclusion that should be made clear to the applicant: Loss or damage by processing or any work done upon the property is not covered, unless caused by fire or explosion. Careless workmanship is the object of this exclusion. The policy also does not insure:
Receipts - The insured gives a receipt to his customers which provides that: the customer accepts the receipt as correct in all respects; the insured will have effected insurance on each article listed on the receipt for a specified amount, which is the limit of the insured's liability for any loss or damage to the articles; the provisions of the receipt do not extend the insurance provided by the policy; the receipt supersedes any temporary receipt.
Records - The insured maintains an accurate record of receipts issued which describes each article, shows the customer's name and address, description, amount of value and where located. This record is open to inspection by company representatives at all reasonable times.
Reports - A report of values is made by the insured to the company not later than the 15th of each month. The total amount of values in all receipts outstanding on the last day of the previous month is stated and the insurance rate per $100 of value is applied against that amount.
Limits of insurance are described carefully and clearly. Premiums are paid on the basis of the aggregate amount of insurance set forth in all receipts, but the limits of insurance apply even if the aggregate of the values stored should exceed the limits.
Specific dollar limits are set forth applying to:
(1) the aggregate amount for which the company is liable in any one casualty;
(2) storage enclosures at specified premises;
(3) locations outside storage enclosures at the specified storage premises;
(4) other premises not used for storage purposes;
(5) any other unnamed premises;
(6) property in transit.
The insurer is not liable for more than: the amount stipulated on the storage receipt; the actual cash value; or the cost of repair with materials of like kind and quality, whichever is the least.
The policy is written subject to the completion and approval of a proposal which is signed by the insured. The proposal is not binding on the applicant, but it and the accompanying description of location are the basis of the contract if a policy is issued. The entire policy is void if any material fact is misrepresented.
Proposal describes name, location and nature of business. Peak values of customers' goods during the preceding 12 months at all locations are given, as well as loss experience.
A detailed description of each storage enclosure and location completes the necessary underwriting information. A separate form, entitled Description of Storage Enclosure and Location, accompanies the proposal. This form requests information concerning the construction of the building housing the storage enclosure, and other detailed information concerning the burglary protection at the premises and the construction of the storage enclosure.
The proposer may specify if he desires Excess Legal Liability coverage. The proposer may also express a need to issue certificates.
No insurance is issued on the specified articles by or through the insured in another company.
Maintenance Of Protective Safeguards -The insured must use due diligence to maintain the protective safeguards which were stated in the proposal of the insurance to be in effect at the time of inception of the policy. This is important because many fur storage premises are protected by burglar alarms, sprinkler systems or watchman service. Rates and underwriting are based upon the presence of these safeguards. The insurance company must be notified if any of them are discontinued.
It is good public relations on the part of the insured, as well as a policy requirement, that he report losses immediately to the company or its agent. A proof of loss is filed within 60 days from the date of loss.
The insured is privileged to take reasonable steps to recover and preserve insured property in the event of loss. The company will contribute to the cost of such efforts.
The insured and other interested persons submit to examinations by company representatives when necessary. Books and records are produced by the insured to facilitate the settling of claims.
Losses are paid to the insured or adjusted with the owner of the property. The company protects, removes and reconditions insured property as it deems necessary, reserving the right to employ independent workmen.
Recovery by a customer is limited to the amount contained in the receipt given him by the insured.
Claims are paid within 30 days after satisfactory proof of loss is received at the home office of the company.
No action may be brought against the company for recovery of a claim unless it is begun within two years after the occurrence of the loss. When a state law is in conflict with this provision, the shortest limit of time permitted applies.
Policy Period - The policy is written on a continuing basis and terminates only when canceled by either party giving notice to the other.
Cancellation - Earned premiums are computed pro rata. Cancellation by the company requires 30 days' (10 for nonpayment of premium) written notice. Premium adjustment is made as soon as possible after cancellation becomes effective.
The Furriers' Customers policy is issued only to proposers who have superior storage facilities. Reputable furriers, department stores, banks, cold storage companies and storage warehouses are the kind of prospects that should be solicited for this coverage.
Fireproof vaults, central station alarm systems and sprinkler systems are features which make risks desirable. If the risk is not good from a fire and burglary standpoint, it is generally ineligible for this policy.
Frequent losses over a one to three year period indicate excessive carelessness or vulnerability to some peril. Such risks should be avoided.
Underwriting a furriers' customer policy requires the analysis of the exposures from the time the garment is first accepted from the customer until the time it is returned. The transit exposure is important if the insured has a pickup and delivery service or does not store garments on its own premises and must transport them to the storage warehouse. Suitable locks and alarms on each vehicle will cut down on the chance of loss. Principal exposures are fire and theft while at the insured's premises or at a storage warehouse.
Each risk is individually rated by the company. The agent indicates in the proposal the Fire contents rate for each storage enclosure and location, and this is the basis of the rate.
Loadings are added to the base Fire rates for all other hazards, and credits are allowed for burglary and theft protection.
In order to eliminate monthly billings and collection in the case of policies producing small monthly earned premiums, the company may collect from the insured on each anniversary date of the policy a deposit premium equivalent to the full estimated annual earned premium. Earned premiums as developed by the monthly reports are credited against the deposit premium.
If the deposit is fully earned prior to anniversary, additional earned premiums are billed and collected until anniversary date, at which time another deposit premium is secured. If the deposit is not fully earned upon the anniversary date, an appropriate adjustment is made and a further deposit secured.
The following endorsements may be attached to the Furriers' Customers policy for an additional premium:
Legal Liability Endorsement - covers the liability imposed upon the insured by law for sums in excess of the amounts entered in customers' receipts.
Furriers' Customers Certification Endorsement - Extends the policy to cover garments of customers while in their possession when certificates of insurance (not receipts) have been issued by the insured.
Editor’s note: The material in this analysis was last published in August 1992. Currently, there is no AAIS or ISO version of this form. Each company that offers this coverage uses their own form. The various form provisions may be reflected in the items appearing in this discussion. While points in this discussion remain relevant to this exposure, please use this as an historical reference rather than as a current analysis.
The purpose of this policy is to protect a furrier, insured under a Furriers' Customers policy, to the extent of the liability imposed on him by law for damage to property left in his custody. An endorsement is attached to basic policy and applies only to the difference between amount declared in customers' receipts and actual cash value. There are two forms: Form A and Form B, which differ slightly.
The Furriers' Customers Excess Legal Liability endorsement ("Form A"), when attached to the Furriers' Customers policy, pays all sums which the insured may become obligated by law as a bailee to pay in excess of the valuations entered in customers' receipts.
Limits of liability are specified for any one article and for any one casualty.
Customers who store their furs with furriers usually have Fur Floater policies of their own. They often declare their furs at a figure far below the actual cash value in order to avoid paying insurance charges that are unnecessary for their point of view. However, the furrier is exposed to potentially great losses when he accepts garments at a low declared value. The liability imposed upon him by law might be the full value of destroyed garments and the full cost of repairing damaged garments.
The Excess Legal Liability endorsement protects him against losses in excess of values entered in customers' receipts.
The insurance afforded by the Excess Legal Liability endorsement does not apply to:
It should be emphasized that this endorsement extends the Furriers' Customers policy, Custody form, to cover in excess of the amount per article stipulated in the insured's storage receipt, on the common law or statutory liability of the insured. Under certain circumstances the courts have held fur stores, repairers, etc., liable for amounts in excess of the storage receipt limits, and such suits frequently involve, in addition, substantial defense costs.
The same underwriting selectivity applies to the Excess Legal Liability endorsement as applies to the basic Custody policy. Reputable furriers, department stores, cold storage companies and storage warehouses are the kind of prospects that should be solicited for the coverage if they have superior facilities.
Fireproof vaults, central station alarm systems and sprinkler systems are features which make risks desirable. If the risk is not good from a fire and burglary standpoint, it is generally ineligible for the coverage.
It is important, also, that expert appraisers of furs be employed by the insured. If all furs were accepted at figures far below their actual value, the exposure might be too great for the premium obtained for the endorsement. The public relations position of the furrier is improved, however, when he is able to accept furs from customers who carry full insurance themselves at a declaration somewhat below the true value. This must be held to a minimum by the furrier for the Excess Legal Liability coverage to be satisfactory from a company underwriting standpoint.
The basis for the rate for this endorsement is the Fire contents rate for each storage enclosure and location. Loadings are added for all other hazards and credits are given for protective measures. The home office or departmental office of the company considers the risk before the coverage can be made effective. The coverage calls for experienced underwriting judgment because of the indefinite exposure within the limits of liability, with weight given to the physical factors and the quality of the risk. Therefore, rates vary among different risks.
The rate for the coverage afforded by the endorsement is applied to each $100 of value in all outstanding receipts as of the last day of each month. Reports of values are made not later than the 15th of the following month. This premium is in addition to that charged for the basic Custody policy.
Rates are quoted upon request and depend largely upon the limits of liability required. For retailers or bailees issuing receipts to garment owners, the rate is applied to the same values as reported under the Custody form. For wholesalers or bailees storing property of customers of other bailees, a flat annual premium is promulgated.
Editor’s note: The material in this analysis was last published in August 1992. Currently, there is no AAIS or ISO version of this form. Each company that offers this coverage uses their own form. The various form provisions may be reflected in the items appearing in this discussion. While points in this discussion remain relevant to this exposure, please use this as an historical reference rather than as a current analysis.
The purpose of this endorsement is to permit the insured to furnish to his customers Certifications of Insurance that extend the coverage of the basic Custody policy when garments are returned to their owners. Other endorsements may be added to Furriers' Customers policies in some states that provide for the issuance of special Personal Fur policies.
The policy is extended to cover, while in all situations, furs and garments trimmed with fur that are property of the insured's customers and for which the insured has issued a Certification of Insurance. Certification of Insurance forms must be approved by the company and do not cover beyond the time the ownership of a garment remains vested in the person to whom issued. Certifications may not be issued for a period longer than 12 months.
It is agreed by the insured that Certifications of Insurance will be issued only in combination with annual storage agreements at a combined storage and insurance charge. The insured also agrees that the rate and premium applying to the insurance will not be stipulated as such on any Certification, bill, circular or advertising matter. No Certification shall be issued on any article for an amount greater than the valuation stipulated in the named insured's storage receipt applying to the article.
Certificates act as individual fur floaters to cover personal furs wherever they are located, either in storage or in the customers' possession. The customer pays an extra premium for such certificates, but not as much as would be charged under a Personal Articles Policy or Fur Floater.
Before the certificates are issued, an endorsement must be attached to the Furriers' Customers policy. The terms of the endorsement, as well as the conditions of the certificate, vary in accordance with the requirements of each individual state insurance department.
Some states require that the amount of insurance on the certificate not exceed the insured's estimate of the value of the article at the time of issuance. Other states require that the amount of insurance on the certificate not exceed the amount stated in the storage receipt. Requirements also vary with respect to premium shown on the certificate. Some states require that separate charges be shown for the certificate and for storage. Other states do not have this requirement.
The certificate must be countersigned in accordance with the state countersignature laws. Copies of each certificate are issued and sent to the insurance company. In the event that a certificate is to be canceled by the company, an individual notice of cancellation must be sent to the certificate holder. Cancellation of the basic policy does not effect the cancellation of certificates.
Editor’s note: The material in this analysis was last published in July 1992. Currently, there is no generic form of this policy. Today, aspects of this coverage may be found under the AAIS Commercial Output Policy or the ISO Capital Assets Policy. While points in this discussion remain relevant to this exposure, please use this as an historical reference rather than as a current analysis.
The Garment Contractors policy protects a garment manufacturer against loss of or damage to garments while such property is at risk on the premises of contractors and sub-contractors and in transit between the insured and such persons. This is a specified peril coverage written by companies active in commercial Inland Marine insurance. Insurance is also available on the insured's premises or on an all risk basis.
The Garment Contractors Floater policy covers specified types of garments manufactured, unmanufactured or in the process of manufacture, including materials, supplies and containers, that are the property of the insured, held by him in trust, on commission or on consignment, or on which he has made advances.
The policy insures, while the property is in transit, against all risks of direct physical loss of or damage to insured property.
It insures, while the property is on the premises of contractors or sub-contractors, against direct physical loss or damage to insured property directly caused by:
A Garment Contractors Floater policy covers property in the course of transit between the premises of the insured and premises of his contractors and premises of his sub- contractors or from mills or other suppliers to contractors or sub-contractors. It also covers on the premises of contractors and sub-contractors for the purpose of performing work on the property for the account of the insured. (Not considered contractors or sub-contractors within the meaning of the policy are throwsters or other yarn processors, weavers, finishers or other cloth finishing works, printers, dyers, spongers, shrinkers, tanners or testing houses.)
Insurance is effective on property within and between the States of the United States and District of Columbia, excluding Alaska and Hawaii. The policy does not cover mail shipments, for which a Mail Coverage Form is suggested.
The Garment Contractors Floater policy does not cover:
The following three coverages are expressly excluded from the policy coverage unless the word "COVERED" is inserted in the space opposite the "Optional Coverage" item in the declarations and additional premium is paid as required:
The following are the definitions contained in the policy provisions for Optional Additional coverages:
No claim is payable for Consequential Damage unless the insured has for a period of 21 days from the date of the loss made a bona fide effort to replace lost or damaged property and to refill or complete the lots or range of sizes or colors. The company may require the insured to surrender to the company the remaining garments or parts of garments, damaged or undamaged, upon the payment or offer to pay of any loss.
Garments, parts of garments and other insured property physically lost or damaged are valued at the actual cost thereof, including labor performed at date of loss, but not exceeding replacement cost on the date and at the place of loss.
If any other kind of insurance exists on property covered under the Garment Contractors Floater at the time of the loss, the insurance afforded under the Garment Contractors Floater does not apply except as excess insurance. Insurance provided by the floater policy does not contribute to the payment of any loss until the amount due from all such other insurance has been exhausted.
The company is not liable for a greater proportion of any loss or damage than the amount insured under the policy bears to 100% of the actual aggregate value at all places, excluding property in transit, where coverage is afforded by the policy at the time such loss occurs. When the policy becomes excess insurance, then the liability of the company does not exceed the above proportion of the amount of excess.
Any act or agreement by the insured, before or after loss or damage, whereby any right of the insured to recover from any carrier in whole or in part for loss or damage to covered property is released, impaired or lost, renders the policy null and void. The company is not liable for any loss or damage which has been settled or compromised by the insured without the written consent of the company. It is agreed, however, that the insured, its agents, servants or employees, or any person, firm or corporation shipping goods at the risk of the insured may accept from carriers bills of lading or receipts whereby the carrier's liability is limited to $50 per shipment or $1.00 per garment.
This insurance may in no manner benefit any carrier or other bailee directly or indirectly.
The insured must as soon as practicable report in writing to the company or its agent every loss, damage or occurrence which may give rise to a claim under the policy. The insured must also file with the company or its agent a detailed sworn proof of loss within 90 days from date of discovery of such loss, damage or occurrence. All adjusted claims must be paid by the company within 60 days after presentation and acceptance of satisfactory proof of interest and loss at the office of the company.
It is understood and agreed that books and records will be kept by the insured in such a manner that the exact amount of loss or damage can be accurately determined by the company. The books and records of the insured, at all times during business hours, must be open to representatives of the company.
Each claim paid under a Garment Contractors Floater policy reduces the amount of insurance by the sum paid. However, the amount of the loss is automatically reinstated and a pro rata additional premium is due and payable from the date of the occurrence.
Though the Policy Period may not be longer than one year; a policy may be written for a period of time less than one year. Cancellation by the insured is short rate; the company cancels pro rata with 5 days' written notice. Cancellation or termination of the policy does not affect shipments in due course of transit at the time of cancellation or termination.
Garment manufacturers with good financial ratings and good physical plants are prospects for this coverage. It is intended for those who send unfinished property to others for completion, or contractors having property of manufacturers on their premises. Certain types of property are not eligible for coverage under the policy, so those dealing in such goods should be eliminated from the prospect list. Ineligible property includes: leggings, spats, footwear, or hosiery; headwear; jewelry or costume jewelry; fine arts; musical instruments, photographic equipment and supplies and accessories; signs or outdoor equipment; air conditioners or domestic appliances; carpets or cloth awnings; data processing equipment and media.
The garment contractors policy is a bailor form, covering the insured bailor's property in transit, and while on the premises of contractors and subcontractors. The insured may require the use of a number of contractors before the garments it manufactures are completed. The major contractors, those that require the higher limits of insurance, are scheduled on the policy. Those with lesser exposures are grouped in the category of unnamed contractors with a single limit applying for any one of these. This limit may usually not exceed 25 percent of the largest limit of scheduled locations.
All policies covering property insurable under a Garment Contractors floater or liability for such property, even though limited to the liability of a contractor or sub- contractor, are subject to the Garment Contractors floater rules. Necessary special conditions applicable to liability policies are authorized by the company in each specific case.
Application-Policies are written only by the service, departmental or home offices of companies upon receipt of a completed application for rating. Provision is made in the application for information relative to: name and address of applicant; each type of garment manufactured by the applicant; the length of time the applicant has conducted his business; whether the applicant or any of the principals have engaged in business under any other names or trade style; losses suffered during the previous three years; limits of liability and optional coverage (see below) desired; names and addresses of contractors used by the applicant; name of present insurance carrier; and details of cancellations or declinations by other companies.
A separate amount of insurance is scheduled while on the premises of each contractor. In addition, there is a separate limit for property at any contractor's premises not scheduled.
There are also separate limits for property in the custody of any air transportation carrier and for property in the custody of other common or contract carriers.
A separate limit applies to property in the custody of messengers of the insured, his contractors or subcontractors; and a separate limit applies to property in transit by any other means not otherwise scheduled.
There is considerable transit exposure in the garment contractors insurance coverage. Theft is an important risk during transit. While the property is on the contractor's premises major exposures are fire, theft and water damage. Major exposures on the insured's premises (when that coverage is written) are fire and theft.
The coverage applies only while the property, including property in transit, is within the U.S., Canada and Puerto Rico. Property in transit to or from Alaska, Hawaii or Puerto Rico is excluded.
The Garment Contractors Floater may be extended to cover on an All Risk basis by the attachment of the All Risk Extension endorsement. In other than a gross sales policy, the Garment Contractors Floater may also be extended to cover on the insured's premises through the attachment of one of the following endorsements upon the submission of the Extension Endorsement Application Supplement and rating by the insurer:
The Garment Contractors Floater by the use of this endorsement is extended to cover the property covered while in, on, or in transit between the premises of the insured as scheduled.
The following exclusion is added to the policy when this endorsement is attached:
This policy does not cover loss or damage contributed to or aggravated by any of the following while the property is in or on the insured's premises:
The Garment Contractors Floater, when the All Risk Extension endorsement is attached, insures against all risks of direct physical loss of or damage to the property covered, subject to the perils excluded.
The All Risk endorsement contains the following exclusions:
This endorsement is a combination of the two previously explained endorsements. The coverage of the Garment Contractors Floater is extended by the use of this endorsement to cover on the insured's premises and also extended to cover on an All Risk basis.
The Personal Property Extension endorsement to the Garment Contractors Floater is available on an All Risk basis only. This endorsement covers the following property against all risks of direct physical loss or damage:
The same exclusions as found in the Insured’s Premises Extension and the All Risk Extension are included in this endorsement with the following additional exclusions:
A special valuation clause is contained in the Personal Property Extension form. Valuation in the event of loss is as follows:
On unfinished property at the actual cost, including labor performed to date of loss, but not exceeding replacement cost
On finished property at the actual cash value at the time of the loss or damage, not exceeding the cost to repair or replace with material of like kind and quality
On all other property at actual cash value