ISO PM 00 14–MUSICAL INSTRUMENTS FORM

(March, 2018)

Coverage under a Musical Instruments Form is a type of inland marine coverage focusing on personally owned musical instruments.

Separate coverage facilitates protection at amounts that best reflect a special property’s value. Valuation is typically based upon relevant documentation such as a current appraisal or sales receipt. Separate protection is important since severe coverage limitations exists in standard homeowners policies for such property.

Inland marine coverage can be purchased using this form or combined with other types of items under a personal articles floater.

ANALYSIS OF POLICY

SCHEDULE

The schedule has space to indicate coverage for the following:

· Unscheduled Property – Blanket Insurance

Note: This is only for low valued items because the maximum payment is $500 per item and coverage is based on the actual cash value of the item.

· Scheduled Property

The form has additional space for specifically listing items and to indicate whether Agreed Value Loss Settlement in Common Policy Provisions Form applies to that item. An individual item may also be marked to indicate that the Optional Performance for Pay Coverage option applies.

Related Article: Common Policy Provisions

A. Property Covered

Musical Instruments Form coverage applies globally to all items listed as covered property.

1. Scheduled and Unscheduled Musical Instruments

Insures against all risks of direct loss to the property (musical instruments) that is specifically listed or is part of the blanket coverage in the schedule. Coverage applies only when an insurance amount and premium is shown.

Example: Pam Plunker's Instrument Schedule:
Item	Description	Limit	Premium
Oakenkrome Pedal Harp	Made in 1912, brass with ivory inset pedals and vine engraved frame	$7,800	$210

It is necessary that a full description of an instrument appears in order for it to qualify for scheduled coverage:

Example: Joanna, as a hobby, is an oboist with the Pariahville Symphony (a volunteer group). Her 1922, Acme Oboe is described and insured under an instruments floater. One evening, while returning from practice and before flagging down a taxi, Joanna stops by an ATM machine. She is held up immediately after making a withdrawal and, besides $200 in cash, her oboe is taken. However, the oboe she lost was a 1997 Plunktone Oboe that was not listed on her floater. It was lent to her by a local musical instrument dealer while her own oboe is undergoing some maintenance. In this case the replacement oboe would be ineligible for coverage under the form.

Reference must be made to Paragraph D. 1. Loss Settlement in the PM 00 01-Common Policy Provisions Form since that provision includes coverage limitations.

All listed musical instruments are covered. In addition, accessories, equipment and sheet music that are related to the instruments can be covered by the policy.

2. Newly Acquired Property

a. An important coverage benefit of the musical instruments form is the automatic coverage for newly acquired items. The automatic limit is 25% of the amount of insurance for the class of property involved or $10,000, whichever is less.

Example: Emma Dayus has the following schedule on her policy.
Instrument	Insurance Limit	Premium
Florea Cello	$1,600	$22
Florea Double-Bass	$3,400	$40
Engelhardt Upright Bass	$2,600	$38
Yamaha Electric Cello	$2,300	$35
Total	$9,900	$135
Emma gets both good and bad news. Her granny who introduced her to the world of stringed instruments passes on. However, Emma’s sadness is tempered when the lawyer from her granny’s estate delivers Granny’s beloved, handcrafted cello. She receives the cello on July 12. On August 8, during a dinner get together with her string quartet friends, she opens the case and sets Granny’s cello on a stand to display it. After her guests go home, Emma is horrified to find that the cello had slipped off the stand, fallen against a chair and has a split neck. She reports the loss and, getting outside assistance, the insurer estimates the loss at $3,400. Since the loss occurred within 30 days of her receiving the cello, it is eligible for coverage. However the maximum amount available is $2,475 (25% of $9,900).

b. The newly acquired property feature is particularly helpful since persons who schedule coverage are likely to be persons who collect higher-valued property. This coverage feature allows such persons reasonable time to remember to report their new property and, most importantly, have their coverage adjusted.

This form states that coverage ceases on a newly acquired item if it is not reported within 30 days (or at the end of the policy period if it arrives first). Another requirement is that the named insured pays all due, additional premium for the new item as of the acquisition date.

c. If the form’s schedule provides musical instrument coverage on a blanket basis, then no protection is granted for instruments that are either owned by or rented to a school, school board or a municipality.

B. Property Not Covered

Musical Instrument Form coverage is inapplicable to a number of situations. Specifically, under the following:

1. Ineligibility under this class is created by property use. Unless such coverage is purchased as an option, getting paid for instrument use disqualifies the property. This exclusion is lifted if a performance for pay appears in the form’s Declarations.

Playing for pay includes use of the property as a paid music instructor anytime within the policy period. Also, payment for other instrument use any time during the policy period qualifies as paid performance.

Example: Let us assume the exact scenario of Emma Dayus and the loss to the cello she inherited from her granny. Again she receives the cello on July 12 and has the $3,400 loss on August 8. However, rather than at a dinner get together, the loss occurs after the cello was used during their paid performance at a local university’s Trustees Dinner. Emma’s insurer tells her that the loss is not covered since, when they wrote the policy, the premium was based on personal rather than professional use.

The form does not refer to professional or business; but to performing with instruments for pay. Since it uses “performance,” there could be some ambiguity issues. Consider a person who instructs students in his or her home. A distinction might be made between performance and instructive use.

Example: Muddy Eyre has a Musical Instrument Form that covers his extensive guitar collection. One day his home is damaged by smoke from an oily, kitchen fire. Most of his guitar collection is ruined. The insurance company adjuster discovers that, on weekends, Muddy and his band perform at local jazz clubs and his guitar loss is denied. Muddy argues that his guitars are covered since his entire band performances involve his keyboard that is not listed on the floater. In this case, coverage would be available for his guitars.

Example: Myra's home is damaged during a violent summer storm. The damage included the destruction of her upright piano ($3,500 loss) and her custom maple drum set ($3,600 loss). Both of these instruments were listed and insured for their full value under an instrument floater.

Myra is a music teacher and she earns several thousand dollars each year giving instruction to up to a dozen students. Her insurer learns this and tells her that she will not be paid for the loss of her instruments. Myra then explains to the insurer's satisfaction that she only gives lessons to persons interested in drumming. The piano is not used for music lessons. The insurer then agrees to pay for the loss of the piano.

2. Property that is considered contraband or which is used in any form of illegal activity is not covered.

C. Perils Insured Against

The ISO Musical Instruments Form normally protects against all forms of direct, physical loss.

1. However, it does not insure against loss or damage caused by any of the following:

a. Wear and tear, deterioration or inherent vice

b. Insects or vermin

2. With regard to a covered, permanently installed organ no protection applies to:

a. A loss involving breakdown or failure (electrical or mechanical)

b. Repairs, adjustments, service or maintenance (except coverage still applies to fire or explosion that occurs along with such activity). However, regarding the ensuing fire or explosion exception, coverage applies only to the portion of loss directly attributable to those perils.

D. Deductible

This insurance is subject to the policy deductible that appears on the declaration page.

E. Options

The ISO Musical Instruments Form offers an option that modifies its base coverage. The following option is in effect if the policy shows that it has been selected either in the declarations or elsewhere.

Perils Insured Against - Named Perils

When this option is selected, coverage for musical instruments is replaced with protection granted only for loss created by fire, lightning, cyclone, tornado, flood, theft or conveyance accident.