ISO Riggers Liability Coverage Form

ISO RIGGERS LIABILITY COVERAGE FORM ANALYSIS

(April 2018)

 

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INTRODUCTION

The Insurance Services Office (ISO) Riggers Liability Coverage Form is designed for contractors that specialize in lifting heavy property objects that belong to others. The lifting usually takes place during installation, construction, and moving operations of other contractors. This coverage form differs from other inland marine forms because it pays sums the named insured is legally obligated to pay for damage to property of others.

POLICY CONSTRUCTION

Riggers Liability Coverage requires at least the following six forms:

Related Article: IL 00 17–Common Policy Conditions Analysis

Related Article: CM 00 01–Commercial Inland Marine Conditions

IH DS 91–RIGGERS LIABILITY DECLARATIONS

The advisory Riggers Liability Declarations does not have spaces for the named insured, its mailing address, and other named insured information, the policy period, or the description of the insured business. That information is on the Common Policy Declarations. IH DS 91 contains the following information:

Insurance Company and Producer Name

The name of the insurance company that provides the coverage and the name of the agent or broker that produces the business are entered in the spaces provided.

Limits of Insurance

This section has spaces to enter the following limits of insurance for covered property:

Note: This limit caps the amount that will be paid in a single occurrence regardless of the any one job site or property in transit limit. It is important to review this limit whenever additional rigging equipment is added or the limit at any one job site is increased.

Fire Department Service Charge Revised Limit

This section has a space to enter a different limit of insurance than the $1,000 limit in the coverage form.

Deductible

This section has a space to enter the amount of deductible that applies.

Rates and Premiums

The Basic Premium is entered when coverage is written on a non-reporting basis.

The following is entered when coverage is written on a reporting basis:

Special Provisions

Any special provisions are entered in the space provided.

IH 00 91–RIGGERS LIABILITY COVERAGE FORM ANALYSIS

This analysis is of the 12 13 edition. Changes from the previous edition are in bold print.

Introduction

This section encourages the careful reading of the entire coverage form to determine what is covered, what is not covered, rights, and duties. It defines we, us, and our as the insurance company that provides this insurance coverage. It also defines you and your as the named insured on the declarations. The reader is also pointed to the Definitions section because certain words or terms used in the form have a more broadened or restricted meaning.

 A. Coverage

1. Insuring Agreement

This is a legal liability contract so the insuring agreement is a third-party agreement rather than a first-party agreement.

Coverage applies only to damages that the named insured incurs which acting as a rigging contractor. The contractor must be legally liable to pay for those damages. The damages must be the result of direct physical loss or damage to covered property caused by a covered cause of loss.

2. Covered Property

Covered property is a tangible property that others own. This property must be in the named insured’s care, custody, or control while it handles the property and performs the functions of a rigging contractor.

3. Property Not Covered

The following described property is not covered:

a. Any property unless there is a contractual obligation for the named insured to provide rigging services for that property.

 

Example: Right-Side-Up Rigging is under contract with Print-It-Like-It-Is Publishing to set in place a new, state-of-the-art color printing press that it imported (and just received) from the European Union. While maneuvering the 50-ton press in the tight confines of the pressroom, Right-Side-Up unintentionally swings the press into another piece of equipment. This causes only minor damage to the press but seriously damages the other piece of equipment. The damage to the press is covered. The damage to the other piece of equipment is not because the contract for services between the two parties does not require Right-Side-Up to cover that property.

 

b. If the named insured has received a liability release for a property, that property is not covered.

Note: The party for whom the rigging contractor performs work usually acknowledges that the rigger’s work is done, accepts it, and signs off before the rigger is released from liability.

 

Example: Right-Side-Up Rigging finishes placing the printing press in position. Print-It's owner and chief engineer carefully review the plans and schematics in conjunction with the placement and conclude that the press is exactly where it is supposed to be. Each signs off on the installation agreement, accepts the work, and releases Right-Side-Up from any further liability and responsibility for the job. Print-It's electricians and computer experts swarm over the press, getting power connected and the computer connections in place. However, the base of one of the load bearing stabilizer legs was inadvertently placed on a stone and the additional weight of all the people combined with the weight of the press suddenly crushes the stone. The resulting impact causes some of the sensitive computer equipment on the press to be seriously damaged when it falls to the floor. Even though Right-Side-Up is responsible for the damage because of improper placement, it is not liable under this coverage form’s terms because Print-It’s owner accepted the installation and released Right-Side-Up from any further liability for the installation before the loss occurred.

 

c. Property that is being handled by the named insured as a carrier for hire and not as a rigging contractor

Note: Motor Truck Cargo Carriers coverage applies to common and contract carriers for hire that transport lawful goods of others from one point to another. Common carriers are subject to a bill of lading and shipping receipt they issue. Contract carriers operate subject to contracts with the owners of the goods. These coverage forms insure the carrier’s legal liability for those goods.

Related Articles:

AAIS Motor Truck Cargo Legal Liability Coverage Forms

ISO Motor Truck Cargo Carriers Coverage Form

d. Contraband. Any property that is illegal for the named insured to own or that is in illegal trade or transportation is not covered.

4. Coverage Ceases

This insurance coverage being provided ends when the first of the following occurs:

a. The policy is cancelled or expires

b. The named insured's liability for the property ends

c. The named insured abandons the rigging project. This applies only if the named insured does not intend to return and complete it

 

Example: Right-Side-Up Rigging’s policy term is 7/1/18 – 7/1/19. Right-Side-Up typically works on up to nine jobsites at the same time.

Scenario 1: Right-Side-Up started working on the jobsite on 6/15/18 but the damage to the air-conditioning unit happens on 7/2/19. No coverage exists.

Scenario 2: Right-Side-Up and the property owner did not see eye to eye, so they ended their contractual agreement. The next day, property that had been under Right-Side-Up’s contract was damaged. Because there was no contractual agreement in place, there was no coverage.

Scenario 3: Right-Side-Up is fed up with the violations he has seen at a jobsite he is working on. He is unable to work with that particular general contractor because of the many shortcuts being taken. He removes all of his equipment. If an accident happens afterward, even though a contract may remain in effect, there is no coverage because Right-Side-Up abandoned the project. 

 

5. Covered Causes of Loss

Covered causes of loss are direct physical loss or damage to covered property with the exception of causes of loss that are listed in the exclusions section.

4. Additional Coverages

Some of the following additional coverages are also additional amounts of insurance.

a. Debris Removal

The insurance company pays to remove the debris of a covered loss. The expenses must be reported to the insurance company in writing within 180 days of the date of loss. Payment is limited to 25% of either the sum of

o    The amount paid for direct physical loss or damage to covered property PLUS

o    The deductible that applies to such direct physical loss or damage

OR

The lesser of the two calculations is used to establish the debris limit cap.

This is not the final limit. Refer to the Limits of Insurance to determine the exact amount of debris removal coverage that is available.

This coverage does not apply to costs to extract pollutants from land or water or to remove, restore, or replace polluted land or water.

b. Pollutant Clean Up and Removal

The insurance company pays to clean up pollutants caused by or that result from a covered cause of loss that occurs during the policy period. The most paid is $10,000 per premises as an aggregate amount during each separate 12-month policy period. The expenses are paid only if they are reported to the insurance company in writing within 180 days of the date of loss.

This coverage does not apply to costs to evaluate the presence or effects of pollutants. However, it does pay for testing that is part of the extracting of pollutants process from either land or water.

This limit is an additional amount of insurance.

 c. Preservation of Property

Covered property may need to be moved from one location in order to keep it from being damaged by a covered cause of loss. When that preventive step is taken, the insurance company pays for any direct loss or damage such property sustains during the move and wherever that property is moved to for up to 30 days after the date it was moved from the initial location.

This additional coverage does not increase the limit of insurance.

Notes: There are several important points to consider:

The property removed must be moved back to the initial location within 30 days from the date of the move. Otherwise, all coverage ends after 30 days.

 

Example: Right-Side-Up Rigging uses a 50-ton truck crane with a telescoping boom. This is the largest that can be safely used without collapsing. It lifts air conditioning units to the top of a mid-rise building being renovated adjacent to the coast of the Gulf of Mexico. A contract carrier delivered the units to the job site the week before and Right-Side-Up is now responsible for them until they are placed on the roof and it is released from liability. The general contractor scrambles to remove property on the job site not yet attached to the building as a Category 3 hurricane zeroes in on the risk location. It asks Right-Side-Up to load the units on its lowboy trailer and drive them to its inland warehouse for safe storage. Right-Side-Up loads up the units, secures the crane boom and jib on the ground, and drives the units to the warehouse as directed. This additional coverage insures the air conditioning units in transit to and from (as well as at) the temporary location. In addition, none of the exclusions in the coverage form applies while the units are at the warehouse as well as in transit to and from.

 

d. Fire Department Service Charge

The insurance company pays up to $1,000 when the fire department is called to save or protect covered property from a covered cause of loss. This limit can be increased. It applies regardless of the number of responding fire departments, fire units, or the number or type of services performed.

This coverage applies to only the named insured's liability for fire department service charges it either contractually assumes before a loss occurs or that a local ordinance or law requires.

This limit is an additional amount of insurance.

B. Exclusions

1. Primary Exclusions

The first group of exclusions applies whether or not the loss event results in widespread damage or affects a significant geographical area and is essentially absolute. Subject to specific exceptions, 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. Ordinance or Law (12 13 words added)

This exclusion applies when any law or ordinance that does either of the following is being enforced or the named insured is complying with it:

This exclusion applies if the loss or damage results from either of the following:

b. Governmental Action

This exclusion applies to the legal and authorized seizure or destruction of property by a government entity’s order. There is one exception. Loss or damage that is caused when the governmental entity orders property to be destroyed is covered if used as a method to prevent a fire from spreading is covered. However, this exception applies only if the fire being contained would have been a covered fire under this coverage form.

c. Nuclear Hazard

Nuclear reaction, radiation, or radioactive contamination is not covered. There is an exception. If a fire results from the nuclear reaction, radiation or radioactive contamination there is coverage for the direct loss or damage caused by that fire.

d. War and Military Action

This exclusion lists three specific warlike activities.

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 result from any of these events.

a. Delay, loss of use, and loss of market

These are consequential or indirect losses that develop as a result of a direct loss or damage.

b. Unexplained disappearance

When covered property is gone and there is no obvious cause or explanation of what happened to it.

c. Shortage found upon taking inventory

Any loss that is discovered as a result of an inventory shortage and there is no explanation as to what happened to the property, similar to unexplained disappearance. This is sometimes referred to as "inventory shrinkage."

d. Dishonest or criminal acts (12 13 changes)

These are any dishonest or criminal acts that the named insured, its partners, employees, temporary employees, leased workers, officers, directors, trustees, authorized representatives, or members and managers of a limited liability company commit. This also includes theft.

Such acts committed by anyone with an interest in the property, their employees, temporary employees, leased workers, or authorized representatives who act alone or who act in collusion with other parties or with each other are also excluded. This exclusion also applies whether or not the acts take place during regular working hours.

This exclusion does not apply to acts of destruction by the named insured’s employees, temporary employees, leased workers, or authorized representatives. However, there is no coverage for theft by the named insured’s employees, temporary employees, leased workers, or authorized representatives.

The 12 13 edition removed the part of the exclusion in the previous edition that applied to dishonest or criminal acts committed by anyone entrusted with the property for any reason.

e. Artificially generated electrical, magnetic, or electromagnetic energy

Loss or damage that is caused by or that results from artificially generated electrical, magnetic, or electromagnetic energy damaging, disturbing, disrupting, or interfering with any of the following:

Examples of this excluded energy are electrical current, charges a magnetic or electromagnetic field produces, and microwaves but are not limited to just these. There are two exceptions:

 f. Unauthorized instructions

When covered property is transferred to another person or place because unauthorized instructions were received to do so.

g. Neglect

Neglect on an insured’s part to do take reasonable measures to preserve and protect covered property from subsequent damage during and after the time of loss.

h. Theft (12 13 addition)

Theft by any person the named insured entrusts covered property to for any reason, whether they act alone or act in collusion with any other party. This exclusion applies 24 hours a day/7 days a week. There is one exception. Covered property that is in a carrier for hire’s care, custody, or control is not subject to this exclusion.

3. Other Exclusions

This group of exclusions applies to loss or damage caused by or that results from any of the following loss events. In every case, if loss or damage by a covered cause of loss occurs as a result of one of these excluded events, coverage applies to the loss or damage the resulting covered cause of loss causes. The insurance company does not pay for any loss or damage caused by or that results from any of these events.

a. Wear and tear, depreciation

This is loss or damage due to wear, tear, and depreciation.

Notes:

Wear and tear is damage that occurs naturally as a result of aging or normal wear.

Depreciation is a loss of value due to wear.

b. Any quality in the property

These are any qualities in the property that cause it to destroy or damage itself.

Note: An example is a loss or damage caused by hidden or latent defects in the property.

c. Breakdown, malfunction, or failure of covered property to operate

This is loss or damage caused by or that result from machines, tools, or mechanisms breaking down, malfunctioning, or failing to operate or function properly. There is an exception in cases where such breakdown, failure, or malfunction is a direct result of the named insured’s rigging operations at the site or project.

Note: Malfunction means to function improperly, to fail to operate at all, or to function abnormally or in a faulty way.

d. Insects, vermin, or rodents

This is loss or damage to covered property caused by or that results from insects, vermin, or rodents.

Note: Some examples are damage from mice, rats, cockroaches, squirrels, beavers, spiders, ants, centipedes, and ticks. Each is characterized by destructive habits that cause damage, such as gnawing and nibbling.


e. Corrosion, rust, dampness, or extremes of temperature

This is corrosion or rust, dampness, or extremes of temperature that cause loss or damage to covered property.

Notes:

Rust and corrosion are low-temperature oxidation processes that result in deterioration over time due to inactivity or neglect.

Dampness and temperature extremes can affect the oxidation process that affects different forms of property and can have other effects on the same and other forms of property.

4. Intentional Loss or Damage

The insurance company does not pay for loss or damage that the named insured expects or intended to cause.

Note: This is slightly different from other Expected or Intentional Acts exclusions. The loss or damage must be expected or intended by the named insured. Other exclusions exclude coverage based on the intentional action of the named insured regardless of the resulting loss. In addition, the named insured must intend or expect the loss while others state that the insured must do so.

 

Example: Jerry swings his crane faster than normal and the property becomes dislodged and falls to the ground.

Scenario 1: Jerry was angry when he swung the crane but did not anticipate the property becoming dislodged. Because Jerry did not intend the property to be damaged, coverage would continue to apply.

Scenario 2: Jerry was angry with the property owner and intended that the property would be dislodged and damaged. Jerry is not the named insured. Because the named insured did not intend for the damage to occur, coverage would continue to apply.

   

C. Limits of Insurance

The most the insurance company pays for loss or damage in a single occurrence is the limit of insurance on the declarations for the applicable coverage.

Payments under Additional Coverages–Preservation of Property does not increase the limit of insurance that applies.

Payments under Additional Coverages–Debris Removal does not increase the limit of insurance that applies. However, an additional per occurrence $10,000 is available if either of the following situations exists.

However, this is limited to no more than $10,000 and is limited to only debris removal expense.

The limits of insurance for all other Additional Coverages are additional amounts of insurance.

D. Deductible

The insurance company does not pay for loss or damage until the amount of the adjusted loss or damage (before capping with the limit of insurance that applies) exceeds the deductible on the declarations. It then pays the amount of the adjusted loss or damage that exceeds the deductible up to the applicable limit of insurance.

E. Additional Conditions

1. Valuation

This condition replaces the Valuation General Condition in the Commercial Inland Marine Conditions.

The value of the covered property that sustains loss or damage by a covered cause of loss is the least of the following amounts:

These values include the value of services that the named insured arranged for or furnished.

The value of the property is determined at the time of the loss or damage.

 

Example: On June 2, Melanie was lifting the latest computer from XXX Corporation to place it into the new offices of Megapower, Inc. and dropped it. It was totally destroyed.

Scenario 1: On June 1, XXX revealed its brand new computer. The cost of the computer being placed with Megapower immediately dropped from $125,000 to $75,000. The value of the computer at the time of the loss was, therefore, $75,000.

Scenario 2: On June 3, XXX revealed its brand new computer. The cost of the computer being placed with Megapower immediately dropped from $125,000 to $75,000. The value of the computer at the time of the loss was $125,000 at the time of the loss so that is what is used to adjust the loss.

 

2. Other Conditions

These conditions are in addition to the Commercial Inland Marine Conditions and the Common Policy Conditions.

a. Coverage Territory

The coverage territory is the United States of America, its territories and possessions, Puerto Rico, and Canada.

Note: Unlike the Coverage Territory Condition in other ISO Non-filed Inland Marine Coverage Forms, this coverage form does not include property shipped by air within and between these points.

b. Defense

The insurance company has the option to defend the named insured against suits that arise out of claims by the property’s owner. If the company decides to defend, it does so at its own expense.

F. Definitions

There are two definitions.

1. Pollutants

These are any solid, liquid, gaseous, or thermal irritant or contaminant. Pollutants also include smoke, vapor, soot, fumes, acids, alkalis, chemicals, or waste. Waste is any material intended for recycling, reconditioning, or reclamation.

2. Rigging

The use of cranes, pulleys, tackle, and similar equipment to move, load, unload, lift, lower, erect, or dismantle covered property.

ENDORSEMENTS

ISO has not developed any specific endorsements for exclusive use with the Riggers Liability Coverage Form. ISO has developed one other endorsement that can be used to respond to specific situations.

IH 99 11–Gross Receipts Reporting Form

This endorsement converts the coverage to a daily, weekly, monthly, quarterly, or policy year reporting form.

Note: Gross receipts are cumulative values instead of an average of periodic values. As a result, the rates used for this reporting arrangement are the annual rates instead of a percentage of the annual rates.

UNDERWRITING CONSIDERATIONS

Underwriting riggers liability involves evaluating a number of factors. This includes the type of rigging project being done, the rigging contractor itself, the equipment that is used, and conditions at the job site.

The type of operation and the exposures presented vary greatly from one rigger to another because one rigger’s specialty can be quite different from the specialty of another. Placing a large piece of machinery on the grade floor of a manufacturing building is much different from hoisting large steel beams at a high-rise building under construction. The primary causes of loss for this coverage form are dropping the covered property, the covered property striking other objects, and the covered property striking an overpass while in transit. Most of these losses are due to human error, failing to pay attention, and failing to plan in advance.

In most cases, riggers liability begins when lifting devices are attached to the property to be moved and ends when the devices are removed and the owner or other authorized party accepts the job. Riggers must be evaluated based on the types of property moved, previous loss experience, descriptions of previous jobs performed (both successfully and unsuccessfully), annual receipts, operating territory, experience and training of employees, the condition of equipment, and the average and maximum values per job.

Equipment must be evaluated by type and must include information about the manufacturer, model number, serial number, and the year of manufacture. How the equipment is used is important, especially if it is used to lift large, heavy, or high-value property. The height of the lift must also be determined.

The job site must be evaluated. It should be reasonably level so the lifting devices do not overturn. It should be large enough so that cranes or other lifting devices can be assembled and erected correctly, placed in the proper position, and outriggers properly deployed. The site must also be evaluated from the standpoint of earthquake and water damage (including flood). Wind is a factor in many lifts and should not be attempted during periods of high winds or generally severe weather. Property moved indoors should have sufficient room to make the move safely without the property coming into unintended contact with other property or objects.

Riggers lift heavy, bulky, and awkward objects that can also be extremely valuable. If those objects fall or are upset, the loss or damage can be enormous. This is a very difficult class of business to underwrite and insure and only a few insurance companies are willing to do so. Experience is the most important element to evaluate in a rigging risk. The insurance company underwriter must examine and be satisfied with the fact that the rigging contractor knows what it is doing, has been doing it successfully for some time, and employs experienced, trained, competent, and professional workers.

A list of past jobs is important. Because some jobs can involve long periods of time, the list should cover at least a five year period. The list should include both current and completed jobs in order to determine the average amount of time it takes to complete a typical job or project.

Specialization is another area to evaluate. A rigger that concentrates on or specializes in a specific type of work is easier for an insurance company underwriter to evaluate than a generalist or one that does not have a specific focus or emphasis. The employees and work crews must also be evaluated. If the contractor uses the same people consistently (be they employees or independent contractors), the likelihood of successful operations is greater than if new crews and people are used for each project as it comes up. Teamwork is an essential element in successfully completing jobs and this happens only through regularly working together over a long period of time.

Equipment is another issue. Does the rigger use owned equipment or does it rent or lease equipment for the specific job? If equipment is leased, is it leased with or without operators? Who is responsible for its maintenance? If the named insured uses owned equipment, does it keep maintenance records and is a preventive maintenance program in place? Are operators experienced and periodically re-qualified? Are the working ranges and lifting capacities clearly marked and adhered to? All of these are important questions and points to consider because even an experienced rigging contractor is only as good and effective as the equipment it uses.

Finally, the type of property being moved and lifted must be considered. It is best to evaluate this issue from a "worst case scenario" basis, giving attention and consideration to a number of factors. Things such as the type of property, its availability (be it custom-made, one-of-a-kind or readily available stock or mass-produced), its damageability, and the consequences if it is actually dropped or upset must all be considered.

Rigging risks are difficult to evaluate because of the broad scope of operations that can be involved. They can be less intimidating and difficult to evaluate if they are approached systematically, in a step-by-step way with appropriate attention to the important elements.